The workers have asked for increased wages, citing the rising cost of living. The government and manufacturers have, however, termed it an unfeasible request. We explain why the textile sector is integral to Bangladesh’s economy.
Over the past week, Bangladesh’s industrial belts of Gazipur and Ashulia have ground to a halt. Thousands of workers in the readymade garments (RMG) sector have been protesting there and in the capital, Dhaka, for higher wages.
As close to 700 factories stopped production, a sector that had generated close to $39 billion for the country in the previous financial year (2025-26) is holding its breath.
Why does a textile workers’ strike affect the nation at large? We explain.
Behind the workers’ strikes in Bangladesh
At its genesis in 1971, Bangladesh’s economy was largely agrarian and tethered to the jute trade, which had historically depended on its relatively industrialised neighbour — today, West Bengal — for processing the raw fibre.
The pivot towards garments was spurred along by Bangladesh’s categorisation as a Least Developed Country (LDC). As part of the Multi-Fibre Arrangement (MFA) that governed the textile trade from 1974-1994, Western nations could impose import quotas on nations like South Korea and Hong Kong that had burgeoning production. Bangladesh’s LDC exemption meant that both foreign capital and manpower migrated to Dhaka.
This shift was further compounded by Bangladesh’s unmatchably cheap labour, which transformed it into the world’s second-largest apparel exporter (after China). Today, the sector employs over four million workers and generates $40 billion annually. This accounts for roughly 80% of the country’s total export revenue.
Now, the protesting workers have asked to raise the minimum monthly wage to 30,000 taka, or $242 — an almost 2.4x increase — citing the rising cost of living.
“The textile business, fundamentally, is a very labour-intensive process,” a former director of sourcing for fashion brand Zara told The Indian Express. When one considers that the industry also has one of the lowest wage structures globally, the protests are “a regular occurrence which cyclically come about”, he said.
It is also, however, linked to the season. “The peak order months for the factories are November and December. It is a time when Western consumption and demand is at its peak,” the former director said. As the schedule during this period is “very time-sensitive for the factories”, these strikes in some ways also put the supplier and management under pressure.
Currently, the minimum monthly wage in Bangladesh is 12,500 taka (roughly $100-105). This baseline — which the workers were protesting against — was established in late 2023 after a series of strikes.
What costs do the factories have to absorb?
“The minimum wage there is deeply connected to their global market competitiveness,” the former director said. The low minimum wages also ensure that this sector has a “very high attrition rate due to the wage price ceiling”.
Local factory owners are directly caught in this “inventory per day” cycle, which requires mass manufacturing. International buyers, while encouraging of the wage increases requested, are uncompromising on their delivery schedules. Should the dates for delivery be missed or delayed, buyers are clear that the owner either “keeps the product with themselves” or is asked to “ship it by air, which basically erases any profit margins”, he said.
The supply-side is also affected by the domestic — and global — energy crisis. Garment manufacturing is water- and oil-intensive.
Meanwhile, Bangladesh’s domestic natural gas output has decreased from 2.7 billion cubic feet (bcf) per day to 1.7 bcf. In 2025, the Bangladeshi news outlet Prothom Alo reported that the decrease in domestic extraction hovered around 33%. Imported liquefied natural gas (LNG) has been adopted as a stop-gap measure, though with rationing in place.
Procurement contracts signed months in advance leave little scope for renegotiation. “It takes roughly 65 people per day to make each garment, like a T-shirt,” the former director said. As oil-related input costs and inflation raise the cost of living, the question becomes how much the government and manufacturers can absorb economic shocks.
Why does this affect the larger economy?
Prolonged gaps in production for Bangladesh’s highest revenue-generating export inevitably affect its foreign exchange reserves (now down to $34.85 billion), the strength of its currency, and domestic consumption.
At the root of the latest protests is the sharp increase in costs of living, which the minimum wage has been unable to factor in. According to the Bangladesh Bureau of Statistics, point-to-point inflation reached 8.34% in September 2026, up from 8.26% in August. Food inflation stood at 7.2%, while non-food inflation was higher, at 9.3%. Wage growth slowed to 7.9%, remaining below headline inflation.
For a country that doesn’t strictly have a middle class, lower-income households must reduce consumption, spending or postpone expenditure. Selim Raihan, professor of economics at the University of Dhaka, told Reuters that Bangladesh could absorb wage increases without necessarily losing its competitive edge should factories improve productivity.
“Treating cheap labour as the industry’s permanent competitive strategy would be a mistake,” he said. “They (Bangladesh) need to move increasingly toward productivity, reliability and higher-value products”.
The government has now re-engaged its Minimum Wage Board to hammer out a revised pay structure from December onwards in a balancing act.
What India should look out for
Although Bangladesh’s RMG sector is dominant globally, India isn’t too far behind — it is sixth amongst the largest apparel exporters. India’s advantage lies in its supply chain and its domestic production of large amounts of cotton and yarn.
India will also benefit from its recent Free Trade Agreements (FTAs) with the European Union and the United Kingdom, which shall provide Indian textiles with zero-duty market access. The FTAs cover RMGs, cotton, man-made fibres, and silk, among others. This provides India an edge in light of Bangladesh’s rapidly expiring LDC classification, which allows it duty- and quota-free access to the same European markets.
As Bangladeshi garments eventually face standard import tariffs ranging from 9.6% to 12%, the historical pricing gap that favored Dhaka over regional competitors will significantly narrow. Besides, competitors like Vietnam cannot be ignored, with its much faster supply chain ecosystem. Any permanent shift in sourcing away from Bangladesh would be devastating for its economy’s ability to absorb external shocks.
Source: https://indianexpress.com/