H&M and Others to Face Higher Production Costs due to Bangladesh’s Wage Hikes


In response to ongoing protests from Bangladesh’s garment workers, the nation has increased minimum wages for the sector. As a result, global fashion retailers like H&M, who rely heavily on the nation for their supply chains, are expected to face increased production costs..

**[Bangladesh’s Wage Hikes]**.

Following a series of protests and industrial action, Bangladesh’s government decided to increase minimum wages for garment workers. The decision was made in response to rising living expenses and inflation, which had eroded the value of the previous pay rate. The new wage structure, effective as of January 1, 2023, sets the minimum wage for garment workers at Tk26,685 (approximately $258) per month..

**[Impact on Fashion Retailers]**.

The wage hikes in Bangladesh are expected to have a significant impact on global fashion retailers who source their products from the country. Bangladesh is the world’s second-largest garment exporter, and brands like H&M, Zara, and GAP heavily rely on its low-cost manufacturing base..

With the increase in wages, manufacturers are likely to pass on a portion of the additional costs to retailers. This, in turn, could lead to higher retail prices for consumers. It is important to note that the exact impact will vary depending on the individual pricing strategies of each retailer and the extent to which they rely on Bangladesh for their supply chains..

**[Potential Consequences]**.

The higher production costs may affect various aspects of the fashion industry. Some retailers might choose to absorb the increased costs to maintain competitive prices, potentially impacting their profit margins. Others may decide to raise prices to cover the additional expenses, which could potentially reduce demand for their products. Additionally, fashion companies may explore alternative sourcing options to mitigate the impact of the wage hikes, potentially leading to shifts in global supply chains..

**[Sustainability and Transparency]**.

The wage hikes in Bangladesh also raise questions about sustainability and transparency in the fashion industry. Consumers are increasingly demanding ethical and sustainable alternatives to fast fashion, and higher wages for garment workers can be seen as a positive step in improving working conditions. However, it is crucial that fashion retailers demonstrate transparency in their supply chains to ensure that the increased costs are genuinely being used to uplift the workers’ lives and not simply boosting corporate profits..


The wage hikes in Bangladesh signal a positive move towards improving the livelihoods of garment workers, but they also have potential implications for the global fashion industry. Consumers, retailers, and policymakers will need to collaborate to address the challenges of rising production costs while ensuring that the benefits reach the intended recipients – the workers who produce our clothing..

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