Bangladesh’s factories are once again under the global microscope. From Dhaka’s ready-made garment hubs to the export-processing zones of Chattogram, the talk of the town among factory owners, trade unions, and policymakers is the upcoming overhaul of the Labour Act expected to take shape as the Bangladesh Labour Ordinance 2025. The government has pledged that the law will align national labour standards with international conventions and the evolving demands of global supply chains. It sounds ambitious, even visionary. But can it deliver real, lasting change for the country’s 72 million workers?
The momentum comes amid mounting pressure from international buyers and development partners. The European Union, for instance, has hinted that Bangladesh’s continuation under the Everything But Arms (EBA) trade privilege depends on tangible labour reforms. The International Labour Organization (ILO) and the World Bank have also tied several projects and loans to measurable progress in occupational safety, wage systems, and freedom of association. After the 2013 Rana Plaza collapse that killed over 1,100 people, Bangladesh made visible improvements, yet, as the ILO’s 2024 Labour Inspection Report noted, less than 40% of registered factories undergo a formal inspection annually, and compliance gaps remain wide between large export-oriented factories and the domestic sector.
One of the most talked-about proposals is the introduction of mandatory provident funds for all establishments employing more than 100 workers. If implemented correctly, this could mark a turning point for worker financial security. A provident fund would ensure that employees, particularly in the garment sector where turnover is high, can accumulate savings beyond their immediate wages. Currently, only about 3% of private-sector workers in Bangladesh have access to any form of retirement benefit, compared to nearly 80% in Malaysia and 55% in India under their provident schemes. However, such a reform requires more than just legislation. Who will manage these funds? How will transparency and portability be ensured? Unless there is independent oversight and strict audit mechanisms, provident funds could risk becoming yet another compliance checkbox rather than a true safety net.
Another major proposal is to revise minimum wages every three years instead of five, which promises a step forward. The logic is simple: inflation erodes purchasing power faster than the current review cycle allows. In 2024, the minimum wage for garment workers was set at Tk 12,500 per month, up from Tk 8,000, but rising living costs in Dhaka and Gazipur have already narrowed that gain. According to the Bangladesh Bureau of Statistics (BBS), inflation hovered around 9.7% for most of 2024, meaning that real wages declined even before the ink on the new wage order had dried. Moving to a three-year review would at least keep wages closer to cost-of-living realities. Yet employers argue that without corresponding increases in productivity and export prices, frequent revisions could threaten competitiveness. The solution may lie in transparent, data-driven wage-setting models that consider inflation, exchange rates, and productivity rather than ad hoc political negotiation.
The government has also announced its intention to increase penalties for child labour, a move widely welcomed by human rights advocates. Officially, Bangladesh has made significant progress: child labour prevalence has dropped from 14.2% in 2013 to 4.3% in 2023, according to the ILO and BBS joint survey. Yet behind these numbers lies a more complex story. The reduction is far less visible in informal sectors such as domestic work, small manufacturing, and agriculture, where inspection is rare. Strengthening penalties without expanding social safety nets for poor families may only push the problem deeper underground. For genuine change, reforms must go hand in hand with stronger birth registration systems, conditional cash transfers to families, and access to free, quality education.
But legislation alone does not guarantee progress. The Department of Inspection for Factories and Establishments (DIFE), the backbone of enforcement, faces a staggering capacity gap. As of 2024, Bangladesh had roughly 400 inspectors responsible for over 100,000 registered establishments, not to mention the vast informal economy. That is one inspector for every 250 factories — a ratio that makes effective oversight nearly impossible. Digitalising inspections and introducing transparent, public compliance dashboards could help, but these tools must be backed by trained personnel, protection for whistle-blowers, and, crucially, political independence for inspectors. Without these, the enforcement gap will continue to undermine even the most progressive legal provisions.
One of the biggest puzzles in labour law reform is why even relatively progressive laws often produce modest real-world change. Three interlocking reasons stand out.
First, enforcement machinery is weak. Labour inspectors are overextended and under-resourced. Factories proliferate, often in remote or semi-formal industrial areas, and many are not being inspected regularly. Without enough skilled, independent, and accountable inspectors, even the best laws are hard to enforce.
Second, informality. Nearly 85% of workers are outside formal, legally recognised employment. Reform that only targets formal factories may leave out tens of millions — domestic workers, gig workers, day labourers — who often face the harshest violations of labour rights.
Third, the issue of drafting and legal clarity. Vaguely defined terms like “factory”, “hazardous work”, or “child labour” leave gaps. Ambiguities breed evasion. If the law does not clearly define who counts as an “employer”, when a workplace counts as a “factory”, or what working hours or tools are considered hazardous, companies can exploit loopholes.
Businesses should begin auditing their wage and benefit structures to anticipate how new rules (especially around provident contributions) will affect costs. It is also time to upgrade HR systems, record-keeping, and grievance procedures — not just because of legal risk, but because international buyers increasingly expect transparency.
The true test of the upcoming Labour Ordinance will not be in the number of amendments or penalties it introduces, but in whether it changes daily realities. If the 2025 reforms can achieve that, Bangladesh will not just be complying with global expectations; it will be defining a new standard for ethical, inclusive growth in South Asia. But the difference between reform that looks good on paper and reform that actually changes lives depends on three things: clarity in law, capacity in institutions, and genuine inclusion of the vulnerable.
The writer is a Barrister-at-Law, Senior HR Specialist at RSGT Bangladesh, Assistant Professor (Adjunct) at Bangladesh University of Professionals, and ILO LEAP Fellow. The views expressed are personal.
