Shyama Venkateswar Distinguished Lecturer, Hunter College and Director, Public Policy Program, Roosevelt House

Posted on March 2, 2014 · Posted in Frank Friday

A year after one of the worst industrial disasters in the country’s history claimed the lives of over 1,100 garment workers in Savar, Bangladesh last year— most of them poor, young  women — a new report finds that the apparel industry’s business model, which relies on a vast and unregulated network of subcontractors who produce work in facilities that violate international labor standards, lies at the heart of the problem of worker safety in a globalized market. The indirect sourcing model has inherent risks: retailers with billions of dollars of annual sales effectively lose control of their supply chain while networks of subcontractors and agents increase their margins at any cost, even if it means compromising on work conditions in the thousands of factories in the developing world that produce cheap garments for western consumers.

Since the Bangladesh tragedy in 2013, two major coalitions – one comprising of labor unions and businesses in Europe, the Bangladesh Accord for Fire and Building Safety (“Accord”) and the other representing North American retailers, the Alliance for Bangladesh Worker Safety (“Alliance”) – have initiated inspections and monitoring of factories in Bangladesh. This could be seen as a step in the right direction, if not for the widely reported tension between the two groups that include major corporate retailers like Walmart, Gap, H&M, Carrefour, and others. While the Alliance claims to have conducted more inspections, the Accord alleges that those inspections have not been held to high enough standards. Meanwhile, the Accord has been accused of not compensating workers whose factories were closed for failing inspections. Neither, however, has a plan on reforming their member partners’ global supply chains which rely on middlemen and subcontractors who operate outside labor laws and safety standards.

Whatever the merits of each coalition, one fact is clear. There are between 5,000 and 6,000 factories in Bangladesh that produce garments for western clothing companies.  Monitoring by the two coalitions include less than 2,000 factories; the rest are unregulated with workers working in downright dangerous conditions. Reports describe factories operating in overloaded buildings, cracks in facades, flammable materials in open spaces, locked gates, and unsafe electrical and structural conditions. A major problem is the lack of transparency in monitoring and compliance, but more important is the ambiguity surrounding who is responsible for paying for the most needed upgrades to the infrastructure that allows for the thousands of factories to operate and produce garments in Bangladesh, an industry representing 80 percent of the country’s exports. Walmart, for instance, has resisted paying more to help factories in Bangladesh improve their safety standards. The Alliance representing North American retailers is not financially liable for mitigating workplace hazards for workers in Bangladesh.

The garment industry has been beneficial to Bangladesh’s growth. Since the late 1970s when the garment industry took root in Bangladesh, poverty rates have decreased from 70 percent to 40 percent with associated improvements in literacy levels, mortality rates, and other human development indicators. However, political instability, corruption, poor governance, weak labor laws, lack of enforcement and an overriding gap in resources have led to poor control of the garment industry that forms the lifeline for Bangladesh’s economy. The government has initiated a National Action Plan to implement the necessary upgrades to its vital industry, but as this report finds, it is unrealistic for the government to advance this, given its lack of finances, political will or technical knowledge.

The tragedy in Bangladesh has led to discussions about corporate social responsibility as well as the need for oversight and regulatory frameworks up and down global supply chains that produce cheap products for consumers all over the world. Addressing how products are sourced, the mechanisms to monitor subcontractors and the labor standards to which they must adhere, or moving businesses to consider more direct, transparent sourcing is not the work of a single entity. Instead, a coalition of labor unions together with governments, corporations, and multilateral groups like the International Labor Organization must pay particular attention to enhancing workplace safety, improving infrastructure in resource-starved countries like Bangladesh, and increasing transparency and accountability of businesses.

Whether in a tragedy like the Triangle Shirtwaist Factory Fire in Manhattan over 100 years ago or the Bangladesh garment industry disaster in Bangladesh last year, it must come down to this: corporations and business owners must ensure decent working conditions and give paramount importance to worker safety. They must bear the responsibility to ensure the most rigorous implementation of international labor laws to protect workers everywhere and enable their collective rights.

The writing and opinions expressed herein are those of the authors and do not necessarily reflect the positions of the Roosevelt House Public Policy Institute or Hunter College.