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, Corporate Responsibility, Corporate Responsibility/Compliance, Labour standards

When will the value of a Bangladeshi life go up?

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:

  • Buyers (Primark, Loblaw,  Bonmarche, El Corte Ingles),
  • Bangladesh Ministry of Labour, Bangladesh Employers’  Federation (BEF), Bangladesh Garment Manufacturers and Exporters Association (BGMEA),  IndustriALL, Bangladesh National Council, Bangladesh Institute for Labour Studies (BILS),
  • Industriall Global Union and Clean Clothes Campaign

http://www.ranaplaza-arrangement.org/

 

Bangladesh Accord

  • The Accord is an independent agreement  which includes independent safety inspections at factories and public reporting of the results of these inspections. Where safety issues are identified, retailers commit to ensuring that repairs are carried out, that sufficient funds are made available to do so, and that workers at these factories continue to be paid a salary.
  • The Accord is a legally binding agreement. It has been signed by over 100 apparel corporations from 19 countries in Europe, North America, Asia and Australia; two global trade unions, IndustriALL and UNI; and numerous Bangladeshi unions. Clean Clothes Campaign, Workers’ Rights Consortium, International Labor Rights Forum and Maquila Solidarity Network are NGO witnesses to the Accord. The International Labour Organisation (ILO) acts as the independent chair.
  • The Accord recently published its list of nearly 1600 factories which are covered under its provisions on its website. The list includes addresses of the factories involved and estimates that over 1.97m workers are employed at these sites.

http://www.bangladeshaccord.org/

 

 

Alliance for Bangladesh Worker Safety

  • A group of North American apparel companies and retailers and brands have joined together to develop and launch the Bangladesh Worker Safety Initiative, a binding, five-year undertaking that will be transparent, results-oriented, measurable and verifiable with the intent of improving safety in Bangladeshi ready-made garment (RMG) factories. Alliance members represent the overwhelming majority of North American imports of RMG from Bangladesh, produced at more than 500 factories.
  • Supporting associations include: American Apparel & Footwear Association, BRAC, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association, and United States Association of Importers of Textiles & Apparel. In addition, Li & Fung, a major Hong Kong-based sourcing company which does business with many members of the Alliance, will serve in an advisory capacity.

http://www.bangladeshworkersafety.org/

 

National Tripartite Plan of Action on Building and Fire Safety in the RMG sector in Bangladesh

  • The Government of Bangladesh and representatives of Bangladesh employers’ and workers’ organizations have signed an integrated National Tripartite Plan of Action on Fire Safety and Structural Integrity in the garment Sector of Bangladesh (NTPA).
  • The National Tripartite Committee (NTC) chaired by Labour Secretary, includes Government agencies, employers (BEF, BGMEA and BKMEA) and trade unions.
  • Bangladesh University of Engineering and Technology (BUET) has begun a process to assess the factory buildings that are not part of Alliance or Accord, both for structural integrity and fire and electrical safety. Technical experts of the three initiatives: Accord, Alliance as well as BUET/ NTC  have worked together in joint development of standards to be assessed.

ILO ‘Improving Working Conditions in the Ready-Made Garment Sector’ program (RMGP)

  • RMGP focuses on minimizing the threat of fire and building collapse in ready-made garment factories and on ensuring the rights and safety of workers.
  • The United Kingdom and the Netherlands are jointly contributing US$15 million to the US$24.21 million programme. The ILO is mobilizing further resources.
  • This programme supports the National Tripartite Plan of Action on fire safety and structural integrity and includes a new  Better Work programme -aimed at improving working conditions in the ready-made garment (RMG) industry in Bangladesh.

http://www.ilo.org/dhaka/

– See more at: http://www.dhakatribune.com/long-form/2014/02/18/when-will-the-value-of-a-bangladeshi-life-go-up/

Bangladesh, Corporate Responsibility/Compliance

RANA PLAZA DONORS TRUST FUND

The co-ordination committee of the Rana Plaza Arrangement   http://www.ranaplaza-arrangement.org/  has published fuller details of the Rana Plaza Donors Trust Fund.

The Trust Fund is open to any company, organisation, public body or individual who would like to make a voluntary donation to the families affected by the Rana Plaza tragedy. Full details of how to donate are on its website. http://www.ranaplaza-arrangement.org/fund