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RMG buyers urged to raise prices commensurate with wage hike

The apparel apex body, BGMEA, has urged the global brands, retailers and their representatives in Bangladesh to adjust the prices of all goods to be shipped from December next commensurate with the wage hike announced on Tuesday.

On the following day, Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan in a letter to the buyers said, from now on, all the business negotiations and deals will have to adhere to the new wage policy.

The labour ministry set the new minimum wage at Tk 12,500 as the gross salary for grade seven workers, a 56.25-percent increase of the gross wage with a 63.41- percent rise in the basic wage.

The new minimum wages came at a time when the global economy is passing through an unprecedented time, along with the local economy, said Mr Hassan.

“The local RMG industry is feeling the heat of this crisis, especially with soaring inflation, as the cost of all our inputs like fuel, gas, electricity, transportation has increased significantly including.”

From the first of July this year, the Bangladesh Bank has increased the interest rates on loans, making trade and investment financing more costly.

The raise in the minimum wage, especially the 63.41 per cent hike in the basic wage, leads to higher benefits for the workers in terms of overtime, earned leave encashment, festival bonus and other allowances, he said.

The implementation of the new wage structure would exert a huge financial impact on the factories, he said, adding that this will be challenging for many of our factories to implement the new wage structure in the current economic and financial circumstances.

“However, ensuring decent living of the workers is also a top priority for us, as well as for global brands and retailers since we have accepted the new minimum wage, we will ensure implementation of it, and we need your support in terms of responsible purchasing practice,” the BGMEA president said.

In a letter to Prime Minister Sheikh Hasina earlier on October 13 last, a total of 15 US brands and retailers requested for a transparent minimum wage review that involves all stakeholders and that does not lead to any retaliation.

In the letter, they acknowledged that apparel brands and retailers sourcing in Bangladesh have a role to play in enabling the recommendations and added: “We are committed to implementing responsible purchasing practices to fulfill that role.”

The brands include Adidas, Gap Inc, Under Armour, Patagonia, Burton, Hugo Boss, Abercrombie & Fitch, Amer Sports, AEO Inc, Levi Strauss & Co, lululemon, SanMar, KMD Brands, PVH Corp and Puma.

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