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, 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