Hizlapara is a neighbourhood of cement tenements and narrow dirt lanes in the scruffy town of Savar on the outskirts of Dhaka, Bangladesh's chaotic capital. It is a quiet area, full of hardworking families and young couples who go to bed early and save hard. It is quieter than ever now.

A 20-minute walk away, a trough full of foul water and debris is all that remains of the Rana Plaza, an eight-storey factory producing cheap clothes for the west, which collapsed six weeks ago.

More than 1,100 people died in the disaster, one of the world's worst industrial accidents, and many came from Hizlapara. Every morning the workers walked through its streets to clock in at 8am, climb the single narrow stairwell and start stitching trousers, T-shirts, shorts and sweatshirts for delivery to European high-street retailers. Most returned long after dark.

Five of the 20 families living at 62A Shobuj Bagh, a lane in Hizlapara, have suffered some kind of loss. On the ground floor Shima, 25, a seamstress who worked on the fifth floor of the Rana Plaza, lives with her husband, who is also a garment worker. At night she wakes screaming with nightmares about falling or being buried. She dreams too of her best friend, Rekha, who lived nearby and stitched and sewed alongside her. She died when vibrations from a generator brought down the illegally built upper floors of the factory on to the workshops below.

Shima, 25, who survived the collapse but her best friend was killed. Photograph: Jason Burke for the Guardian

Then there is Lisa, a once sociable 19-year-old who worked as a helper for 3,000 taka (£25) a month on the sixth floor of Rana Plaza. She is still in pain from the injuries she sustained in the collapse and now barely talks.

Others at 62A have lost the income that shielded them from abject poverty. They sit in the courtyard talking dubiously of finding new jobs and of returning to the villages where they grew up but which, after flooding and land disputes, they know can no longer provide them with a living.

Mohammed Shaheen, 18, from 59B Shobuj Bagh, is dead. He too worked on the sixth floor, cleaning and doing odd jobs. "About 30 to 35 of my friends were killed," his brother, Ramzan Ali, 20, said.

A worker inspects the ruins of the Rana Plaza complex. Photograph: AP

Bonma, 20, and Tanzina, 18, lived next door, at 60B. They were serious, pious girls who said their prayers and worked hard. One is missing, the other confirmed dead. Like most of the 3,500 workers at Rana Plaza, they had been sent home the day before the collapse, when the factory was shut as a result of an "electrical problem" – in fact large cracks were being examined by an engineer – and they were still in bed when their supervisor turned up on their doorstep the next morning to call them into work.

"My mother heard the supervisor tell them: 'If you don't go to work, you won't get any pay at all,'" their older sister recalled. "Anything they wanted, like makeup or clothes, they would borrow from me, rather than spend any of their wages." Bonma's marriage to a man from the neighbourhood, chosen by her parents, was to take place in May.

Many survivors of the Rana Plaza collapse talk about compensation. Bangladesh has made huge economic progress since the days when it was a byword for human disaster, dubbed a basket case by Henry Kissinger, the former US secretary of state. The country of 160 million is on track to meet many of its international benchmarks in areas such as maternal mortality and sanitation.

But it has much ground to make up. Literacy is a miserable 59% and, as elsewhere in south Asia, any incremental progress is fragile and uneven. For almost every family whose lives are better, there is one whose lives are unchanged or in many cases considerably worse.

Most of the victims of the Rana Plaza collapse have had their hospital expenses paid by the government or the Bangladesh Garment and Exporters Association (BMGEA), an industry body representing owners. Many families have received an immediate payment of 20,000 taka to cover basic funeral expenses. As most of the victims have been buried in distant ancestral villages, the money is barely adequate, their relatives say.

A further sum of between 100,000 and 600,000 taka is to be disbursed by the government to bereaved families at an unspecified date. Some cash has been pledged by big western retailers such as Primark and Matalan, which sourced goods from Rana Plaza.

Excavators clear debris at the collapse site. Photograph: AFP/Getty Images

The BMGEA has undertaken to pay survivors their outstanding salary for the month of the collapse, plus a month's pay for every year worked at Rana Plaza, but few appear to have received the full amount due. On Wednesday police used teargas, live ammunition and baton charges to break up a demonstration by former workers in Savar.

Atiqul Islam, the director of the BGMEA, said it was a very hard time for the industry. "We have to learn lessons and all get together – retailers, buyers, suppliers – and see how we can go forward," he told the Guardian.

The garment industry in Bangladesh employs about 3.5 million people, mainly young women, and more than four-fifths of its $20bn (£13bn) production goes to the west. Pay at factories is better than other industries and despite long hours, abuse from employers, poor job security and danger, sewing is less arduous than alternative employment such as agricultural labour, construction work, cleaning homes or ship-breaking.

So in Shobuj Bagh there are two great fears: that a telephone call will bring news of another collapse; and that the western buyers will go elsewhere and the jobs that are their first tenuous step out of abject poverty will disappear. There are already signs that the latter fear may be realised as retailers seek suppliers who pose less of a reputational risk. As for the former fear, most try to ignore the risk.

Asma, 45, is yet to identify the remains of her 25-year-old daughter, Moyna, who worked at Rana Plaza. Her four remaining children leave home every morning for work in nearby garment factories. They earn monthly wages of up to 8,000 taka each.

Asma left her village and flooded land seven years ago to seek a better life in the capital. The combined earnings of the family will leave enough to educate her grandchildren, she hopes.

"I try not to worry [about another accident]. It won't change anything. You have to make a living. You have to think of the future," she said.

Pakhi Begum, 25, on her hospital bed in Savar. She lost both legs in the factory collapse. Photograph: Jason Burke for the Guardian

For some victims of the collapse on 24 April, that future is bleak indeed. Pakhi Begum also lives in Shobuj Bagh. With her husband and two daughters, aged nine and seven, she left their village in the south-west five years ago. The couple were happy when they found jobs in the garment industry. On the fifth floor of Rana Plaza, Begum stitched zips and pockets on to jeans for 12 to 14 hours a day, seven days a week. She is now being cared for in the nearby Enam hospital.

Begum had tried to stay at home on the day of the collapse amid concerns over the cracks in the wall of the building, but her manager threatened to dock her an entire month's pay. So she went to work.

"When it happened, it was very fast. I saw people running and then a huge hole opened up in the floor and I fell into it. Then it was all dark, like a grave. A concrete beam was across my legs and another on my side so I couldn't move. I was screaming and praying," Begum said.

Around her, the 25-year-old could hear voices. Some came from outside. After 36 hours, rescuers reached her. But lifting her from the rubble was impossible. The beam had crushed her legs, trapping her.

"I was talking to them. I told the rescuers to cut my legs. They refused. We argued. I was telling them to do it. Then someone volunteered. First he did the right leg. The anaesthetics did not work properly so I screamed. He said: 'Don't scream or I can't work.' So I didn't scream when they cut again," she recalled.

Begum blames Sohel Rana, the owner of the factory and a local politician known for his connections with local municipal authorities, for the tragedy. He has been detained and faces a possible life sentence.

"Rana is to blame. He knew there were problems, but sent us back in there," Begum said. "The prime minister said I will get rehabilitation and help and a salary all my life, but I doubt it will happen. Maybe I will go to my village and live there."

People still gather outside the now-empty plot where the Rana Plaza stood. Many are relatives of victims: an adolescent charged by a desperate grandmother with getting the form or signature that would bring compensation for his dead father; a small child who insists on being brought every day because he has been told his mother may yet be found.

Any westerner is mistaken for a representative of one of the major brands and immediately surrounded by supplicants.

A woman kneels in the dirt, clinging to the yellow barriers barring access to the site. Sobbing, she gasps in the thick, humid air, then howls the name of her daughter again and again.