Country Net Wage Analysis

Conducted by the Fair Labor Association: Example of Bangladesh and Vietnam

The FLA’s Fair Compensation Dashboard allows companies to calculate average worker wages in a manufacturing facility and measure those wages against living wage benchmarks. All FLA member companies are required to collect and analyse wage data from a representative sample of their supply chain. The FLA's tools and dashboard are also available for use by non-member companies on a subscription basis.

The charts below illustrate the change in average worker wages over time in two primary apparel sourcing countries. The analysis is based on data gathered by the Fair Labor Association and its members from 2015-2020, and builds upon previous analyses published in 2018⁵ and 2019⁶, and includes a dataset of 90 factories for Vietnam and 21 for Bangladesh.⁷

The analysis focuses on a worker’s average monthly net wage; and does not include overtime, leave time, or incentive pay wages. The FLA aligns with the Anker methodology⁸ to define a workers’ monthly net wage as: Basic Contracted Wage + Cash Benefits + In-Kind Benefits – Legal Deductions and Taxes. Net wage does not include incentive pay, leave pay, or overtime pay. It should be noted that the data is an aggregate of factories from which FLA member companies were sourcing in the years indicated. Therefore, the charts below indicate general trends over time rather than change in any individual facility.

Despite measurable progress, in both Vietnam and Bangladesh there is still significant work to be done to raise worker wages to the level of the Global Living Wage Coalition's living wage estimate. It should also be noted that in both countries the legal minimum wage remains well below both union demands and the Global Living Wage Coalition's estimate. Progress, however, is possible; in 2021, the FLA will publish case studies highlighting the stories of three companies and suppliers who used the FLA dashboard to identify and implement practical, factory level changes that significantly raised worker wages. The FLA's Fair Compensation Dashboard is an essential tool for gathering data to help companies, workers, and civil society understand the work yet to be done and craft joint strategies for ongoing, measurable progress towards a living wage.

Net Wage Analysis in Bangladesh
FLA Average Net Wage, Bangladesh (2015–2020)

Net Wage Analysis Conducted by a FLA Dataset of 21 Factories in Bangladesh

From 2015 to 2019, the average net wage of Bangladesh workers steadily increased year over year; an average of 21%. The highest increase was 31% between the 2015-2017 average and 2018.

Due to the COVID-19 pandemic, the average monthly net wage in 2020 decreased 3% from 2019.

When comparing to the 2020 Global Living Wage Coalition’s living wage estimate⁹ for Dhaka, Bangladesh,¹⁰ the 2020 FLA average is 46% below the 2020 living wage estimate. Meanwhile, the 2018 FLA average is 44% below the 2018 living wage estimate and the 2019 FLA average is 42% below the 2019 living wage estimate. This means, on inflation-adjusted basis, workers’ net wage in Bangladesh shows a real progress from 2018 to 2019.

Net Wage Analysis in Vietnam
FLA Average Net Wage, Vietnam (2015–2020)

Net Wage Analysis Conducted by a FLA Dataset of 90 Factories in Vietnam

From 2015 to 2019, the average net wage of Vietnam workers steadily increased year over year; an average of 12%. The highest increase was 15% between the 2015-2017 average and 2018.

Due to the COVID-19 pandemic, the average monthly net wage in 2020 decreased 7% from 2019.

When comparing to the 2020 Global Living Wage Coalition’s living wage estimate¹¹ for urban areas¹² in Vietnam, the 2020 FLA average is 20% below the living wage estimate. Meanwhile, the 2018 FLA average is 14% below the 2018 living wage estimate and the 2019 FLA average is 11% below the 2019 living wage estimate. This means, on inflation-adjusted basis, workers’ net wage in Vietnam shows a real progress from 2018 to 2019.