Bangladesh living wage study: Project report, Factory B
The Fair Labor Association (FLA) recently completed a study in Bangladesh to examine strategies for suppliers and buyers to progressively implement living wages for workers.
In total, four factories and five FLA member companies participated in the project. Two of the factories are located in the Gazipur region, while the other two are based in the Chittagong Export Processing Zone. This report covers the collaboration between the FLA member, Colosseum, buying from one of four factories in Bangladesh that chose to participate in the project, and the project team. For the purposes of this report, the factory is called “Factory B.”
Across all four factories studied, the project team found that the average worker did not earn base wages that met the Global Living Wage Coalition’s estimates for a living wage in Bangladesh. Even with overtime, the average worker did not earn living wages, despite most workers logging excessive hours in an attempt to achieve them.
The factories started their lowest paid workers at the legal minimum wage, and provided higher wages as workers gained more skills and experience and moved between wage categories. However, workers interviewed by the project team across all factories reported dissatisfaction with the legal minimum wage, noting that it has been unable to keep pace with rising prices. In general, workers reported that their wages were too low to afford basic needs while also saving money for emergencies, and that most households required more than one earner to survive. Workers reported cutting back on food and housing costs to save money, often living in very poor conditions.
Specifically, at Factory B, the project team found a mix of promising practices, and opportunities for improvement. For example, Factory B was the only factory participating in this study that did not plan production around excessive overtime hours, and where workers did not work excessive hours. Factory B offered workers a noteworthy package of in-kind benefits, including no-cost basic medical care, scholarships for workers’ children, and a gift package for workers upon the birth of a child. At the same time, Factory B’s median wages were the lowest recorded during the study.
The project team recommended that Factory B develop a more structured training program to help workers advance into higher-earning roles. The team also recommended that Factory B explore creative incentive programs that match the company’s business model, such as incentives that reward high levels of accuracy or other quality measures, to help workers supplement their income.
FLA encourages buyers to incorporate the real cost of labor into their pricing negotiations and to maintain long-term, collaborative supplier relationships to support investment in higher wages. Buyers’ sustainability and purchasing teams should collaborate to ensure that purchasing decisions align with buyers’ living-wage commitments, and buyers should collaborate with each other and with multi-stakeholder partners to increase their leverage with factories. Buyers should support suppliers’ worker engagement efforts and consider ways to provide financial support for incentive programs. Find further recommendations for buyers in the conclusion of this report.