The International Labour Organisation (ILO) said it must also improve education and create more full-time jobs for young people to stop them from emigrating and draining the labour pool.
"Unless a comprehensive set of labour market and social policies are introduced, (the country) will be unable to maintain its economic momentum and improve living standards in a sustainable way," the report said.
Important steps had been made towards an open economy, the ILO said.
The report, two years in the making, was issued as Bangladesh suffers major labour unrest in the garment industry - a major source of clothing for European and North American markets and the mainstay of its export-led growth - and faces pressure from Western nations on factory conditions.
In April this year, the collapse of a garment complex employing mainly women just outside Dhaka killed 1,129 people. Just months before in 2012 a total of 117 workers died in a factory blaze partly attributed to shoddy building.
Presenting the report at a Geneva news conference, ILO officials said that it was not originally linked to these disasters as it had been started back in 2011. But they said it reflected a situation that led to the incidents.
The report said the rise of Bangladesh's ready-made garments industry over the past two decades had brought it to account for 4.8 percent of global apparel exports, second only to China, from 0.6 percent in 1990.
Unregulated growth
"But unregulated industry growth has contributed to poor working conditions in the sector, which have acted as an obstacle to sustainable development," the ILO said.
Although in the past six months the government had taken some action to address health and safety issues, poor conditions remained a challenge in many factories.
National estimates say poverty has declined, according to the report, but as of 2010 some 76 percent of the population of around 151 million were living on less than US $2 a day, the highest in the region, according to the report.