Equal pay for equal work: How wage reforms can help youth obtain better jobs

As we mark International Equal Pay Day, it is essential to reflect on the state of labour markets, particularly for women and youth, in Bangladesh. The vision of our younger generation is defined by a strong commitment to equality, fairness, and opportunities for decent work. 

However, the harsh reality is that the employment creation in Bangladesh has not kept pace with these expectations, leaving many young people, especially women, unemployed or trapped in low-paying jobs, facing wage unpredictability, and battling systemic barriers that hinder upward mobility.

The disconnect between education and employment opportunities has resulted in frustration and disillusionment for many. Almost two million youth enter the labour force each year, yet many struggle to find jobs that match their qualifications, while those who do secure employment often start with salaries that are far below a liveable wage. There is a stark wage gap, and in sectors like agriculture, where women are heavily represented, women earn 31.51% less than men for the same work. 

On the demand side, employers often lament the lack of real workplace-relevant skills at all levels, pinpointing the need for reforms in education and training on market-relevant skills, including social skills, and through workplace learning like apprenticeship and traineeship programmes. 

One of the most pressing challenges is the unpredictability of wages. The wage-setting system in Bangladesh is often arbitrary and lacks transparency and fairness. Young workers, especially in the informal sector—which accounts for around 85% of total employment—are the most susceptible to unfair practices.

The issue of low wages is often compounded with the lack of wage security, benefits, and the potential for career progression. This is a significant concern, as it leaves young people trapped in precarious employment conditions with little hope for wage growth or financial stability.

The situation is further exacerbated by the fact that the national minimum wage increases have not kept up with inflation or living costs. According to the ILO's Global Wage Report, Bangladesh has seen one of the steepest declines in real wages among Asia-Pacific countries, with an annual decline rate of 5.9%. This means that while nominal wages may have risen, the purchasing power of those wages has diminished, leaving many workers, especially young people, worse off.

A call for an evidence-based wage setting system

There is a need for a comprehensive, evidence-based national wage-setting system. Such a system would provide predictability, fairness, and transparency in wage determination, ensuring that workers are paid according to the value of their labour and that wage adjustments reflect economic realities like inflation and cost of living. 

Establishing a wage-setting mechanism could also help bridge the gender wage gap and ensure that marginalised groups—such as women, people with disabilities, and minority communities—receive fair wages for their work.

A national wage-setting system grounded in evidence could also play a vital role in poverty reduction. Bangladesh has made significant strides in setting minimum wages in the readymade garment sector, but it is time to extend this to other industries. 

A gender-inclusive wage policy, guided by the principles of International Labour Standards such as ILO Convention No 100 on Equal Remuneration, would be a powerful step toward ensuring that all workers, regardless of gender or background, are compensated fairly for their labour. Promoting wage transparency is another crucial step, as it would help unearth wage disparities and hold employers accountable for closing pay gaps.

Other compounded systemic barriers to youth employment

In addition to wage-setting issues, there are other systemic barriers that prevent young people in Bangladesh from meaningful participation in the labour market. These equally deserve our attention and include the mismatch between market demand and supply in terms of skills and competencies, poor quality of education and skills training systems and absence of critical employment support functions, like career counselling.

In addition, the informality of employment and the absence of social security provisions for the workers are additional structural and governance challenges that young people face, making them more susceptible to working poverty.

Young women, overseas workers and marginalised communities are particularly vulnerable to all these challenges, while also facing additional barriers, both structural and cultural.

The role of youth in driving change

Despite the significant challenges youth face in Bangladesh's labour market, they are uniquely positioned to drive meaningful reform. With their energy and passion for justice, young people are already pushing for greater transparency, fair wage-setting mechanisms, and gender equity. Youth-led organisations are playing a key role in raising awareness about wage disparities and advocating for more inclusive labour market policies.

Engaging youth in creating robust labour market institutions and involving them in policy dialogues is essential for building a fairer, more transparent workforce. Supporting youth participation in trade unions and employers' organisations would also amplify their voices in critical discussions about labour rights and wages.

On this International Equal Pay Day, let us therefore reaffirm our commitment to creating a labour market that serves all—especially youth, who represent the future of Bangladesh. By addressing wage disparities and promoting transparency, we can build a prosperous and just Bangladesh where every young person can thrive. From ILO's side, we remain committed to supporting these efforts in collaboration with the interim government, workers, and employers' organisations.

 Tuomo Poutiainen is the Country Director of ILO in Bangladesh.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.