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 article and available in full at )

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  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 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.