Daily Newsletter

24 November 2023

Daily Newsletter

24 November 2023

H&M increases prices paid to its Bangladesh garment suppliers

Founder & CEO of Bangladesh Apparel Exchange, Mostafiz Uddin has confirmed to Just Style he received a letter from Swedish fashion retailer H&M stating it is increasing prices paid to garment manufacturers in-line with the recent rise of minimum wages in Bangladesh.

Shemona Safaya November 24 2023

Uddin claims H&M has become the "first" global brand to increase unit prices for garment manufacturers to support this increase in wages, adding that the brand plans to absorb the rise in costs via product prices.

This comes as no surprise, since the Swedish fashion retailer had previously increased prices after minimum wage revisions took place in Bangladesh in both 2013 and 2018.

Uddin noted this is the third occasion where H&M has jumped on the bandwagon and increased prices following an increase in minimum wage.

He said: "Leadership like this matters as it sets a standard for other fashion brands in the industry to follow. During the pandemic, H&M became the first major global brand to settle all bills on ALL orders after the world came to a halt. This proved a catalyst for other brands to follow and was crucial in enabling cashflow for thousands of suppliers around the world."

In fact, Uddin added lots of brands publicly urged the Bangladesh government to increase the minimum wage but H&M became the "first" brand to support such sentiments with meaningful action.

An H&M spokesperson confirmed to Just Style that the brand has committed to stand behind responsible purchasing practices to its business partners in Bangladesh after the new minimum wage.

The spokesperson said: "We have a well-diversified supply chain and have long experience with sourcing from several geographies. We support the development of fair and competitive wages in our supply chain and are working towards improving working conditions for the workers through the way we conduct our business. We have communicated to our suppliers that we acknowledge the importance of our purchasing practices as enablers for improved wage levels, better planning and forecasting and beneficial payment terms."

In fact, H&M clarified that the mentioning of "prices" in this context refers to its purchasing prices and not price to consumers.

The Swedish retailer added: "When we decide how to price our offer to customers, we always ensure that we have the best combination of fashion, quality, price and sustainability in every market where we operate."

This news comes after the announcement on 7 November, where Bangladesh's State Minister for Labour Monnujan Sufian announced Tk12,500 ($112.8) as the new minimum monthly salary for garment workers.

However, the new minimum monthly wages set for the apparel sector workers is still below what the workers’ representative on the wage board, Sirajul Islam Rony, had proposed in the previous meeting.

Recently, in an exclusive interview with Just Style, Fair Wear Foundation's executive director Alexander Kohnstamm expressed concerns over Bangladesh's minimum wage decision for garment workers, saying fashion brands should show suppliers they are making responsible sourcing decisions and will stay in the region.

Kohnstamm pointed out minimum wage is not a "liveable wage" and stated it begs the question: What’s the rationale for the wage board to come to that conclusion?

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