• Friday, Aug 12, 2022
  • Last Update : 04:24 pm

Bangladesh’s workers more productive in past decade, but actual wages dip

  • Published at 12:58 am December 3rd, 2020
ILO real minimum wage report

Finds ILO study

The real minimum wage in Bangladesh saw a negative 5.9 per cent growth between 2010 and 2019 despite a 5.8 per cent growth in productivity, making it the largest decrease among the Asia Pacific nations, according to a recent study of the International Labour Organisation (ILO).

Called the “Global Wage Report 2020-21”, the report, which was unveiled on Wednesday, looked at wage trends in 136 countries in the four years preceding the pandemic. 

It found that global real wage growth fluctuated between 1.6 and 2.2 per cent.

Despite Bangladesh's descent, the Asia-Pacific region along with Eastern Europe saw the most rapid wage increases. North America and Western Europe saw a slower growth than anticipated.

In the Asia-Pacific region, the real minimum wages increased in 22 countries and decreased in eight. 

Among the countries that have experienced an increase in real minimum wages, the highest average annual increases were observed in Vietnam by 11.3 per cent, Laos by 10.1 per cent and Cambodia by 9.7 per cent, the report findings showed.

Bangladesh's negative 5.9 per cent was followed by Sri Lanka with negative 4.5 per cent and Afghanistan with negative 0.6 per cent.

“We need adequate wage policies that take into account the sustainability of jobs and enterprises, and also address inequalities and the need to sustain demand,” said Guy Ryder, director general of the ILO.

On the other hand, Nepal recorded the highest growth in minimum real wage among the South Asian countries by 4.7 per cent, followed by India with 3.9 per cent, Pakistan 3.5 per cent and Myanmar 1.6 per cent.

In the Asia Pacific, Bangladesh is one of the few examples where minimum wages are set entirely according to industry.

In 20 countries in the region the growth of real minimum wages kept pace with or exceeded labour productivity growth; whereas in 10 countries the growth of real minimum wages was lower than that.

In case of labour productivity growth, Myanmar saw the highest growth by 5.9 per cent in the region followed by Bangladesh with 5.8 per cent, India 5.5 per cent, Pakistan 2.2 per cent, Nepal 4.3 per cent, Sri Lanka 4 per cent and Afghanistan 1.7 per cent.

On top of that, minimum wage in Bangladesh is below the poverty line.  

In Asia and the Pacific, the median value of the monthly minimum wage is $381 (PPP), with values ranging from $48 (PPP) in Bangladesh to $2,166 (PPP) in Australia.

In this region, one may observe a distinct split between developed and developing economies, with four developed countries, namely Japan, the Republic of Korea, New Zealand and Australia standing out with higher minimum wage levels, ranging from $1,348 (PPP) to $2,166 (PPP) per month.

Minimum wages in most other countries of the region are set between $200 (PPP) and $800 (PPP) per month.

Although the minimum wage in Bangladesh was below the poverty line, higher rates usually applied in the readymade garment sector.

Adequate minimum wages can protect workers against low pay and reduce inequality. 

But ensuring that minimum wage policies are effective requires a comprehensive and inclusive package of measures. 

It means better compliance, extending coverage to more workers, and setting minimum wages at an adequate, up-to-date level that allows people to build a better life for themselves and their families, said Rosalia Vazquez-Alvarez, one of the authors of the report.

As of 2020, around 18 per cent of the countries with statutory minimum wages exclude agricultural workers, domestic workers or both categories from minimum wage regulations. 

Of these, seven countries – namely, Bangladesh, Cambodia, Jordan, Lebanon, Pakistan, Sudan and the Syrian Arab Republic – exclude both agricultural and domestic workers.

Globally, results show that minimum wages are set, on average, at around 55 per cent of the median wage in developed countries and at around 67 per cent of the median wage in developing and emerging economies.

In developing and emerging economies, minimum-to-median wage ratios range from 16 per cent in Bangladesh to 147 per cent in Honduras.

The report results showed monthly wages fell or grew more slowly in the first six months of 2020, as a result of the Covid-19 pandemic, in two-thirds of countries for which official data was available, and that the crisis is likely to inflict massive downward pressure on wages in the near future.

The wages of women and low-paid workers have been disproportionately affected by the crisis.

The crisis has also affected lower-paid workers severely. Those in lower-skilled occupations lost more working hours than higher-paying managerial and professional jobs.