Bangladesh, Compliance and ethical trading, Corporate Responsibility, Labour standards

THE ROAD FROM RANA PLAZA

Three years on, the scale of the pain caused by the Rana Plaza tragedy remains as shocking as ever. Building a safer, more sustainable garment industry will be the best and most lasting memorial to those who suffered at Rana Plaza.

To reach this goal, all stakeholders in the global garment chain need to stay focused on co-operative efforts to raise standards by remembering:

1. There is no substitute for vigilance, 2. Co-operation is key, 3. Government must play its part, 4. A better future needs a level playing field 5. Climbing the value chain beats a race to the bottom 

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Three years on, the scale of the pain caused by the Rana Plaza tragedy remains as shocking as ever.

Among the hundreds of RMG workers who survived the factory collapse that killed 1,135 people on April 24, 2013, three fifths still suffer serious physical and psychological after-effects. Around half are unemployed and less than one in 20 wish to return to work in the garment industry.

The reminder provided by the anniversary will hopefully boost ongoing efforts to aid, rehabilitate, and provide solidarity to all survivors and the families of the bereaved.

The ILO chaired fund set up by the Rana Plaza Arrangement backed by the government and leading brands has made invaluable progress in enabling support to be provided for victims in line with the standards required by ILO Convention 121, without getting delayed by legal disputes.

Those brands who led the way in supporting the Arrangement deserve recognition for acting transparently to speed the flow of compensation available to victims.

It was 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.

As for the people most directly responsible on the day, the building owners and managers who forced workers back into a factory which had been officially declared unsafe, murder charges were filed last year against 42 different people and the city development authority RAJUK has filed a separate case against 13 people, for flouting the National Building Code.

Hope remains that the wheels of justice will keep turning and the survivors’ needs will not be forgotten.

For Bangladesh, the anniversary is a salutary reminder of the need to redouble efforts to build a better future for the millions of people who work in or are dependent on the RMG sector.

Building a safer, more sustainable garment industry will be the best and most lasting memorial to those who suffered at Rana Plaza. To reach this goal, all stake-holders in the global garment chain need to stay focused on co-operative efforts to raise standards by remembering:

1. There is no substitute for vigilance

Official government efforts and the Accord and Alliance brand led stake-holder safety initiatives are making a real and meaningful difference.

Factory inspections are steadily and surely identifying and repudiating areas for improvement.

Last year, for instance, there were only five incidents of fires in the whole industry which passed without loss of life. This compares with some 250 officially recorded garment factory fires taking place during 2012, which took the lives of 115 people. The large decline in fires and improved safety rate is a sign of how increased monitoring and growing awareness among workers and factory owners are helping to prevent accidents.

Renewed attention has also been given to labour rights issues and the minimum wage was raised after a long hiatus.

2. Co-operation is key

Stake-holder collaboration is vital to help build the long-term partnerships needed to help grow Bangladesh’s garment manufacturing sector as a safe and sustainable industry.

The stake-holder safety initiatives and Rana Plaza Arrangement signal how industry wide co-operation can help bring about a sea-change in attitudes.

Amid an ever competitive global marketplace, brands and buyers need to keep playing their part in working to help factory owners secure the finance to fund improvements.

It is in everybody’s interest to raise standards here and now in Bangladesh, where the industry is well-rooted than elsewhere where the same downward pressures on prices and standards create the same challenges.

Investing more in long-term orders and building closer relationships with well-performing producers, is key to improving the sector’s cash flow and securing new funds to keep upgrading standards.

It is a testament to the Bangladesh garment industry’s collective resilience that it has continued to grow and reach out to new markets despite all the pressures it is facing. There are encouraging signs that leading manufacturers and the BGMEA are now taking more of a lead in building better factories and investing more in research and development to raise productivity in the apparel industry.

Much more co-operation is needed to ensure the benefits of improved conditions and better safety standards reach across all the tiers of the supply chain.

The short lead times, low margins, and large amount of sub-contracting inherent in fast fashion, make it imperative that all stake-holders work closely to identify and close off loopholes which enable codes of conduct to be broken.

3. Government must play its part

The government has to do more to ensure it fully enforces safety standards and labour laws.

It is welcome then the Department of Inspection for Factories and Establishments now has  277 inspectors to ensure welfare, safety, and health of human resources working in industrial sectors, compared to just 42 three years ago.

The government also needs to keep up a national focus on enhancing labour rights and developing better workplace insurance systems. This can help not only improve working conditions and increase the appeal of Bangladeshi goods, but also strengthen the industry’s case for securing a fairer deal from importing nations.

Lack of land and reliable energy supplies are the two biggest deterrents that impede investors from developing safer, modern factories. It is still vital then for the government to facilitate and attract greater investment in new factories by freeing up underused state owned land for the development of EPZs and industrial parks.

4. A better future needs a level playing field

Despite the WTO Bali package, it is telling that little has changed since the IMF’s famous 2002 report on the “The Truth about Industrial Country Tariffs.”

Developing countries that export primarily agricultural and labour-intensive goods such as textiles and clothing are still hard hit by large industrial countries’ tariff policies.

This remains particularly the case with Bangladesh RMG exports to the United States, where the IMF study showed in 2001, the US collected duties of $331 million in 2001 on total imports from Bangladesh then worth $2.5bn, which was slightly more than the $330m it collected on $30bn of imports from France.

With Bangladesh now an even bigger RMG supplier to the US market, the picture is somewhat worse with well over $800m now paid each year in tariffs to the US government on imported Bangladeshi garments.

The tariff rate charged on Bangladeshi RMG exports to the US (15.6%), the second highest in this category, is especially discriminatory, as it is higher than nearly all other developing countries and roughly five times that charged on RMG exports from China and India.

It compares unfavourably with the EU’s “everything but arms” duty and quota-free scheme.

As it is stated, US policy to officially encourage efforts to raise labour standards in Bangladesh, if the US does not wish to remove its tariff, it should adopt the proposal made by the former chief economist of the Bangladesh Bank and establish a “tariffs for standards” fund.

By putting a portion of the excess rate paid by Bangladesh, say $200m, into a fund administered by a third party to finance factory upgrades and improvements in working standards, the US could help level the playing field for Bangladeshi exporters by directly supporting increased investment in improving Bangladesh’s RMG sector.

5. Climbing the value chain beats a race to the bottom

It is in the common interest of buyers and factory owners and workers alike for Bangladesh’s garment industry to improve its standards, as consumers and buyers will also gain from higher standards through improvements in productivity.

For the Bangladesh garment sector to achieve its goal of doubling exports to $50bn by 2021, a comprehensive approach needs to be taken to maximise investment in building new factories where productively and standards can both be improved.

This is particularly crucial for the Bangladesh RMG sector, which needs to both adapt to new competition and invest in improving workforce skills so the industry can keep rising up the value chain.

– See more at: http://www.dhakatribune.com/opinion/op-ed/2016/04/24/2257/

 

Bangladesh, Compliance and ethical trading

Investment for a better Bangladesh RMG Industry

Everyone agrees, to sustainably improve the RMG industry increasing investment is necessary to deliver improvements in  productivity and safety.With plenty of multi stakeholder activty on compensation and safety, there is reason to suppose that the case for more investment will grow. http://www.dhakatribune.com/2014/feb/19/when-will-value-bangladeshi-life-go              According to the Economist, buyers have strong economic arguments for investing in such initiatives to improve the RMG sector in Bangladesh  http://www.economist.com/news/business/21588393-workers-continue-die-unsafe-factories-industry-keeps-booming-bursting-seams

There is certainly still good reason to suppose that cutting and running to competitor nations will not remove risks for brands and buyers of poor standards in supply chains. One worry for Bangladeshi businesses and workers however, is that restructuring may pull the ladder for improvement away from smaller factories – even though the nature of the industry and short lead times often builds in a lot of sub-contracting. Squaring this circle is a global problem for the garment sector and one which deserves to be followed with close interest. http://www.thedailystar.net/op-ed/urgency-for-rmg-sector-restructuring-12531

One intriguing post Rana development is growing interest from investment funds in the sector. How this pans out may make a huge postive difference over the next few years  http://www.theguardian.com/sustainable-business/supply-chain-tau-investment-management-regulations-cheap-labor-clothing

Bangladesh, Compliance and ethical trading, Labour standards

Stakeholder plan for building a safer garment industry in Bangladesh

A leading garment manufacturer and investors were among stakeholders (RMGACTion)  who recently published a 10 point roadmap to build a safer and more sustainable garment industry in Bangladesh.  (summarised in this http://www.dhakatribune.com/op-ed/2013/jun/13/building-safer-and-stronger-garment-industry article and available in full at  http://www.scribd.com/doc/144709575/RMG-Sector-10-Point-Plan )

Rightly, the paper starts with safety as the most urgent priority for action by the industry, regulators, buyers and unions – and proposes the ILO backed Bangladesh Fire and Buildings Safety Accord signed in April as a starting point to help classify factories most at risk. It calls upon the BGMEA to ensure that all new factories built are independently certified to meet the Tier 1 classification (highest of three grade) – and that action plans are urgently developed and implemented for the 1000 worst Tier 3 graded factories found in the process.

Interestingly, the paper also looks to the longer term and welcomes BRAC founder Sir Fazle Abed’s statement that Bangladesh needs stronger unions more than outside pressure http://www.nytimes.com/2013/04/30/opinion/bangladesh-needs-strong-unions-not-outside-pressure.html?pagewanted=all&_r=0.  It has of course long been argued by workers groups that  empowering workers to defend their own rights via unions and collective bargaining is the most effective way to sustainably improve conditions – which is why freedom of association lies at the heart of the core ILO standards and hence the ETI Base code and is a core principle of the UN Global Compact.

Pragmatically, given the default resistance by most owners to supporting union rights in Bangladesh (backed by a strong lobby in Parliament with ministers from governments of both Bangladesh’s main parties making defensive and dismissive remarks in response to suggestions to increase union rights) – the paper calls for worker participation bodies and a new BRIDGE organisation to facilitate improvements (and implement employee welfare and training programmes) as stepping stones towards meeting this goal.

Most importantly, it looks to the longer term by recognising that Bangladeshi exporters should look to move up the value chain with its attendant benefits of higher productivity and wages. Realistically, much of the paper focuses on the need for a properly co-ordinated (and financed) Action plan to improve conditions in the factories that need it most.

It is in the financing part where the author’s laudable objective of devising a ‘plan for Bangladesh by Bangladesh’ which ‘does not require commitments by buyers’, that the plan may seem a bit sketchy.  Hence rather than proposing to take 1% to 2% of the export value of the industry from buyers, it mentions an export tax of similar value (which arguably amounts to the same thing.if not paid for by improved productivity – although that is clearly the desired goal) – and calls for multilateral funding for a $1billion RMG Sector Transformation Fund to loan money to finance improved factories and/or reloactions.

Whilst there are precedents to enable such a large programme of state aid – and it is clear finance is needed by a large cohort of factories – it is unclear how quickly this could be actioned in an election year and how effective the government would be in ensuring  transparency and accountability.

In practice therefore, all good ideas that can be implemented and monitored efficiently whether from buyers or regulators – or by workers themselves – need to be supported as the scale of the task necessitates a wide spectrum of practical approaches.  Some hard questions and choices will inevitably remain – as the understandably important national need to support millions of livelihoods can in the long term only be sustained by better productivity and more investment by factory owners and buyers alike – because ultimately the extent to which govt and external support can go in raising standards is constrained.

Similarly, in an industry of this size and scale, it is likely that differences may remain between the predominantly European buyers who tend to support an ‘invest and improve’ approach  towards non-compliance – and the ‘cut and run/ zero tolerance’ approach favoured by some major US firms.  In principle, a virtuous cycle of improvement is better supported by the former approach than the latter which is why unions and NGOs are right to argue that cut and run is no solution.   (Although cut and run advocates could argue that in a globalised world, Schumpter-ian forces can equally help drive out the worst offenders.)

Finally, to return the original safety issues at Rana plaza – and to be fair to Mike Flanagan, the retail consultant whose off the cuff wage rate email is quoted in the article, – his blog has a well considered review of what he summarises as the 7 key reasons and two factors, underlying the deaths at Rana plaza. (He points out that if only one or two of these had been different, the death toll would not have been as it was….)

Although Flanagan’s article http://www.just-style.com/comment/solutions-to-prevent-another-bangladesh-tragedy_id117742.aspx paradoxically (and I would argue mistakingly) criticises Bangladeshi media and campaigners for highlighting corruption issues and tracing buyers as people were still trapped (which just sounds like their job – with highly articulate and moving vox pops from workers and their families on local rolling news stations – helping to put a lot of pressure on the government to arrest the owner) – and he robustly defends the Walmart zero tolerance approach – his conclusions and proposed actions – which place a lot of emphasis on listening to workers and calls on buyers to ‘actively encourage worker whistle-blowing’ merits reading along with the RMGACTion plan.

Bangladesh, Compliance and ethical trading, Labour standards

RANA PLAZA DEATHS RISE – CALLS FOR ACTION MOUNTING

With a death toll exceeding the Tazreen tragedy last November and more bodies feared to be discovered, help not just sympathy is required for workers in risky factories all around the world. http://www.thedailystar.net/beta2/news/so-near-yet-so-far/

One can only hope this needless loss of human life will prompt more action (rather than ‘cut and run’) by brands such as those named in this article to make recalcitrant factory owners raise standards.   http://www.dhakatribune.com/politics/2013/apr/25/ill-fated-factories-supplied-global-brands

LESSONS FROM PAST TRAGEDIES SUCH AS SPECTRUM and TAZREEN STILL NEED TO BE LEARNED AND APPLIED IN FULL.

Bangladeshi citizens themselves must also face the wider societal challenges of reducing the culture of disregard for safety and fatalistic acceptance of tragedy that appears to underlie this disaster.

Bangladesh, Compliance and ethical trading, Corporate Responsibility/Compliance

Working standards and the Bangladesh RMG sector – the challenge for Brands, Retailers and Producers

In a list of  The Most Controversial Companies of the year 2012   –  published in January 2013 by a private research provider – other research providers are available  –  analysing alleged breaches of international standards relating to 10 global companies as reported in high profile news stories, the horrendous fire  which killed over 117 people at the Tazreen factory in Ashulia near Dhaka in Bangladesh in November 2012,  features at the top of the list ahead of many larger companies.  http://www.laborrights.org/news/coverage-of-the-tarzeen-fire.

This poses a challenge to everyone involved with the garments industry around the world – and is a particular challenge for Bangladesh where RMG is the country’s biggest export and industrial employer. Should not the past 20 years of codes of conduct, compliance, inspection and audits by the industry worldwide be doing more to mitigate this sort of accident….

In part, many would argue it has – although more needs to be done  Impact assessment studies by bodies such as the Ethical Trading Initiative confirm codes of conduct and their associated audits have played a part in improving standards, particularly on easier to audit issues such as child labour. However breaches of core labour standards remain in many industries; In particular, systemic issues or risks associated with long/forced overtime hours, low pay, and discrimination are harder to control or root out. And any massively competitive industry, particularly one operating where there is a large supply of cheap labour like the Ready Made Garments (RMG) export sector in Bangladesh, is likely to face some systemic breaches of standards

–  The challenge therefore is how to spread good practices that already exist in the sector(which is building more modern factories and continuing to achieve growth becoming the 2nd biggest exporter of RMG in 2012 after Chinahttp://www.worldbank.org/en/news/feature/2012/07/03/consolidating-accelerating-exports-bangladesh  ) and raise the playing field as a whole.

Although conscientious efforts made by some retailers and brands (and support for fair trade models by some consumers and producers eg; via  www.ethicalfashionforum.com/,)  are beneficial and improve standards in the short term, in the long run experience suggests that empowering workers to help represent themselves is an essential but oftenoverlooked element in sustainably safeguarding and improving standards –not to mention productivity.

This is not surprising perhaps as freedom of association and collective bargaining are sensitive issues in many countries or politically restricted as in China. In Bangladesh, it is to be hoped that the government’s 2013 national action plan on fire safety and associated investigations in the wake of the Tazreen and similar fires will help to raise standards and prevent further accidents and deaths.  The various multistakeholder initiatives involving brands, unions, the ILO and the BGMEA (Bangladesh Garment Manufactures & Exporters Association) such as that convened by the global garments union (Industriall – January 2013) will hopefully provide a platform for further improvements in working conditions and labour rights; in the past, too much of the Bangladeshi political  debate has been dominated by talk of conspiracies against the industry and speculation about the cause of fires, rather than calmly dealing with first hand testimony from workers (promptly interviewed by local media and news channels) about locked doors and lack of fire exits.

In turn, more brands and buyers need to take their own commitments and responsibilities more seriously – retailers must be expected to follow best practice by fully addressing breaches of labour standards when they are highlighted and  pro-actively working to mitigate problems, implement corrective action plans and raise standards within their supply chains – if they fail to do this or walk away from a problem supplier as Wal-Mart is alleged to have done recently in Bangladesh http://www.thedailystar.net/newDesign/news-details.php?nid=270558, they will rightly face criticism.

Of course if as analysts suggest, the Bangladesh industry’s export growth has been driven mainly by low wages  (all the many genuine efforts to implement codes of conduct notwithstanding) it is easier to understand – if not agree with defensive and nationalistic responses made to calls to increase trade union rights in Bangladesh.  The sector is too important in providing jobs (and bringing millions of women into the formal workforce) for this sort of resistance not to occur. Likewise global market pressures are so competitive that many buyers are happy to take advantage of  this type of race to the bottom.

Certainly with the vast majority of bargaining power and finance within the sector lying in the hands of global  buyers and retailers, they are the ones with the most ability to facilitate improvements to standards and wages,  (which experience suggests can be a win-win by improving productivity rather than being a cost) – so this is arguably where most responsibility lies and where consumers and activists will target most pressure to help raise standards.

http://www.industriall-union.org/industriall-promotes-rights-of-garment-workers-in-bangladesh

http://www.ilo.org/global/standards/lang–en/index.htm

http://www.fibre2fashion.com/news/apparel-news/newsdetails.aspx?news_id=121553

Bangladesh, Climate Change, Environment

All things must pass, but lets hope

…that this doesn’t come to pass  http://goodbyebangladesh.blogspot.com/, 

With the business case increasingly well costed and established,  major investors around the world are playing their part–  the Institutional Investors Group on Climate Change for instance includes some pension funds and asset managers in Europe, representing around €7.5trillion in assets and is collaboratively working to ensure climate change risks and opportunities are addressed and reflected in their investment practices and decisions.

http://www.iigcc.org/

And at the local level there is plenty of eco innovation and action to welcome.

 http://ufahari.com/ideas-innovations/in-bangladesh-new-eco-friendly-kiln-to-lower-air-pollution/