Pakistani entrepreneurs have been looking very closely at the recent developments in Bangladesh. With the Western customers now visibly concerned about the dismal condition of the Bangladeshi workers, the very low factory payouts to its mostly ‘piecemeal’ labour, and the sub-human work environment (per se) in the Bangladeshi garment factories, not only have their orders with Bangladesh slowed down, but they are also now seeking improvements in the safety and pays of the workers before engaging with the country again. This, of course, means cost of production going up and (at least, on the face of it) Bangladesh’s traditional competitive edge of cheap labour somewhat being compromised.

There are mixed reactions on this amongst our own textile players. While some are viewing it as an opportunity or an opening to capture a good part of the global markets moving away from Bangladesh, the other (more serious minded) players are wanting to assess (more deeply) the real nature of woes facing Bangladesh, in order to ensure that tomorrow they do not end up falling in the same trap. “Wages below a certain point in fact become counterproductive for a firm” (Schumpeter).

When assessing garment manufacturing in Bangladesh, one realises that the Bangladeshi garment workers, who make clothes for Western brands, such as H&M, GAP and Marks and Spencer, are literally the lowest-paid garment workers in the world. In fact, the wages are so low that an increase of 80 percent only a year back was greeted by the workers by rampaging angrily through the capital Dhaka burning cars and looting shops. In real terms, this increase in their minimum wage only took their pay from $23 to $43 per month.

Given the average food prices in Bangladeshi and taking the average size of a Bangladeshi family a United Nations study revealed that in order for the family to have access to only the minimum caloric requirements, the minimum wage needs to at least be $75.00 per month, and that also where both parents are working.

Meanwhile, the position has worsened: Bangladesh has been in the same high inflationary cycle as the rest of the South Asian economies. Living costs - including food, clothes, shelter, and medical care - have been going higher and higher.

More importantly, the anger amongst the Bangladeshi workers should be like a wake-up call for regional competitors, who look to blindly emulate the Bangladeshi export model and for the global retailers expecting to escape rising labour costs and strikes by exploiting work conditions in Asian manufacturing centres. The problem though is by no means limited only to Bangladesh. While initially starting from a cheaper base than China, Asian industrial hubs in general such as Bangladesh, Vietnam, Cambodia, and Indonesia are now facing mounting labour unrest and intense upward pressure on wages, as prices for food and other essentials rise.

Further, the demands for better pay across Asia reflects the underlying economic principle of improvement in job opportunities in economies that are growing faster than their customer (Western) markets and naturally with this the traditional ability of employers (in these manufacturing hubs) to pay very low wages is diminishing. The sheer pace of growth and dynamism in Asia is putting an upward pressure on wages.

In Cambodia, Phnom Penh recently raised the minimum wage by 21 percent - from $50 to $61 per month. This still falls below what the more activist of Cambodia’s 273 unions have been demanding and are now threatening to go on an industry wide strike. Vietnam recorded 200 strikes in 2012 by workers hit by inflation of between 9 to 10 percent.

Recently, for example, nearly 10,000 workers walked out of a Taiwan-owned shoe factory, demanding better pay. In Indonesia also - where powerful trade unions with millions of members play a crucial role in negotiating with employers - minimum wages set by regional authorities have increased by nearly 30 percent in less than two years. In spite of the minimum wage in Jakarta being in excess of $125 per month (in remoter regions of Indonesia, it is half of this), Indonesia also recorded a spate of strikes at textile factories in 2012. In India too, Nokia, the Finnish mobile phone maker, Bosch, the German car parts manufacturer, South Korea’s Hyundai, Volvo, and countless local companies have all recently faced rising industrial unrest.

Still, Bangladesh is a bit of a unique case since wages have been dramatically low and local food prices have been rising at about 16 percent per annum. Workers in general have just been playing ‘survival catch-up’ over the last decade and now the anger cum frustration seems to be at a tipping point.

To make matters worse, Dhaka in its policy matters has instead come across as being more concerned about the interests of the garment factory owners, of whom 29 sit in the 300 seat Parliament, while many other lawmakers also have indirect stakes in garments factories through friends, relatives, and family. Critics say these interests leave the government unwilling to genuinely address the real issues. There are no ‘industrial relations’ and the attitude borders on being arrogant and feudal. This unprofessional approach and prevailing mindset in the industry represents the actual underlying problem, threatening the future of this Bangladeshi industry, which has so far been in the forefront in leading the Bangladeshi export surge.

For anyone or any country (Pakistan included) seeking to capitalise on this slipping global market share of Bangladesh in garments’ exports, they need to keep in mind that their efforts at home, without first addressing the garment industry’s sensitive underlying issue on social accountability, will not bear much fruit.

The writer is an entrepreneur and economic analyst.