Salary increment rules in Bangladesh vary depending on sectors like private and public. For government employees the salary increment is based on the National Pay Scale. In private sectors the salary increments vary widely as individual organizations determine the policies. As per the 2022 amendment of Bangladesh Labour Rules, 2015, minimum 5% of basic wages must be increased every year. This does not concern any target achievement or profits of the company.
What Is the Legal Framework for Salary Increments in Bangladesh?
The Bangladesh Labor Act 2006 does not mention any specific rate for salary increment. The law mandates rules for forming Minimum Wage Boards for different sectors. These bodies will decide minimum wages and increases. Increment rates may vary depending on the industry. These rates are decided after taking into account aspects such as accommodation costs, money inflation and the economic conditions of sectors. The workers of the RMG industry have been receiving a 5% annual wage increase. However, this rate has been raised to 9% on 1st December, 2024. This has been done in alignment with the rising inflation in Bangladesh.
The BLR 2015 (amended) requires an annual mandatory wage rise equivalent to at least 5% of basic wages. Nothing in the 2022 Amendment changes this. There are sectors with active labor unions. Here, Collective Bargaining Agreements (CBAs) may stipulate specific terms for salary increments. Employee representatives negotiate these agreements with employers. One thing the Labor act mandates is that such practices must be non-discriminatory and transparent.
What Are the Different Types of Salary Increments in Bangladesh
The primary types of salary increments in Bangladesh are given below.
Annual Increments
In Bangladesh, government employees only get 10 percent annual salary rise based on their pay scales. Such increment is given to employees in the month of July irrespective of when they joined or promotion. For the private sector, this would depend on internal company policy and any employment agreements.
Performance-Based Increments
Private organizations provide performance based increments to employees as a reward. Based on the work performance and contributions to the company, employees receive salary increases.
Increments by Promotion
Promotion to higher positions often comes with salary increments. This applies for both government and private organizations depending on the significance of the new role.
Increments Based on Experience
Employees may receive salary increments based on the length of service period and accumulated experience.
Increments for Inflation Adjustments
In order to offset the inflationary pressures some sectors periodically adjust salaries of employees. This occurs mostly in industries with strong labor unions.
What Factors Influence Salary Increments in Bangladesh?
The factors influencing salary increments in Bangladesh are as follows.
- Industry Norms and Market Benchmarks: The salary increment rate is different according to industry standards. For example, the rate in the technical industry is higher than that of others because it needs to retain skilled technicians. Also, businesses compare their pay structure with market benchmarks to pay better to stay in the competition and attract the best talents.
- Company Profitability and Financial Performance: The financial performance and profitability of a company plays a big and direct role in deciding the salary increments. Strong profitability means the potential to raise higher budgets for salary increments.
- Employee Performance Metrics: Most companies will usually have some sort of KPIs or targets set for employees.
Based on the achievements and contributions employees may receive bonuses or increments. - Inflation and Economic Factors: Inflation has a great impact on the purchasing power of employees. Salary increments help to adjust with rising costs during this period. Companies often use CPI (Consumer Price Index) as a reference for adjustment.
- Government Policies and Legislation: The government policies and decisions of wage boards influence salary revisions in different sectors.
For example, in 2024 Bangladesh government has issued a directive to make a wage raise of 9% in the RMG sector yearly. - Collective Bargaining Agreements (CBAs): Sectors with well-organized labor unions can make more equitable wage negotiations.
- Supply and Demand for Labor: Certain job categories have the demand for salary increases. Cybersecurity experts and software developers are both examples of such skilled workers seeking substantial increments. Often overlooked is the demand for agricultural workers.
How Can Companies Effectively Manage Salary Increments?
Companies must become transparent in terms of policies regarding salary increase eligibility criteria. Employees should know well about the increment decisions. Companies can also use HR and Payroll software to ease and automate the process for calculating salary increments. It becomes very useful to handle a huge amount of workforce by reducing errors and saving time. In order to build trust among employees, businesses should ensure equity when deciding increment rates. They must not be biased and align increments based on an employee’s performance and also the industry standards.
Final Words
There are no specific laws for salary increment or promotions in Bangladesh Labor Act 2006 or any other laws of the government. Industries therefore have to rely on their own rules or wage board decisions. Conditions such as inflation, profitability, government regulations and general industry standards all affect practices of salary increase.
In order to manage increments more effectively and calculate them properly using the HR & payroll system is one recommended way forward. Yet corporations should also strive after equity to avoid bias while giving salary raises.
