Published : 27 October 2026
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Updated : 27 October 2026, 00:29
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Md. Nadim Uddin
Bangladesh's factories have created millions of jobs. Employment in industry rose from 9.5 million in 2010 to nearly 12 million in 2022. Two types of industry drove this growth. The first is the ready-made garment (RMG) industry. Firms in rich countries move simple, labour-intensive work to poorer countries, and Bangladesh, with its abundant workforce, seized the opportunity. Garments became the country's main source of foreign earnings and provided millions of poor women with paid work. The second is a newer group of industries, such as food processing, plastics, electronics and light engineering, which have grown by selling to the domestic market.
We usually assume that a factory job is a ladder out of poverty. A person leaves the village, gets a regular wage, and the family's life slowly improves. But a factory job is not always a way out of poverty. In early 2024, we surveyed 3,005 factory workers in Dhaka, Gazipur and Narayanganj. We did not survey the entire manufacturing workforce: owners, managers, engineers, supervisors and office staff were not included in our sample. The survey covered workers engaged in production on the factory floor: machine operators, assemblers, craft and trade workers, technicians and helpers. Workers like these make up about 85 per cent of all manufacturing jobs, and they are among the lowest-paid workers in manufacturing. We found that about 28 out of every 100 of these workers live in households below the upper poverty line, compared with about 19 out of every 100 people in the country as a whole. Eight out of every 100 fall below the lower, or extreme, poverty line.
Women work at sewing machines in a garment factory. Bangladesh’s manufacturing sector has created millions of jobs, but factory employment does not always lift workers and their families out of poverty. Photo: Mehedi Hasan
In other words, a person can work in a factory all year and still be poor. This essay asks three questions. Why does factory work not always lift workers and their families out of poverty? If it does not, why do people still leave agriculture for factory work? And what should wage policy do about it?
The first reason is simple: wages remain close to the minimum wage, and the minimum wage is too low. On average, a worker in our survey earns a basic wage of about Tk 12,500 per month, which is almost exactly the minimum wage in the garment industry. Overtime and bonuses add only about Tk 2,000, bringing the total to about Tk 14,500. When we asked workers what monthly salary they expected, the average answer was about Tk 23,000, far above what they actually earn. Even with the earnings of a spouse or other family members added, the average household earns about Tk 23,900 a month. A household of four needs roughly Tk 19,800 a month just to stay above the upper poverty line in the city. So household income sits only just above the poverty line, and any illness or loss of income can push a household below it.
The second reason is the cost of city life. A factory worker earns more in cash than a rural non-farm day labourer, about Tk 14,500 per month compared with Tk 10,000. Yet the two groups have similar poverty rates. Rent, food and transport in the city eat up the gain. People migrate for better pay and a better life, but because the city costs so much, they end up living little better than they did in the village. A larger family makes this worse, since each additional member adds to the cost of city life.
A household of four needs roughly Tk 19,800 a month just to stay above the upper poverty line in the city. So household income sits only just above the poverty line, and any illness or loss of income can push a household below it.
The third reason is that extra work does not pay much. Workers in our survey put in an average of 12 or more extra hours a week, at the cost of rest and family time. Yet overtime and bonuses together add only about Tk 2,000 a month. In many non-RMG and domestic factories, less overtime is available, and it is also underpaid.
The fourth reason is the number of earners in a household. Most workers depend solely on their wages, which are very close to the minimum. On one income, it is hard to meet the cost of city life. When both husband and wife can work, the family has a real chance of escaping poverty. In our survey, workers whose households had another earner were less likely to be poor. The garment industry offers this opportunity because about half of its workers are women, compared with a quarter in other industries.
The last reason is low levels of education and a lack of voice at work. Most factory workers have studied only up to primary or secondary level, and those with little education are paid less. Workers who studied beyond secondary school were less likely to be poor.
Workers also have little power to bargain for better pay. Where a factory has a trade union, workers earn more and are less likely to be poor.
Given the high cost of city life, crowded housing and the slim chance of escaping poverty, it may seem surprising that so many people still move from villages to cities. The economists John Harris and Michael Todaro offered a simple explanation: people move when the wages they expect to earn in the city exceed what they earn at home. In the city, a factory offers full-time work year-round at a higher wage. In the village, farm work is seasonal. There is plenty of work at harvest time, but little in between, and in the lean months, many families have no income at all. Rural non-farm work, such as driving, working as a bus helper or running a tea stall, pays more than farm work. But it is informal, pays less than a factory job and offers less security. So people migrate for the certainty of work. A monthly wage, however small, is something a family can plan around.
A child looks out of a window in a corrugated-tin dwelling in a Lalbag slum. For low-paid factory workers, the high cost of housing, food and transport in cities often erodes the financial benefits of regular employment. Photo: Anisur Rahman
But this migration places a new burden on cities. The number of unskilled workers arriving has grown much faster than the number of jobs available to them, which keeps wages down. Many who come looking for factory work end up in casual jobs instead. They are better off than they were in the village, but often not by enough to escape poverty in the city.
Urban poverty is falling much more slowly than rural poverty, so it needs to become a policy priority. Between 2010 and 2022, the upper poverty rate fell by about 15 percentage points in rural areas but by less than 7 percentage points in urban areas. Unless poverty among factory workers comes down, urban poverty as a whole will be difficult to reduce.
The place to start is the minimum wage. Bangladesh does not have one minimum wage; it has many. The Minimum Wage Board has so far set minimum wages for 47 sectors, and the RMG minimum wage is higher than those in other sectors. The minimum wage for leather workers is Tk 7,100, set in 2020. For jute workers, it is Tk 8,000, set in 2014. For pharmaceutical workers, it is Tk 8,050, set in 2017. In several industries, such as light engineering, electrical appliances, iron and steel, furniture and ceramics, no minimum wage has been set.
Minimum wage across industries
| Industry | Minimum wage (Tk) | Year declared |
| RMG export | ||
| Woven garments (trousers, shirts, sweaters and others) | 12,500 | 2023 |
| Garments (hosiery) | 12,000 | 2023 |
| Non-RMG export | ||
| Leather and leather goods, export-oriented (shoes, bags and other articles) | 7,100 | 2020 |
| Jute and jute products | 8,000 | 2014 |
| Agro-food processing (cold storage) | 6,050 | 2022 |
| Agro-food processing (tea packing) | 7,080 | 2017 |
| Pharmaceuticals and medical equipment | 8,050 | 2017 |
| Domestic industries | ||
| Plastics | 8,000 | 2020 |
| Textiles and spinning | 1,0001 | 2024 |
| Light engineering | Not fixed | |
| Electrical appliances | Not fixed | |
| Paper and printing | 8,150 | 2022 |
| Metal (iron and steel) | Not fixed | |
| Furniture | Not fixed | |
| Ceramics | Not fixed |
Source: Minimum Wage Board
Note: The table shows a selection of industries. It illustrates that many industries still have no minimum wage and that existing minimum wages are rarely revised.
This creates three problems. Where an industry has no minimum wage, its workers can easily be underpaid. Where a minimum wage exists but is rarely revised, inflation gradually erodes its value. And large differences in minimum wages between industries mean that workers doing similar work are paid very differently. To address this, Bangladesh needs a uniform minimum-wage system across all industries. The idea is not new. In 2001, the government moved to introduce a universal minimum wage, but the plan did not go ahead because industry owners opposed it.
Pedestrians cross a busy road amid heavy traffic. Although factory workers generally earn more than rural day labourers, higher living costs in cities often leave them little better off than their rural counterparts. Photo: Rashed Sumon
Instead, the Minimum Wage Board was formed in 2004 to set wages sector by sector. Workers and trade unions now demand a uniform minimum wage or a single national wage structure, as in Vietnam or Cambodia. Industry owners usually oppose such a system, arguing that they would lose access to cheap labour and their competitive advantage. Yet empirical evidence does not conclusively show that minimum wages necessarily reduce employment. In practice, minimum wages are often set or revised only in response to strikes, pressure from trade unions and demands from international buyers.
Three things need to change. First, there should be a minimum wage for all manufacturing industries, a floor below which no factory worker should be paid. Second, the minimum wage should be revised regularly, in line with the cost of living in cities, rather than only after strikes. Third, overtime and attendance bonuses need to be paid properly, so that extra hours actually add to a family's income.
But a minimum wage alone will not end poverty on the factory floor. Our findings point to four other conditions that help working households escape poverty. The first is employment opportunities for women. Households with two earners do much better than households with one. Every industry, not just the garment industry, needs to provide women with workplaces that offer safe transport, childcare and fair treatment.
Garment workers protest outside the Bangladesh Secretariat on 25 March 2025, demanding unpaid wages and Eid bonuses. Photo: Amran Hossain
The second is education and skills. The third is factory size. Unlike the garment industry, which was "born to export", many domestic industries grew step by step, from retailer to importer to assembler to manufacturer. Most remain small and cannot pay the wages that large firms can. Promising domestic industries need support, including tariff protection where justified, so they can grow, meet domestic demand and eventually become large enterprises. The fourth is having a voice at work. A factory-level trade union allows workers to bargain collectively. The rules governing the formation of trade unions should be eased.
Bangladesh's manufacturing story began with low-cost labour. That was enough to get the factories running and to bring millions of people out of the fields. But a model built only on cheap labour cannot also end poverty for the people who do the work. If Bangladesh wants factory jobs to be a way out of poverty, and not just a way out of the village, the next stage of its growth must share more of its gains with the workers who made it possible.
Md. Nadim Uddin is a Research Fellow at the Bangladesh Institute of Development Studies (BIDS).
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