The death of 1,127 garment workers in the collapse of the Rana Plaza factory complex in Bangladesh on April 24 was an unspeakable tragedy. There is plenty of blame to go around – on corrupt officials who didn’t enforce existing regulations, on clothing companies willing to look the other way while their suppliers cut corners on safety, and – yes – on Western consumers eager for the cheapest possible fashions.
But finger-pointing will do no good unless there is a sincere and strenuous effort to find solutions to make sure this kind of disaster doesn’t happen again.
The fix is a complex one, because simply boycotting Bangladeshi goods or abandoning clothing manufacturing in Bangladesh would do more harm than good. The industry has become a key employer for tens of thousands of workers, and it has allowed many women to enter the work force for the first time, thus reducing rates of poverty.
That’s why the five-year accord signed this past week by a consortium of international labour groups and clothing retailers is such a positive move – as long as it is put into practice quickly and the move to improve conditions gains momentum.
The “Accord on Fire and Building Safety in Bangladesh” is a relatively simple six-page document, but its provisions were carefully crafted to ensure they are effective.
There will be independent safety inspections of the factories that supply the retailers. If corrective action has to be taken, workers will keep their jobs, while renovations are carried out. The retailers will help pay for renovations or arrange for financing, if necessary. And workers will be allowed to refuse unsafe work. The retailers agree that they will not do business with any factory that refuses to make safety upgrades.
Transparency is a key aspect of the agreement. Part of the problem after the Dhaka fire was confusion over what was actually being produced in the factory, and which retailers were the customers. Now, retailers will have to make public an updated list of their suppliers in Bangladesh – although sensitive commercial data will be kept private. The inspection reports will also be publicly available.
On top of that, the retailers have committed themselves to maintaining their business in Bangladesh – an important factor if the garment industry is to keep its place as a driver of the country’s economy.
None of this is revolutionary, and there have been other agreements in the past that have included some of these provisions. But this time there appears to be a much broader consensus to make significant change, and the accord is legally binding. That makes it “an historic game-changer,” according to Tom Grinter of the European labour group IndustriALL. The dispute resolution mechanism and enforceable arbitration mean Bangladeshi workers will no longer have to rely on “corporate goodwill” for their safety, he said.
Those who have signed on include a who’s who of global clothing retailers, including Britain’s Marks & Spencer, Tesco and Primark, Sweden’s H&M, and PVH Corp., the U.S. company that owns the Calvin Klein and Tommy Hilfiger brands. Canada’s Loblaw Cos. Ltd., whose Joe Fresh clothing line had products made in the Rana Plaza building, is also a signatory. Loblaw rightly describes the pact as an “active collaboration by retail and manufacturing industries, government and non-governmental organizations” that is “is critical to driving effective and lasting change in Bangladesh.”
Conspicuously absent from the agreement are several large U.S. retailers, including Wal-Mart Stores Inc., which objects to, among other things, the binding dispute-resolution mechanism in the accord.
Wal-Mart has decided to go its own way, and conduct detailed safety inspections of the 279 factories in Bangladesh where its clothing is made. Those results will be made public, and the company will stop production at any plants it deems unsafe.
It is unfortunate that Wal-Mart has not signed on to the broader accord, as it would have given the agreement extra heft. Ultimately, all retailers commitments should be carefully watched.
While companies based in the litigious United States are understandably wary of getting caught up in prolonged and expensive legal disputes, it is the legally binding force of the agreement that makes it potentially so powerful. Major retailers should be ready and willing to accept the risk of hard-fought lawsuits to make this effective.
Still, more needs to be done. The Bangladeshi government itself must take considerable responsibility for fixing its dangerous factories and improving working conditions. There are some signs it is doing so, as government leaders have recently vowed to allow factory trade unions to be created without getting permission from the employers. Among other needed reforms are increases in minimum-wage levels, and policies to make sure those rates are enforced.
Indeed H&M, one of the largest buyers of clothing from Bangladesh, has been pressuring the government for several years to increase minimum wages, and has made it clear it will accept the price increases that will come with higher worker pay.
The factory collapse in Dhaka was a symbol of some of the failures in international business practices that have come about because of global sourcing, complex supply chains and buck-passing to third-party suppliers. At a time when more and more companies are claiming to make “corporate social responsibility” a hallmark of their operations, their efforts to improve working conditions in Bangladesh will be a true test of those intentions on a worldwide scale.
Companies taking advantage of cheap labour in poor countries must be directly involved in workers’ welfare, and put reforms in place as quickly as possible.