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Transparency Thursday: In Response to the Bangladeshi Factory Collapse, Who is Responsible for Ensuring Safe Working Conditions?

Body carried from Rana Plaza. 9 May 2013

The collapse of the Rana Plaza Complex in Dhaka, Bangladesh was a tragic event which has resulted in the deaths of more than 1,100 people. If there is any silver lining to this horrific event, it is that more attention is being paid to factory safety conditions and workers rights in Bangladeshi factories and in the garment industry as a whole. Bangladesh is the second largest producer of apparel globally after China.

The origin of goods and a consumer demand for sustainable production processes has its origins in the food production industry. The trend has expanded into the garment industry in recent years. When garment producers first came under scrutiny, much of the focus was on workers rights. “Sweatshops” and child labor became lightning-rod issues. While these issues have not been fully eliminated, progress has been made—the “spotlight effect” can greatly change the actions of large MNCs. The new issue on consumer and producer agenda’s is factory safety conditions. How best to address this issue is open for debate.

In the past week, many European and a few American clothing producers have agreed to sign onto a legally enforceable plan which mandates; “rigorous, independent factory inspections, and helping to underwrite any fire safety and building repairs needed to correct violations.”

An alternative approach, championed by The Gap, seeks a watered down version of the plan without the legally binding aspect. “Under Gap’s proposal, if a retailer were found to have violated the agreement, the only remedy would generally be public expulsion from the factory safety plan.

“The U.S. is quite litigious,” said Bill Chandler, a Gap spokesman. “We put forward specific proposals that we thought would bring other American retailers into the fold. We thought it would be a step forward and would turn it into a much more global agreement.”

According to Gap, its plan is not to exonerate companies from having a legal obligation, but rather an attempt to bring many more companies on-board. Admittedly, the spotlight-effect of public expulsion from such a plan would probably be very costly for a clothing producer, leading the company to seriously consider internalizing the cost of bringing its factories up to code.

Walmart is planing on its own internal safety audit system,which is likely to be rife with conflicts of interest. Walmart’s reasoning is efficiency, it does not believe a global mechanism can work efficiently as there will be lots of bureaucracy involved.

I believe a large element of the picture has gone largely unnoticed in the aftermath of this tragedy—the role of Government on working conditions. What exactly are Bangladeshi factory safety-standards like? How do they compare to other developing / developed countries? If the rules on the book are not adequate, then requiring MNCs to underwrite getting up to code will not fix anything. If the rules are adequate, and are simply not enforced properly, then requiring producers to pay for bringing factories up to code should theoretically work.

The Bangladeshi government response has been significant. “This week the Bangladesh government said it had closed 16 garment factories in Dhaka and two in the south-eastern port city of Chittagong for safety reasons after the collapse of Rana Plaza.

“These factories will only be allowed to reopen after they have made structural and safety improvements,” a senior official of the labour ministry said. “Every factory in the country will be inspected as part of a government initiative to ensure safety.”

There are concerns that corruption and political influence may allow owners to evade regulations.”

Again, is the issue the laws in place, or how they are enforced? Actions by the Bangladeshi government make it seem like it is an enforcement issue. If this is the case, the issue likely reaches beyond apparel and is one of corruption and lack of transparency (and is likely government-wide). Is the movement towards stronger enforcement authentic, or is it merely an attempt to appease clothing producers until media attention dies down?

Ultimately, a mixed approach will need to be taken. Pressure has to continue to be put on the Bangladeshi government to enforce better safety conditions for workers. In a country with over 4 million garment workers, this is an important step in protecting the rights of Bangladeshi workers.

Pressure can also be put on MNCs by consumers. Consumers can “shop with their wallets”, but will they? I had a conversation with a co-worker, and we both felt that when considering the food and garment industries, it would be harder to pass the extra cost onto the consumer in the garment industry. Our reasoning was that when it comes to food, people are willing to pay extra because they believe they are putting something better into their bodies—it is a mutually beneficial relationship. When it comes to garments, the benefits to the consumer are diminished, far off, and often forgotten except in the direct aftermath of events like the one this article is based on.

So MNC will perhaps have to make up more of the cost on this one. MNCs can also “vote with their wallets”. By shifting production to other countries, the Bangladeshi government will understand the value of having a reasonable minimum standard for worker safety and workers rights. MNCs can pressure the Bangladeshi government to better enforce safety regulations (if the cost cannot be passed onto consumers, perhaps part of it could be shared with the Bangladeshi government). The government’s role cannot be overstated in this issue—without good governance any plans by MNCs will be hampered.

As far as what MNCs can/should do, I think that a more inclusive, less binding plan that relies on the spotlight-effect is more practical even if theoretically less effective. What good is the legally binding plan if the majority of producers do not sign onto it? If a less binding plan got the majority of garment producers on board (as opposed to just a handful), those producers would have a more unified voice. The Bangladeshi government would have less options and ultimately would have to appease MNC s (since such a large portion of the Bangladeshi economy is based on textile exports) by helping enforce stricter factory safety standards.

 A more recent Bangladeshi factory fire, in which 8 were killed, highlighted that there is indeed much more work to be done.

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