Can a country progress on the back of cheap labour? asks Syed Sultan

Syed Sultan Uddin Ahmed, head of the Labour Reform Commission, believes Bangladesh must outgrow its dependence on cheap labour and low-cost goods if it is to become a developed and dignified nation.

Building a just and equitable society is not possible without ensuring minimum protections for workers, according to him. To that end, he called for the formation of a permanent wage commission.

He also lamented the "disregard" and "indifference" demonstrated once again by policymakers towards working people in the proposed budget for the upcoming 2025-26 fiscal year.

Sultan, who is the Executive Director of the Bangladesh Institute of Labour Studies (BILS) and a workers' rights expert at the International Labour Organization (ILO), sat down with bdnews24.com's Inside Out to share his thoughts on workers’ rights, the formation of trade unions, minimum wages, the Consensus Commission, and labour law reform.

The episode aired Wednesday on bdnews24.com's Facebook page and YouTube channel.

TAX ON WORKERS' WELFARE FUNDS 'UNACCEPTABLE'

In the proposed budget for FY26, Finance Advisor Salehuddin Ahmed introduced a 10 percent tax on disbursements from worker-related funds, including Workers' Welfare Foundation Fund. Sultan denounced the move, calling it “unacceptable”.

He argued that it contradicts the state’s responsibility to uphold social welfare and provide symbolic support to its most marginalised groups.

“This clashes with the welfare duties of the state and its obligation to offer at least minimal, symbolic assistance to vulnerable populations,” he said.

The finance advisor had said that a 10 percent deduction would be applied when payments were made to beneficiaries from participation funds, welfare funds, or the Workers' Welfare Foundation Fund.

“No welfare fund, meant to provide supportive disbursements, should be taxed. Not for workers, not for anyone.”

By regulation, 5 percent of a company’s net profit must be allocated to employee benefit schemes, 80 percent of which goes to a participation fund, while the rest is split between a general welfare fund and the Workers' Welfare Foundation. Workers receive direct cash support from the participation fund.

“Sometimes this becomes a case of double or even multiple taxation,” Sultan said.

“When a company earns profits, it already pays corporate taxes. The portion set aside for workers is essentially their money. There's no justification for taxing it again.”

UNIVERSAL LABOUR LAW PROTECTIONS

Sultan emphasised the general lack of awareness surrounding the labour law in Bangladesh, the scope of which, he says, covers only a "narrowly defined group of workers".

“It doesn’t provide full protection, and what little it does is limited to just 15 percent of the workforce. Even within this group, many are excluded due to job classifications, contractual hiring, and outsourcing."

In essence, the law primarily protects a limited segment of workers employed in the formal private sector. “These workers can take legal action if they don’t receive wages, but that's a small fraction of the labour force.”

Sultan argued that a vast majority of working people, who earn a living through labour, are denied basic safeguards.

“There are no protections when it comes to wages, working hours, or medical support in case of accidents. We’ve insisted that certain minimum conditions be guaranteed, such as an appointment letter, an ID, a defined wage, safe and regulated work environments.”

To build a nation free from inequality, he stressed that it was imperative to expand minimum labour protections to all.

The commission has also recommended introducing accountability into the labour administration system, he said.

Sultan noted that no reform can succeed without democratic governance and transparency.

“When governments resist accountability, they turn public institutions into personal tools. We’ve proposed a tripartite structure involving the government, employers, and workers to oversee reforms.”

“But that structure depends on the overall political system being democratic and accountable. If the state itself lacks these qualities, no independent commission can operate effectively.”

He continued, “This is why we’ve said that what’s needed is a structural transformation. Such a transformation can only come through establishing a democratic system that is connected to the people. Without that, no commission will succeed.”

CAN A NATION THRIVE ON CHEAP LABOUR?

When worker unrest becomes unmanageable, only then are efforts made to revise wage structures, according to Sultan. Yet there is no permanent mechanism for fair wage increases.

He finds this inconsistency deeply troubling.

Sultan points out that both those in power and those outside who influence policymaking share two assumptions. First, that low wages give Bangladesh a competitive edge in global markets, and second, that having any job is enough to keep people satisfied.

“These attitudes need to change. If we can’t dismantle this mindset, Bangladesh can never become a truly dignified nation. The idea that cheap labour guarantees investor profit, or that it should be the selling point for foreign investment, is shameful. Can a country really develop by branding itself on cheap labour and cheap products? That’s not sustainable.”

To address this, the Labour Reform Commission proposed the creation of a Permanent Wage Commission, a body that would set wages based on the principle of a living wage, not just market minimums.

“We’re not suggesting European or American standards overnight,” Sultan said. “But we must begin to see workers’ wages as part of both their family’s development and the industry’s overall growth. A country cannot thrive while depending on cheap labour. We must move beyond this.”

EMERGENCY FUND FOR WORKERS' PROTECTION

As part of a broader state reform agenda, the interim government formed five key commissions in its second phase, one of which was the Labour Reform Commission. On Apr 21, the commission submitted its final report to Chief Advisor Muhammad Yunus, recommending among other measures, the establishment of an emergency wage protection fund for workers.

Under this proposal, employers would be required to deposit an amount equivalent to two months’ wages per worker into the fund, which would act as a financial safety net during crises.

“We proposed starting with the export sector,” said Sultan.

“Export-oriented industries, especially the ready-made garment (RMG) sector, can be disrupted by various national or international factors. This fund would help ensure workers are paid even if production is halted.”

He clarified that while the fund would be contributed by employers, it would be jointly managed by the government and employers. In case an owner disappears or fails to pay, the government could intervene to disburse the wages.

Sultan emphasised that the RMG sector was still transitioning towards becoming a sustainable industry, and that volatility, whether economic or political, remained a constant threat.

The commission also made special provisions for domestic workers, the second-largest group of women workers after the RMG sector. “Those who are marginalised or stripped of rights, each of them deserves tailored protection,” Sultan said.

Bangladesh has an estimated 80 million workers, including 3.3 million in the garment sector alone. Sultan insists that legal protection should extend to all, regardless of sector or formality of the job.

“There must be a social security fund for all. While 70-year-olds are pulling rickshaws, we're talking about building a discrimination-free Bangladesh. We must move away from this mindset. Eight-year-olds are selling flowers on the streets, which we're buying for our loved ones. Such contradictions cannot sustain a nation.”

Sultan also reflected on the evolution of the garment industry.

“It wasn’t built by the state. It emerged organically, piece by piece. The state later stepped in, offering incentives and enjoying international accolades, but the real credit goes to the entrepreneurs and the workers. The people of this country have sacrificed a great deal to keep the industry going.”

WHY TRADE UNION CONDITIONS SHOULD BE RELAXED

Sultan leans strongly in favour of easing restrictions on trade union formation in Bangladesh, challenging prevailing assumptions that hinder workers' rights.

“In Bangladesh, a few entrenched narratives dominate the labour sector. One of them is that if workers are allowed to form trade unions, they will demand their rightful share -- higher wages, better working conditions, and enforceable rights. Employers fear this.”

He noted that the right to unionise is not actively promoted, and that 85 percent of workers currently have no legal protections, which in turn prevents them from organising.

“As long as workers are not given the right to organise and represent themselves, there will be no fundamental solution to the problems they face,” Sultan said.

“Real reform begins when the affected party is allowed a voice -- when you are compelled to sit at the table with those who are impacted.”

Sultan also stressed the need for a comprehensive national labour database.

“We first need to identify who these workers are. Second, we must ensure they are included in social safety net programmes. Without a proper data system, none of this is possible. We have to organise the entire framework around these priorities.”

In essence, Sultan calls for structural change by granting freedom of association, acknowledging worker representation, and building systems that allow workers to claim their rights, not just in theory, but in practice.

'FRAGMENTED’ LABOUR LAW REFORMS HINDER REAL PROGRESS

Bangladesh's labour law remains entangled in a long-stalled reform process, one that Sultan describes as “piecemeal and externally driven”.

“Instead of a comprehensive overhaul grounded in local realities, what we see is a patchwork effort shaped by a mix of foreign pressure and scattered domestic demands,” Sultan said.

He emphasised that labour rights are now part of international business standards, which means there is always external pressure to align laws with global benchmarks, particularly in the context of international trade and investment.

But the response from the state has been reactive and fragmented, according to him.

“This has happened many times before. Every time reforms are made, they are partial. As a result, there’s no cohesive framework, and the process remains incomplete.”

The reform commission chief also addressed concerns over the imbalance in how state-provided industrial incentives are distributed, especially in sectors like ready-made garments. While employers benefit significantly from government incentives, workers often remain excluded.

“Workers’ rights should not be treated as external to industrial growth. The closer the two sides [labour and management] can come through mutual understanding and shared perspectives, the stronger the industry will be.”

WHAT SHOULD THE NATIONAL CONSENSUS COMMISSION DELIVER?

On Feb 12, the interim government formed a National Consensus Commission, bringing together the heads of various reform commissions, including on the constitution, elections, judiciary, anti-corruption, police, and public administration. The commission’s primary goal is to consult with political parties and stakeholders to build consensus on reform proposals and draft a “National Charter”.

However, Sultan believes the labour commission's work, focused on structural socio-economic issues, was not directly relevant to the political dialogue platform.

“As I understand it, the Consensus Commission is primarily dealing with political issues,” he said. “It would have been good to be included, but I don’t think our involvement is strictly necessary.”

Still, he hopes that constitutional aspects linked to labour and gender reforms will be considered by the National Consensus Commission.

Sultan also stressed that labour reform should not become politicised.

“We don’t want our commission’s proposals to be caught in political debate. Whoever forms the government should take steps to implement them.”

But he warned that no government would act on its own.

“We can’t expect any government to move forward without public pressure. It will require active and vocal engagement from large sections of the population.”