RMG industry: Post-Rana Plaza

IT is more than one year now since the horrific Rana Plaza disaster that claimed at least 1,135 lives and left hundreds more missing, wounded or incapacitated. The scale and gravity of the disaster generated a chorus of condemnations from all around the world and mobilised global opinion to revamp and improve building structures and working conditions within the industry. It was a wake-up call!
International Labour Organisation (ILO), in this regard, acted quickly and negotiated, within the first ten days of Rana Plaza disaster, a tripartite statement signed by the government, employers and workers stipulating the need for structural assessments of all export-oriented garment factories, employment of additional 200 building inspectors and the rehabilitation of workers affected or disabled by industrial accidents. It also agreed to amend law allowing right to union and enhancing occupational safety and health. Subsequently, an integrated National Tripartite Plan of Action on Fire Safety and Structural Integrity in the Garment Sector (NTPA) was signed by the government, Employer's Federation, Bangladesh Garment Manufacturing and Exporting Association (BGMEA), Bangladesh Knitwear Manufacturing and Exporting Association (BKMEA), National Coordination Committee for Workers' Education (NCCWE) and IndustriALL Bangladesh Council (IBC) representing unions. Major buyers, retailers and key fashion brands were not signatories of the agreement, which overshadowed the actual objectives of such an arrangement.
Internationally, two major positive developments took effect -- the signing of an Accord on Fire and Building Safety by global unions and major fashion brands and retailers primarily from Europe; and an Alliance for Bangladesh Worker Safety agreed upon by retailers and brands primarily from North America. Both Accord and Alliance aimed at inspecting and setting safety standards in garment factories used by the signatories over a five-year period.
In addition, two significant policy changes took effect as a response to global demand -- the amendments to the existing Labour Act in July 2013 allowing the formation of trade unions without informing the factory owners and the 77% increase of the minimum wage in the industry from $38 a month to $68 a month.
Following the first round of inspection of factories in Bangladesh last month, EU representative and the Executive Director of the Accord, Alan Roberts termed the problems manageable and not severe while acknowledging that some noticeable changes had already taken place. This is, indeed, good news, when Bangladesh is trying hard to come out of the shadow of the scandalous Rana Plaza disaster. However, there are several key issues that require immediate attention. For example, only 25 of the promised 200 qualified building and safety inspectors have been appointed to date and a national occupational health and safety law is yet to be legislated, while the concentration of factories around the already overcrowded Dhaka remains a concern.
Another lingering issue is the failure to adequately compensate Rana Plaza victims. BGMEA, charitable organisations and the government of Bangladesh had already paid some compensation. A Rana Plaza Trust Fund was formed by ILO to collect compensation from retailers with factories in Rana Plaza. To date, the British retailer Primark has paid $9 million to the fund while the others paid a total of only $8 million, leaving a shortfall of $23 million. Some retailers did not even make any initial payment and remained unwilling to pay compensation in full. Meanwhile, the Bangladesh Prime Minister's relief fund collected public donations of over Tk.127 crores to support and rehabilitate Rana plaza victims, of which only Tk. 22 crores have been spent so far.
Rising production cost is also an issue resulting from increased wages and additional spending to become compliant with requirements set by the government and international agreements. Local factories have recently committed to spend Tk. 80 billion as new investments to meet such requirements. However, despite such a cost blowout, most retailers remain reluctant to pay any extra money for their imports. The situation has been exacerbated by the intensifying global competition as countries such as India, Cambodia, Vietnam and Myanmar have aggressively been trying to exploit the Rana Plaza situation to persuade foreign buyers to buy garments from them instead of Bangladesh! Unfortunately, failing to cope with the rising cost and competition, a good number of factories have either registered significant losses or have already been forced out of business since the Rana Plaza disaster.
The garment sector in Bangladesh has been built over a period of the last four decades through the dedication and hard work of our indigenous entrepreneurs and employees without much support from the government and other local or international organisations. It is time now to consolidate and safeguard the industry and its future through adopting a systematic, multi-level and multi-pronged governance approach. At the national level, key players including labour representatives, factory owners and the government need to reach a consensus about the way the industry should be run and governed.
It is also important for retailers to ensure ethical practice and auditing conforming to the 2011 UN human rights guiding principles to protect and respect people's life, livelihood and dignity. Accordingly, at the retailers' end, the home country government, retailers and consumer groups should form partnerships to ensure the observance of these principles in factories located in their source-countries. Currently, there is no direct involvement of governments of major retailing countries to make major retailers and brands follow ethically responsible sourcing practices and pay the fair price for their orders. Relevant international organisations including NGOs should also be directly involved in making the process transparent and accountable.
Finally, it is time now to streamline apparently dispersed initiatives and establish a global garment industry governing council as a platform to formulate, update and implement a set of global norms on working conditions, building standards, labour rights and minimum wages. All key stakeholders including, retailers, consumers, workers, factory owners, governments, NGOs and international organisations should interact, coordinate and participate to form this much-needed body and fund its activities.
 

The writer is the Head of Geopolitics, Business and Government Research Cluster at RMIT University, Australia and Honorary International Advisor of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).