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Dhaka Tribune

Sanem: Garment sector's median monthly salary going down while inflation is rising

By analyzing the inflation data of Bangladesh along with other countries, it can be seen that it has been on an upward trend since last May

Update : 17 Nov 2022, 09:23 PM

The macro economy of Bangladesh is still being affected by some long-standing structural issues, in addition to the current global economic turmoil. The ability to fix currency rates, the irrepressible hundi, the FDI crisis, and debt management are all factors that have a significant impact on the ongoing issues.

A new study on the garment workers of one of the country's strongest sectors has shown this picture, particularly as the impact of inflation is becoming more apparent in public life and the median monthly wage has begun to decline.

The South Asian Network on Economic Modelling (SANEM), which released its findings on Thursday, November 17, expressed concern about the current economic scenario in Bangladesh.

At the webinar, to fight the situation Sanem suggested some sectors such as fiscal responsibility, prudent debt management, exchange rate management and supply side issues (export diversification), interest rate management and banking sector, governance (banking sector reform), public spending on health, education, dealing with subsidies, need special attention and a high-level advisory panel of experts. 

Selim Raihan, executive director of the Sanem, presented the keynote paper and said: “Stress that we are facing now, other countries are also facing this economical problem. But this does not mean that all the reasons behind it are because of global economic turbulence, there were some old structural problems in Bangladesh's economy which still affect our macro economy. This has actually been around for a long time.”

“There has been inflationary pressure for the last eight to nine months which affects the marginal people most. Even though it is decreasing, it is still around 9%. By analyzing the inflation data of Bangladesh along with other countries such as India, Vietnam and Indonesia, it can be seen that it has been on an upward trend since last May. Vietnam, for example, is handling this pressure quite admirably. Moreover, I will raise the question of whether our inflationary data is underestimated,” he explained. 

Regarding the inflationary impact on garment workers, he added: "Sanem and MFO (Microfinance Opportunities) jointly collect unique data on a weekly basis. We have worked with 1200 to 1300 garment workers who are in Dhaka, Chittagong, Narayanganj, Savar and Gazipur. Finally, we find several things which are of concern here. Yes, although it does not represent the whole nation (Bangladesh), there is no denying that the garment sector is in a better position than any other sector in Bangladesh. Moreover, they also paid regularly.”

“According to our latest survey, they have been feeling a lot of pressure since April due to inflation. Especially in the area of food security. More worryingly, the median salary of workers in the RMG sector has already come down. There we also see a downward trend since April. That means, On the one hand, inflation is increasing. On the other hand Median monthly salary of RMG workers is following a downward trend.” 

Median monthly salary means wages and the extra earnings through overtime.

Regarding other major challenges, Sanem finds critical problems of PIE (Poverty, Inequality, Employment), problems of competitiveness and high cost of doing business, illicit money transfer (Hundi), budget as a percentage of GDP is still much lower than what should be given the size of the economy, high amount of subsidies, weak capital market, management of foreign debts and lack of electricity generation.

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