Why Bangladesh's Garment Factories Keep Closing

On Saturday, production stopped at 147 garment factories in Savar, Ashulia and Gazipur. Fifty-five of them were closed indefinitely under Section 13(1) of the Labour Act, the "no work, no pay" provision, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), as reported by Prothom Alo and The Business Standard. The halted factories employ about 300,000 people. Owners say more will shut from Sunday if workers do not return.

It is tempting to read this as a story about a strike. It is not only that. The factories closing this week may reopen. Hundreds of others, closed quietly over the past two years, will not.

Two kinds of closure

The first kind is temporary and political. Workers walked out on 31 October demanding that the minimum wage, fixed at 12,500 taka a month since December 2023, be raised. The government formed a wage board the next day, and on 4 November the board agreed that a new pay scale would apply from December, Reuters reported. It did not say how much. Workers' representatives have since proposed 32,000 taka. Protests resumed on 10 November, and owners answered with lockouts.

The second kind is permanent, and it is the larger story. BGMEA's own figures, published by bdnews24.com, show member-factory closures rising from 35 in 2023 to 77 in 2024 and 141 in 2025. A wider count covering all industrial belts found 457 factories shut between August 2024 and June 2026, according to Apparel Resources: 155 in Gazipur, 124 in Ashulia and 119 in Chattogram. Most were small units belonging to no trade body. BGMEA's president has said three to four member factories close every month, costing more than 19,000 jobs in six months.

Fewer orders, lower prices

The first cause is demand. Garment exports fell 1.64 percent to $38.70 billion in the 2025-26 fiscal year, with nine of twelve months in decline. Shipments to the European Union, the largest market, dropped 19.33 percent in the first four months of 2026, a period in which the EU's garment imports from all countries also fell by about a tenth, bdnews24.com reported.

The Business and Human Rights Centre, which tracks the sector, says 86 percent of the permanent closures were attributed to a lack of orders and financial difficulty. It also notes that brands have reportedly been unwilling to pay higher prices even as production costs rise. Uncertainty over United States tariff policy has made buyers more cautious still.

Gas, power and cost

The second cause is energy. A Dhaka Tribune report in August described more than 1,000 garment factories across the central industrial belt as severely affected by gas shortages, many able to run for only two or three hours a day, and said more than 150 textile mills had closed for good in two years. Factories that cannot guarantee delivery dates lose orders to competitors who can. Those that switch to diesel pay far more for every piece they make.

The credit squeeze

The third cause is money. After the 2024 uprising, banks cut lending to business groups whose owners were jailed, among them Beximco and NASSA. Beximco alone closed 14 factories in February 2025, affecting more than 31,000 workers, Prothom Alo reported. The problem then spread. The president of the Bangladesh Chamber of Industries has said an order shortage turned into a working-capital crisis, with many factories unable even to open letters of credit to import raw materials.

The wage question

Owners argue that a large pay rise now would finish off weaker factories. The BGMEA president has also claimed that vested interests are stoking the unrest. Workers answer that inflation of around 8 percent has eaten their pay, and their representative on the wage board told Al Jazeera that Bangladesh has "among the lowest garment wages in the world".

Both claims can be true. Economist Selim Raihan of the University of Dhaka told Reuters that the industry could absorb a significant increase without losing its edge if factories raised productivity. That is the real difficulty: the factories that have been closing are mostly the small, older ones least able to do so.

What the closures mean

It is worth noting that BGMEA recorded 323 new member factories over the same three years in which 256 closed. The industry is not disappearing. It is consolidating, with work moving from small subcontractors to larger, better-financed groups. For exports, that may be survivable. For the workers of a shuttered factory in Gazipur, it is not much comfort.

Mustafizur Rahman of the Centre for Policy Dialogue put the wider risk plainly to bdnews24.com: "Our competitive edge is steadily eroding."

Low wages were that edge for four decades. They can no longer carry an industry that lacks reliable gas, affordable credit and buyers willing to pay a fair price. A wage settlement will end this month's lockouts. It will not stop the closures. That requires an energy plan, a clean-up of bank lending, and a transition scheme for the workers whom consolidation leaves behind.