Finance
Garment Sector Global buyers will buy Bangladeshi garments at higher prices
Dhaka, Nov 10: The American Apparel and Footwear Association (AAFA), a US-based global organization of clothing buyers, has promised to increase the purchase price of Bangladeshi-made clothing due to the increase in workers' wages. AAFA Chief Executive Stephen Lamar said this in an e-mail message sent to Reuters on Thursday.
According to the Reuters report, the world famous Swedish fashion retailer brand H&M, Gap and other retailers have promised to increase the purchase price of clothes made in Bangladesh. This additional price will help compensate for the increase in the factories' costs of making the garment as a result of raising workers' wages.
The American Apparel and Footwear Association (AAFA) has more than 1,000 members worldwide. World famous Swedish fashion retailer brand H&M, Gap and other fashion companies are members of the organization.
Bangladesh is the largest exporter of ready-made garments in the world after China. Bangladesh's government has raised the minimum wage for workers to Tk 12,500 (US$113) this week after garment workers clashed with police in deadly protests. For the first time in five years, the new wages for garment workers will come into effect from December.
Factory owners have said that the increase in workers' wages ahead of the next general election in January will reduce their profits as well as increase production costs by 5 to 6 percent. Statistics of this sector show that 10 to 13 percent of the total production cost of ready-made garments is spent on workers.
AAFA Chief Executive Stephen Lamar was asked if the production cost increases by 5 to 6 percent, will the purchase price be increased by the same amount? "Sure," he replied.
"We and our members have said time and time again that we are committed to responsible procurement practices to support wage growth," said Stephen Lamar. "We have repeatedly called for the adoption of an annual minimum wage review process, so that Bangladeshi workers are not disadvantaged as a result of changes in macroeconomic conditions."
About 4 million people are employed in this industry. Garment sector is one of the main foundations of the economy of Bangladesh. About 16 percent of Bangladesh's gross domestic product (GDP) comes from this garment sector.
