Everyone acknowledges that the value of any single human life is incalculable.Ask an actuary, lawyer, or insurance company however, and they will be able to suggest financial amounts based on hard economics and labyrinthine legal precedent.
Whether in a rich country or a low income nation like Bangladesh, the compensation typically awarded to victims of accidents can never truly be sufficient to compensate for their loss. Even though the law everywhere is usually intended to do just that, the reality of bargaining power and self-interest is that corporations and governments will seek to limit their liability, so it is not unusual for compensation payments to be contested for many years.
In this context, the stakeholders who have signed the Rana Plaza Compensation Arrangement deserve credit for being able to agree a coordinated framework within the year, to compensate the injured workers and dependents of the deceased who died in the Rana Plaza building collapse at Savar on April 24th, 2013.
For families of the 1,133 people killed and over 2,000 injured, this agreement will hopefully increase the amount of much needed compensation and increase the pace of delivery of payments to cover medical costs and income replacement needs.
The Arrangement has been signed by four leading buyers (Primark, Loblaw, Bonmarche, El Corte Ingles), the Bangladesh Ministry of Labour, Bangladesh Employers’ Federation, BGMEA, Bangladesh Institute for Labour Studies (BILS) and labour groups including the global trade union, Industriall. It is also supported by the Clean Clothes Campaign NGO which has been pressing global retailers to do far more to help the families of the disaster’s victims.
Under the agreement, which provides for a single approach for compensation consistent with provisions of ILO Convention No 121, the International Labour Organisation (ILO) is chairing a multi-stakeholder Coordination Committee drawn from the signatories, to make disbursements to victims with instalments pencilled in to have started from February 2014, provided sufficient funds are received, but still, it is embroiled in a suuficiency protest, where the workers are protesting the Tk1.45m compensation amount. According to ILO standards, this figure stands at Tk2.8m.
To finance the payments, international brands and retailers have been approached to make voluntary contributions into a trust fund managed by a global bank and open to other international donors. Any local funds will be kept in a local bank which will also be used to make the payments agreed directly to the beneficiaries.
Although the final total funding needed will only be known once individual claims are determined according to need and medical advice, it is estimated that the total amount disbursed via this agreement will be around $40m. The amounts given will be offset against any other sums already paid to victims by the government and other local and global stakeholders.
Besides the four Canadian and European companies who have signed the Arrangement, over 20 other multinational brands have been linked to the five garment factories which were located in Rana Plaza, but legal caution and denials of liability are expected to deter most from signing up. Bearing in mind that on the day, the magnitude of the disaster was amplified by the negligence of local managers who demanded that workers go into a building that had been officially determined to be unsafe, such reticence comes as no surprise.
This does not mean that other brands outside the Arrangement have not also been active in making payments to victims or in supporting stakeholder initiatives to improve safety conditions. The legally binding Accord on Fire and Building Safety in Bangladesh has been signed by over 100 global companies and the Alliance for Bangladesh Worker Safety brings together major North American retailers who have agreed to make $100m of loans available to improve factories.
Looking to the future, it is the successful implementation of these types of initiative that will be key to ensuring safe working conditions for everyone in the sector.
For the families of Rana Plaza’s victims however, it is their immediate day to day needs that matter most. No stone should be left unturned to increase the amount of support and finance provided. This is why it is vital that the Rana Plaza Compensation Arrangement has received strong institutional support and credible brand backing. Otherwise it would be all too easy for financial help to be lost in a quagmire of corporate defensiveness and legal dispute. The still-running disputes arising out of the Union Carbide disaster at Bhopal in 1984 highlight the risks to all involved of the cost of failing to settle just compensation as early as possible.
Of course by global standards the amounts people will receive seem small. Inevitably they are limited by factors such as actual wage rates and the low cost of living in Bangladesh, which give rise to a low value for the economic cost of the statistical value of a person’s life in Bangladesh.
Negotiators announcing the Arrangement have talked in ball park figures of families of the dead receiving up to $25,000 each. An unusual amount by Bangladeshi standards no doubt where per capita purchasing power is in the order of $1,900 a year, but no substitute for the loved one lost.
Still it promises to be more than if left to the law alone. In submissions to the High Court committee for determining compensation, the BGMEA was reported to have argued that the 1955 Fatal Accidents Act is not applicable in this case as the death of workers was not caused by “wrongful act, negligence or default’’ of the factory owners themselves. Responding to suggestions to set Tk 19.51 lakh as the amount of compensation for families of each deceased worker, it argued that relatives will get money from life insurance and labour law requires Tk100,000 compensation only.
Had such legalistic argument been stuck to by everyone involved, it is doubtful that the Rana Plaza Compensation Arrangement could have been approved before the end of 2013. The brands who signed deserve recognition that they have transparently acted to increase the amount and speed of compensation available to victims. It is tacit acknowledgement on their part that the vast majority of bargaining power and finance within the garment sector lies in the hands of global buyers and they are the ones with the most ability to facilitate improvements to standards and wages in the industry.
Hence, whilst the deplorable safety conditions that caused the Rana Plaza disaster are directly the fault of individuals enabled by the poor enforcement of safety laws within Bangladesh, it is right that international buyers share in the duty of responsibility towards workers in the industry. Corporate responsibility has to be about doing more than just the bare minimum of what the law requires.
None of this absolves Bangladeshis from taking more action to compensate victims and invest in improving the garment industry ourselves. Yes, there are sound arguments for much of the finance for the initiatives mentioned coming from abroad; global buyers relentlessly seek to drive down the cost of goods and western consumers benefit from the low wage rates of producing countries like Bangladesh. But this does not justify being passive in the face of global market forces.
At the very least, there is a basic moral duty for the garment sector to raise standards itself. More importantly over the medium term, a lot more still needs to be accomplished to raise the estimated $1bn required to build newer factories and spread good practices across the sector.
This is not an impossible challenge. After all, the Bangladesh garment industry would not have become the world’s 2nd largest exporter after China if it did not already have some competitive and fully-compliant world class producers. It should also in the medium term pay for itself by improving productivity and increasing profits.
Key stakeholders share a common interest with garment factory owners and workers in raising average standards in Bangladesh. Most of the problems inherent in ensuring the good working conditions which consumers expect and campaigners are calling for, are endemic to the garment industry worldwide. As buyers who “cut and run” to competing manufacturing countries like Cambodia and India only face running into similar problems elsewhere, it is better all round to improve conditions here and now.
Yet, despite long experience over the past two decades of dealing with stakeholders on compliance and labour standards issues, the BGMEA leadership traditionally places much of its external emphasis on maintaining a low cost model at all costs. This is neither positive strategic thinking for the long term, nor is it positive public relations as it gives the appearance of being over-defensive about poor conditions.
While garment owners have a good case for complaining about the low margins demanded by buyers, it is also the case that much of the impetus and funds for making factory improvements, is coming from overseas companies, campaigners and governments. Much more of this effort needs to come from the industry itself. It is not as if it is completely powerless as large factory owners have considerable economic and political influence within the country.
Members of the BGMEA should for example do more to demonstrate that they too are investing in improving conditions and developing skills training. They could also be more pro-active in building the country’s image, when for example, buyers request meetings abroad to negotiate contracts because of the perceived risks caused by the political climate. What is to stop more producers from arranging secure meetings in Cox’s Bazar rather than spending money to meet in India or Singapore?
As the nation’s dominant industrial sector, garment entrepreneurs owe it to themselves as well as the country’s workers to invest in moving the county’s exports higher up the value chain. They have no choice. Not only is it undesirable in the globalised economy to stay stuck in a race to the bottom, it is impractical. Sooner or later, Bangladesh will become a middle income country. Relying on low labour costs alone will not be sufficient to sustain the nation’s economic growth. This necessitates improving the climate for investment.
The BGMEA should work together with campaign groups and unions to raise standards so that the aftermath of the Rana plaza disaster does not just help to bring about vitally-needed safety improvements, but improves the productivity and sustainability of the industry overall.
Ultimately it will only be by raising living standards overall that the value of a Bangladeshi workers’ life will be raised higher.
|Rana Plaza Compensation Arrangement|
|UN agency International Labour Organisation (ILO) acts as a neutral chair. The Understanding for this Arrangement has been signed by:
Alliance for Bangladesh Worker Safety
National Tripartite Plan of Action on Building and Fire Safety in the RMG sector in Bangladesh
ILO ‘Improving Working Conditions in the Ready-Made Garment Sector’ program (RMGP)