What If All Garment Workers in Bangladesh Were Financially Included?

January 19, 2022
  • Ella Moffat portrait

    Ella Moffat

    Manager, RISE, BSR

Wage digitization of low-income populations has the potential to be a win-win opportunity that can deliver both social and economic progress. For workers, especially women, it can mean the chance to open a financial account, potentially leading to greater economic empowerment. For global buyers, it can mean efficiency savings and increased transparency in global supply chains, and for financial service providers, a new active market segment. 

At HERproject, we believe a financial inclusion transformation is underway in Bangladesh due to digitizing payroll accounts. We are very optimistic about this because in partnership with the Bill & Melinda Gates Foundation, we've supported 70 garment factories with a workforce of around 170,000 people (majority women) in digitizing their wages and have seen the impact for businesses and workers, especially women.

  • Wage digitization has led to administration time spent on payroll being cut by more than half.
  • One in two female workers opened mobile money accounts and became active account users, conducting an average of eight transactions a month, including sending remittances to their families and buying time for mobile phone calls.
  • One in five workers started saving on a monthly basis, a habit that helps them both plan for the future and cope better with unexpected financial crises.

It is much safer to use [mobile money]. It’s convenient and it saves time. I used to be worried about walking with cash, especially on payday, and when sending money. Now I can save some of my wages in my mobile money account and can earn interest.

-Moshrefa, Garment Worker, Bangladesh

There are 4 million garment workers in Bangladesh, more than 58 percent of whom are women. This raises the question, “What if all garment workers became financially included?” This has led to the striking projections—if all 4 million garment workers received their pay in their financial accounts as well as financial capability training to build their skills and confidence to use financial services, we can expect:

  • A total of 4 million new active customers for financial service providers. This would also contribute to closing the financial gender gap in Bangladesh. The 2017 Global Findex found that in Bangladesh, 36 percent of women have a bank account, compared with 65 percent of men.   
  • Up to US$199 million sent in remittances through financial services to their families. On average, following participation in HERfinance, women send US$54 and men US$43 in remittances each month. Across a workforce of 4 million, this is the equivalent of US$199 million. Sending money to their families is crucial to workers, especially women, since it means they can support their parents in their home villages and invest in children’s education and land for their futures.  
  • 400,000 hours of production time saved each month on payday. HERfinance factories reported saving 6 minutes of production time per worker following the transition from cash to digital wages. Time is money—so this represents huge savings for employers, always under production pressure.

We believe this scenario is within reach and will benefit workers, especially women, and businesses. Achieving this scenario requires action across three interrelated areas: increasing inclusive access to financial services; building the labor force’s digital financial capability, especially for women; and increasing digital payment opportunities in the financial ecosystem. All global brands and buyers sourcing from Bangladesh need to encourage, reward, and support their suppliers in switching to digital wages, in a way that considers the needs of workers, especially women. The financial ecosystem needs to promote and incentivize digital payments and acceptance for key payments otherwise made in cash, such as groceries, health care, school fees, bills, and rent. Workers, especially women, need support to build their financial capability, knowledge, and confidence to use their payroll accounts and benefit from digital payments. 

“Digital payments are an important step in achieving global financial inclusion. This fully aligns with our ethical and responsible sourcing strategies and our holistic sustainability plan, especially in respect to human rights in our business and supply chains. Providing the opportunity for workers to be paid digitally, creates economic opportunities for them and their families, advancing the Sustainable Development Goals on women’s equality and decent work.”

-Fiona Sadler, Global Head of Ethical Trading and Responsible Sourcing, Marks & Spencer  

It’s also important to consider and address the barriers that women face in adopting digital wages. Women are less likely than men to have the resources and confidence needed to open and use accounts. They are more likely to feel obliged to share their account details and become victims of fraud. Traditional gender role expectations for women restricts their ability to access and take control of their finances.

“I didn’t know how to use mobile money until we had the training. Through this, we learned about the interest on savings and fees. Now on payday, I send money to my parents and my mother-in-law. I have opened a savings account in a private bank and deposit money each month.”

-Pushpa, Garment Worker, Bangladesh

Key stakeholders, including financial service providers, global brands, and employers, can deliver and scale wage digitization that empowers workers, especially women, by working collaboratively. Find out how to get started with our practical guides for financial service providers, global brands, and buyers and our open source financial capability materials, including posters, videos, and tech learning tools. By working together, scaling responsible wage digitization is possible, and financial inclusion for 4 million garment workers in Bangladesh is within reach.   

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