Bangladesh announced a six-member wage board on Sunday to review garment workers' pay and urged employees to return to work, but thousands of workers kept protesting around Dhaka, demanding a minimum monthly wage of 30,000 taka, more than double the current rate of 12,500 taka.

The board is to include representatives of the government, workers and factory owners and is tasked with setting a new minimum wage. The Ministry of Labour and Employment adviser, M Sakhawat Hossain Chowdhury, told reporters that the issue had been resolved. "There will be no more problems now," he said. "The workers should return to work and work smoothly."

The announcement did not end the dispute. Al Jazeera reported that thousands of workers continued protesting around the capital after the board was named, with clashes reported and police firing tear gas and sound grenades. Channel NewsAsia reported that police also used water cannon to disperse workers who had blocked a busy intersection in Dhaka, and that some protesters threw bricks at officers.

In Gazipur, on the outskirts of the capital, hundreds of workers blocked a major highway, disrupting transport in one of the country's key industrial belts. The demonstrations forced owners to shut between 25 and 30 factories, according to the Gazipur Industrial Police superintendent, Mohammad Amjad Hossain, and authorities deployed Border Guard Bangladesh personnel to maintain order.

How the dispute started

The protests began on Saturday in Ashulia, a major garment manufacturing hub on the outskirts of Dhaka, where dozens of factories suspended operations after workers staged demonstrations demanding higher pay. Mohammad Mominul Islam Bhuiyan, superintendent of the Ashulia Industrial Police, said about 30 factories had declared holidays, and that clashes between workers and police in Ashulia injured several people, including police officers.

Workers say the current minimum of 12,500 taka no longer covers food, housing, transport and healthcare. The demand for 30,000 taka would more than double their monthly income. Channel NewsAsia put the figure at about $245 a month, against a current minimum of about $101.

The industry's scale is what makes the dispute a national economic question. Bangladesh's ready-made garment sector is the world's largest after China's, employs about four million workers, generates more than 80 per cent of the country's export earnings and supplies clothing to many leading Western brands. It contributes roughly 10 per cent of gross domestic product.

The unrest has also exposed the sector's dependence on energy. Manufacturers say production costs are rising, gas and electricity supplies are intermittent, and energy markets remain uncertain because of tensions in the Middle East during the United States-Israel war on Iran, Al Jazeera reported. Those costs sit on top of the wage demand, which would raise the sector's biggest single expense if the board grants it.

Channel NewsAsia reported that the dispute has raised concerns about disruption to an industry that supplies clothing to many leading Western brands. The labour minister's warning about delayed shipments and payments points to the same risk: buyers can move orders to other countries if Bangladeshi factories cannot deliver on time.

The Labour and Employment Minister, Ariful Haque Chowdhury, warned that prolonged factory closures and production disruptions could delay export shipments and payments from international buyers, creating further difficulties for manufacturers and workers alike.

Pressure from several directions

Manufacturers say the sector is facing mounting challenges: rising production costs, periodic gas and electricity shortages, and uncertainty in energy markets linked to tensions in the Middle East. Those pressures sit alongside a broader cost-of-living squeeze that has pushed wage demands up across South Asia.

The government's room for manoeuvre is limited by the export model itself. Bangladesh competes with Vietnam, India and other suppliers on price and delivery times, and buyers can move orders quickly when production is disrupted. A large wage increase raises costs for factories that operate on thin margins; a small one leaves workers short and keeps the protests going.

The wage board is the mechanism Dhaka has used before to reset pay without legislating a number directly. Its six members must agree a figure that the government can defend to employers and that workers will accept as more than a gesture. The board's first task is therefore as much political as economic.

Similar arguments are playing out elsewhere. The European Union has been redrawing its rules on fair labour mobility, a debate we covered in our report on the EU labour mobility package, while rising inflation has pushed wage claims up across Asia and Europe, as our account of US inflation and growth sets out.

Supply chains are also being reorganised by tariffs and trade policy, a shift that has hit manufacturing towns from Canada to South Asia and that we examined in our report on tariffs and Canada's auto towns.

For the workers in Ashulia and Gazipur, the practical question is whether the new board produces a number quickly enough to justify returning to the machines. For the government, the risk is that a long shutdown damages the one sector that has reliably paid the country's import bill. Neither side has much time.