Sunday, June 2, 2013

Five Things You Should Remember About the Bangladesh Tragedy

Background: On April 24, 2013, the eight-story Rana Plaza building in Savar, Bangladesh, collapsed. The building housed five garment factories, which reportedly manufactured and supplied clothing to several major western brands including Benetton, Dress Barn, KiK, Mango, The Children’s Place, Primark, and Wal-Mart. The current official death toll is reported to be 1,130, but local activists suspect it is actually much higher. Compensation will only be distributed to families who can provide official proof, through a DNA match of a family member to a body; therefore, a lower official death toll count is viewed as a way to reduce the government's compensation costs. Regardless, at this official death toll, the Rana Plaza collapse is the world’s second deadliest industrial disaster on record, after the India Bhopal gas leak

Relevant facts:
  • The Bangladesh garment manufacturing sector brings in about $15.6 million annually and makes up about 80% of the country’s total exports. Sixty percent of these goods are shipped to Europe, 23% to the U.S., and 5% to Canada. Bangladesh is the 2nd largest apparel exporter after China, and has the lowest comparable minimum wage, $37 month. 
  • In November, a Bangladesh garment factory fire killed 112. Products for Wal-Mart, Disney, and Sears were produced in the Tazreen Fashions factory although, allegedly, through unauthorized subcontracting arrangements (which are disturbingly common in developing nations with large garment manufacturing sectors). 
  • Workers at the Tazreen Fashions factory claimed their bosses ordered them to stay at their sewing machines, even as the rumor of the blaze spread. When workers did try to escape, they found “women’s exits” were padlocked and the “male” stairwell was filled with smoke and bodies. 
  • The WRC (Workers Rights Consortium) estimates it would cost $3 Billion over five years to bring approximately 4,500 Bangladesh factories up to standards, or about 10 cents per garment produced.
  1. How did it happen? Pervasive corruption, poor construction, and a workforce without rights.

  2. The long answer to this involves delving in to the long and torrid history of multinational exploitation of cheap labor in developing nations. We’ll save that for another day. For now, here are some of the more important pertinent factors that led to the factory collapse:

    • Building and factory owners use substandard construction materials and frequently neglect to obtain proper building permits. (Update 06/03/13: a survey of garment factories done by the Bangladesh University of Engineering and Technology found 3/5th of the country's garment factories are "vulnerable to collapse")
    • When permits are obtained, there is little follow-through or supervision, leaving building owners to operate unregulated, to the extent they may build additional unauthorized stories.
    • Within the factory, building and factory owners and management frequently use unauthorized generators and machinery, which cause vibrations that impact structural stability.
    • Bangladesh suffers from a shortage of trained inspectors and systemic corruption, especially at the local level.
    • Government officials are allegedly “scared” to enforce the meager existing regulations (video) because of the economic power of the garment industry in Bangladesh.
    • Labor activists and union organizers report being intimidated by government officials, many of which have a vested financial interest in the garment industry. A year ago, a popular and vocal labor activist was found murdered, his body showing signs of torture. Despite pressure from international groups and governments, the murder investigation is stalled.

    Even though workers reported the cracks in the walls, and an inspector advised building and factory owners to evacuate the building, workers were told to return to work or face punishment, which could include docking of pay, reduced hours, or firing. As a result, many workers were in the building when it collapsed, despite the obvious signs something was wrong.

  3. What are multinationals doing? Depends on the company, but something potentially groundbreaking.

  4. The official accord (pdf), signed by 40 companies to date, requires a 5-year commitment, and includes the following key components:

    • Legally enforceable contract 
    • Independent, thorough, and credible factory safety inspections with publicly available reports
    • Mandatory repairs and renovations underwritten by Western retailers (funding options are negotiable)
    • Signatory companies must stop doing business with any factory that refuses to make improvements, after a notice and warning process 
    • Workers and unions have a substantial voice in factory safety, including development of a complaint mechanism and reporting process 

    H&M, the largest purchaser of garments from Bangladesh, has signed on to this accord, as have three U.S.-based corporations: PVH (parent company of Calvin Klein, Tommy Hilfiger, and Izod), Abercrombie & Fitch,and Sean John.

    Gap and Wal-Mart declined to sign on to the accord due to the legally binding component, which they claimed opened them up to frivolous lawsuits. Instead, they have put together their own agreement, along with members of the National Retail Federation, which will not be legally binding and does not discuss financing factory improvements. The lack of financing arrangements presents the biggest hurdle for success, as most factory owners don’t have the funds available to make necessary improvements without increasing the cost of products sold or reducing wages.

    Wal-Mart’s efforts to avoid responsibility should come as no surprise given recent actions regarding their Bangladesh operations.  After the Tazreen fire, Wal-Mart shareholders rejected a proposal to require suppliers to report annually on safety issues at their factories by a 50-to-1 margin and they have rejected a proposal to readdress the issue at the upcoming June 7th shareholder meeting; however, Wal-Mart said it would donate $1.6million to help start a new Bangladesh fire and safety training academy and claim they are working with other stakeholders and lobbying the Bangladeshi government to improve worker safety standards.

    The terms and implementation of the accord (and any other agreements) are important for the obvious reasons of making tangible and sustainable improvements for the lives of workers in Bangladesh. They are also important because, due to the attention currently focused on Bangladesh, multinational organizations will be watching the degree of follow-through and the amount of continued attention from consumers, media, investors, and NGOs. This type of multi-stakeholder cooperation is, in many ways, groundbreaking, in that it is international and has commitment from high-ranking government officials. As such, it will be seen as a template for future agreements in other countries and industries.  Any deviations and failures will be viewed as justification for reducing commitments in future arrangements. Thus, participating companies must be held to the standards they have set and held responsible for any deviations or failures to achieve promises. In the same respect, successes can be built-upon and we should applaud companies as they achieve their goals.

  5. What are labor rights and other organizations doing? What they have always done: making sure companies are held responsible for labor right violations.

  6. There are several organizations working on tracking labor rights issues in Bangladesh and other developing nations. These are some of the best resources:

    Advocacy groups and research centers are important resources for evaluating important developments, such as the new Bangladesh accord, as well as learning about and staying up to date on major issues in various industries and countries.

  7. What is the Bangladesh government doing? We’ll see…

  8. The Bangladeshi government claims it has taken a more forceful stance on workers’ rights. After the Tazeen fire, the government assigned a special task force and stepped up factory inspections, whereby 700 garment factories were found to have faulty safety standards out of the 2400 factories examined since February 7th. However, there was no indication efforts were made to address these problems. After a series of worker protests, the cabinet approved an amendment to the labor law, giving workers greater freedom to form trade unions and government agreed to raise the minimum wage.

    Additionally, the six-member committee investigating the Rana Plaza collapse announced it would seek life sentences for nine people, including the building and factory owners, engineers, and officials who approved building permits. Their rationale for this recommendation indicated that the collapse was due to shoddy construction, improper issue of building permits, and gross negligence of responsibilities to workers.

  9. What can you do?

    • Don’t stop buying products from Bangladesh. While boycotts are emotionally satisfying, the reduced demand has unintended consequences on the workforce we are intending to help. As demand decreases, multinationals reduce orders and factories have less money to distribute to their workforce, let alone address safety improvements. Poverty and overpopulation in many developing nations ensure factories will find workers, regardless of the factory conditions. Instead of boycotting, buy from the companies that have committed to legally binding improvement programs. 
    • Don’t encourage the U.S. government to remove Bangladesh’s favored trade status. Even though it does send a strong signal to the Bangladeshi government, the related increase in costs will influence multinational buying decisions, and they will likely take their orders to other countries. 
    • Don’t forget about the other countries with their own labor and human rights issues. Bangladesh has the world’s attention right now, and rightly so, but there are a plethora of problems in the worldwide garment manufacturing industry and each developing nation has their own unique set of challenges. Websites for BHRRC, BSR, and IHRB are fabulous resources for educating yourself about these issues and issues in other industries. 
    • Do pressure Wal-Mart, Gap etc to join the accord by posting a comment on their facebook pages (Wal-Mart and Gap) and signing the petition.
As a final personal note, I believe factory audits and monitoring programs are not a long-term solution. It is way too easy for factory management to cheat the system: keeping multiple sets of books, bribing or threatening workers to comply, and making quick physical changes to factory layouts, in order to meet standards for the duration of the inspection. For long-term and sustainable change, we must:

  • encourage governments to improve their regulations,
  • provide financial incentive for factories to improve their conditions,
  • ensure protections for workers to unionize, to educate themselves, and to exercise their rights, and
  • pressure western companies to guarantee they only work with factories that adhere to higher labor and human rights standards.

All of these improvements can and should be part of a comprehensive approach or they will not stick. This seems like an enormous task, and it is, because a fundamental change in philosophy is needed, on top of changes in policies and practices. Companies and governments will need to stop viewing workers as commodities, useful only for the amount of product they can produce per hour, and start treating them as equal human beings; worthy of the rights ascribed to them by the international community. Only then will we see tangible and sustainable improvements throughout the garment manufacturing industry and beyond.

As always, I look forward to your comments and questions.

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