Bangladesh wage unrest disrupts peak apparel production

By Grace Kim

Bangladesh’s garment factories are entering their busiest season, but protests over a 140% wage demand have forced hundreds of them to suspend production. The disruption comes as major shipments were scheduled for November.

Bangladesh ranks as the world’s second-largest apparel exporter after China, Reuters reported, and garments generate more than 80% of national export earnings. The 4 million-worker sector contributes about 10% of GDP, with low wages and duty-free access to key Western markets underpinning its low-cost, reliable supply base.

How far has the unrest disrupted output?

Protests began on Saturday in industrial areas around Dhaka, where workers clashed with police. Officers used tear gas and sound grenades as protesters demanded a 140% wage increase, according to the Reuters report.

Factories were about to start spring collections for H&M, Primark and Walmart before the stoppages. Garment executives said worried clients had called about shipments; those calls signal concern, but Reuters named no order cancellation or quantified reduction.

Operators were already managing earlier disruption from severe fuel and power shortages linked to the Middle East war and 2024’s mass anti-government protests. The latest unrest compounds those production constraints during the sector’s busiest period.

Sparrow Group, whose clients include Zara, Gap and Marks & Spencer, halted production on Monday after a large crowd attacked its factory. CCTV footage showed people throwing bricks and stones, smashing windows and damaging exterior walls while trying to force the main gates open.

Head Shovon Islam said more than 5,000 workers had been evacuated safely. Who was behind the attack remained unclear, Reuters reported, and no party had been identified as responsible.

“This is the industry’s busiest season,” Islam told Reuters, adding that major shipments were scheduled for November. “Any disruption at this stage is extremely damaging and is hampering production at the worst possible time. All my buyers are concerned.”

What pay settlement will reset sourcing costs?

Workers are asking for a minimum monthly wage of 30,000 taka ($243), compared with 12,500 taka ($100). The last increase came in 2023, when minimum wages rose by more than 56%; earlier raises ranged from 50% to 77%.

Matching the 140% demand could push Bangladesh above India, the world’s fourth-largest textile exporter. Industry officials said Indian garment minimum wages typically range from 13,000 rupees to 15,000 rupees a month, which Reuters put at $137.

Pay in China and Vietnam was roughly twice Bangladesh’s level, according to 2024 International Labour Organisation data. That comparison matters as global competition intensifies around the sector’s low-cost advantage.

The government formed a wage board on Sunday to make a pay recommendation. Its review will consider inflation, economic conditions, living costs and export performance, said Abdur Rahman Tarafder, secretary of the Ministry of Labour and Employment.

The American Apparel & Footwear Association, which includes the top US companies in the sector, called the board a “critical opportunity to deliver a fair wage that allows garment workers to support themselves and their families.” The association also requested an annual review process; its statement represents advocacy, not a binding wage decision.

How much can export earnings absorb?

Bangladesh garment export earnings fell 1.65% from a year earlier to $38.70 billion in the financial year ended June 30. The sector then rebounded 6.1% in July-September, generating $10.58 billion, according to Reuters.

That rebound provides some buffer, but major shipments were scheduled for November. A settlement near 30,000 taka would reset the cost floor for future sourcing allocations.

What does India change for sourcing teams?

Clifton Group chief executive M. Mohiuddin Chowdhury, based in Bangladesh’s port city of Chittagong, said India has become an increasingly strong competitor. He cited India’s own cotton supply, strong yarn industry and government incentives, but did not announce any order transfer from Bangladesh.

Bangladesh retains duty-free and quota-free access to the EU, Britain and Canada. India now has a free-trade agreement with Britain, the second-largest destination for Bangladeshi garments, adding a trade-access alternative for Indian suppliers.

What sourcing decision follows?

The immediate sourcing decision is operational: buyers must identify November exposure at suspended or threatened factories and confirm whether alternative capacity can protect delivery dates. The strategic decision waits on the wage board, because a settlement approaching 30,000 taka could erase Bangladesh’s wage edge over India.

Until the board issues its recommendation and manufacturers confirm revised allocations, neither the requested wage nor an India-led order shift represents a settled sourcing plan. Compliance teams should track the government process and any resulting legal minimum. They should not treat the workers’ demand or the trade association’s statement as enacted policy.