Loblaw Cos. Ltd. has provided a framework for how it will compensate victims in the deadly collapse of a building housing a factory in Bangladesh that made the grocer's Joe Fresh clothing.
Loblaw said on Thursday it will start in 2014 to provide long-term, direct financial compensation for the victims and their families. The Toronto-based retailer, which sells Joe Fresh in Canada and the United States, said it will pay three months' wages to all employees of New Wave Style or their dependents. It is following in the path of clothier Primark, its sister chain in Britain – both controlled by the Weston family.
Loblaw's compensation plans come six months after the collapse of the eight-storey Rana Plaza building, the world's worst industrial accident in close to three decades that left 1,129 dead and provoked a global outcry, prompting the garment industry to start to move to improve its suppliers' safety standards.
The Globe and Mail chased the path of cheap clothing around the world and found apparel makers' supply chains are increasingly fragmented. Companies like Loblaw place their garment orders through middlemen, who also outsource the work, leaving Loblaw and other retailers unable to trace where exactly their clothing was being made. The disaster and the problems it exposed spurred a growing awareness among customers and retailers about the true cost of the $5 global T-shirt.
"There is a tremendously long way to go in terms of bringing some semblance of responsibility to the way manufacturing supply chains are operated," said Scott Nova, executive director of the Worker Rights Consortium. "But it is certainly a turning point in terms of the worker safety crisis in Bangladesh."
He said retailers such as Primark and Loblaw are coming to understand that expectations of them are changing amid growing awareness of the dangers of cheap chic, he said.
But he and other workers' advocates said other retailers, including Wal-Mart Stores Inc., need to come to the table to help compensate victims directly.
Loblaw and Primark were among only nine companies that attended talks in Geneva last month to discuss compensation for those injured and family members of those killed. The International Labour Organization, which chaired the talks, aimed to include companies representing almost 30 clothing brands made in the Rana Plaza complex.
"We are very frustrated and disappointed with the pace at which the apparel industry is moving on this particular subject," Galen G. Weston, executive chairman of Loblaw, said last month.
He pointed to the "poor showing of global retailers who had manufacturing in the Rana Plaza at the conference in Geneva."
Loblaw spokesman Bob Chant said on Thursday the company joins Primark in encouraging "all brands that have been involved in production at Rana Plaza to participate in the provision of compensation to the victims of this tragedy."
If the other brands fail to take part in the funding, Loblaw will follow Primark in immediately contributing to the payment of three months' wages for about 3,600 people, "regardless of the brand apparel that was being produced in their workplace."
Loblaw is among several major retailers that have signed a five-year agreement aimed at improving substandard fire and building safety in Bangladesh, the world's second-largest apparel exporter after China.
The garment sector in Bangladesh has experienced several fires, including one earlier this month that killed at least 10 people.
Loblaw has also already given $1-million to the Save the Children Bangladesh charity as well as the Centre for the Rehabilitation of the Paralyzed hospital in Bangledesh.
Wal-Mart Canada spokesman Andrew Pelletier said the retailer's goal is "to positively impact global supply chain practices both by raising our own standards and by partnering with other stakeholders to improve the standards for workers across the industry."
He said Wal-Mart has found no evidence that it was making "authorized or unauthorized" products in Rana Plaza at the time of the building collapse.