Bangladesh’s government agreed on Monday to allow the country’s 4 million garment workers to form trade unions without prior permission from factory owners, a major concession to campaigners lobbying for widespread reforms to the industry following a building collapse last month that killed more than 1,100 people.

The cabinet decision came a day after the government announced a plan to raise the minimum wage for garment workers, who are paid some of the lowest wages in the world to sew clothing bound for global retailers.

Those working at the eight-storey Rana Plaza, which housed five garment factories when it collapsed on 24 April, were paid as little as £25 ($38) per month.

Rescuers on Monday continued to search for survivors in the ruins after a seamstress was discovered alive under the rubble on Friday. The woman is recovering in hospital.

The toll from the world’s worst industrial accident since the Bhopal disaster in India in 1984 stands at 1,127. No bodies were found at the site, in the Dhaka suburb of Savar, on Monday indicating that all may have been retrieved, a spokesman at the army control room co-ordinating the salvage operation said.

The tragedy has prompted widespread criticism of international firms working with local garment producers in one of Asia’s poorest countries.

Several western firms, including UK high street retailer Primark, have said they were supplied by factories in the complex. The building had been illegally constructed, developed massive cracks in the days before its collapse and workers were forced to continue work despite safety fears. The building’s owner has been arrested.

Mosharraf Hossain Bhuiyan, a government spokesman, said ministers had agreed to amend the law to lift legal restrictions on forming trade unions in most industries. The old law required workers to obtain permission before they could unionise.

“No such permission from owners is now needed,” Bhuiyan told reporters after the meeting presided over by the prime minister, Sheikh Hasina. “The government is doing it for the welfare of the workers.”

Local and international trade unions have long argued for such changes.

on Monday, writing in the Guardian in his first major intervention since the tragedy, Muhammad Yunus, the Nobel laureate and internationally respected social activist, called for both a minimum wage and a 50 cent (33p) surcharge on garments made in Bangladesh, which would finance a social welfare fund assuring safety at work, healthcare and pensions for workers.

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