Securing a living wage for garment workers

Millions of workers in Bangladesh’s Ready-Made Garment sector are trapped in cycles of poverty due to extremely low wages. A new briefing by Swedwatch highlights how low wages impact workers’ lives and the systemic issues that perpetuate these conditions. In light of the recently adopted EU Corporate Sustainability Due Diligence Directive (CSDDD), this briefing provides actionable recommendations for both global brands and policymakers.

Despite being one of the EU’s key apparel suppliers, most garment workers in Bangladesh earn wages far below what is needed to cover basic living expenses. The recent increase in the national minimum wage — from 8,000 taka to 12,500 taka (€94) per month — still leaves workers earning only 38% of what would be considered a living wage (see fact box). This means that essential needs like food, adequate housing, healthcare, and education for their children remain unaffordable for many, reinforcing cycles of debt and exploitation.

Moreover, low wages leave workers no option but to accept overtime, yet diminishing demand has meant such opportunities have become scarce. This forces workers to shoulder excessive production targets within their standard shifts.

As we have not had any overtime work for the last six months, most of us are living life on a loan. When I get my salary, I repay the first person that I took a loan from and then take a loan from someone else. This is how the cycle of borrowing continues. Taking out loans has become part of our life now. /Shapna, Helper

Women — comprising the majority of the workforce — face an additional burden, as they not only earn less than their male counterparts but also juggle long working hours and caregiving responsibilities at home.

Understanding the root causes

The Swedwatch briefing Paying the Price for Fashion: Securing a Living Wage for Bangladesh’s Garment Workers, identifies two main systemic issues that perpetuate low wages in the sector.

First, workers in Bangladesh lack the bargaining power needed to secure better wages. This is due to weak enforcement of labor laws and significant barriers to unionisation. Workers who try to organise often face intimidation, violence, or dismissal. Even when unions are established, they are frequently perceived as corrupt and ineffective, leaving workers without a platform to demand fair pay and better conditions.

Second, the report highlights how unsustainable purchasing practices by global buyers, sourcing from Bangladesh, exacerbate the problem. Brands frequently pressure suppliers to lower prices and shorten production deadlines — a practice known as “price squeezing.” These demands force suppliers to cut costs, often at the expense of workers’ wages and well-being.

The high production costs, including workers’ wages, yearly pay raise, and increasing prices of raw materials and utilities, are not taken into consideration when calculating the unit prices for the products. There are no incentives in production agreements, instead the prices we receive for our products remain flat or are decreasing. /Asif, Executive Manager

Recommendations for buyers and policymakers

The briefing emphasizes the need for global brands and EU policymakers to take coordinated action to improve wages and conditions for garment workers.

For global brands, aligning due diligence efforts with international standards like the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Companies is a critical first step. This includes ensuring that their purchasing practices support living wages rather than suppress them. Engaging meaningfully with workers and trade unions, establishing confidential grievance mechanisms, and implementing living wage benchmarks are all measures that brands can adopt to drive positive change. Rather than cutting ties with non-compliant suppliers, brands should work collaboratively with them to improve conditions and offer financial support when needed.

On the policy side, EU member States have an opportunity to improve shortcomings in the recently adopted CSDDD by setting clear obligations for fair purchasing practices. Broadening the scope of the directive to include more companies, strengthening enforcement mechanisms, and providing clear guidance to help companies support living wages are essential steps. Policymakers can also ensure that these measures explicitly require brands to develop ethical purchasing policies that prioritize fair wages for workers in their supply chains.

By addressing these issues, the fashion industry in Bangladesh, guided by thoughtful regulations, can take a critical step toward ensuring a more sustainable and equitable future for the millions of workers who form its backbone.

Download the briefing

In this 20-page-briefing you will find:

✔️ Notable and widespread effects of low wages on workers

✔️Key drivers behind low wages

✔️Recommendations to brands on actions for improved wages

✔️Recommendations to EU policymakers on how related legislation could support living wages