Retailers agree on standards for Bangladesh

With consumers ready to open their wallets for the holiday shopping season, those worried about the quality of working conditions for factory workers may find some comfort in a retail agreement announced Wednesday.

The Wall Street Journal had this story:

Three parallel safety pacts spurred by the death of more than 1,100 people in the April collapse of a garment factory in Bangladesh have tentatively agreed on common standards for plant inspections in the country.

Experts from the three groups—the Accord on Fire and Safety in Bangladesh, which is led by mostly European retailers; the Alliance for Bangladesh Worker Safety, led by Wal-Mart Stores Inc. and Gap Inc.; and the government’s own National Tripartite Action Plan—reached the deal last week.

It would prompt the groups to adopt unified standards to simplify inspections and avoid duplication, officials with the three programs said.

The agreement, which still needs final approval from each group’s steering committee, could be a significant breakthrough in international efforts to raise standards in Bangladesh’s garment industry, according to Srinivas Reddy, country director of the International Labor Organization, which helped broker the deal.

“It was vital to agree on a coordinated approach toward safety standards and inspection methodologies to avoid multiple inspections of the same factories and to ensure that the same basic standards are applied,” Mr. Reddy said.

Reuters added these details of the agreement between the various retailers:

European retailers have agreed to finance fire and safety reforms for buildings that do not meet requirements, while the North American group – Alliance for Bangladesh Worker Safety – pledged $100 million in loans to factory owners to finance safety upgrades.

“The reason garment factories continue to be unsafe is not for a lack of common standards. It is because the monitoring visits carried out by brands were not conducted by competent engineers, not done in manner that is transparent, and did not include any commitment by brands and retailer to finance repairs,” said Theresa Haas, a spokeswoman for the Worker Rights Consortium, a labor rights group that is a member of the European-led Accord on Fire and Building Safety in Bangladesh.

“It’s up to the factory owner to decide if they want to remediate. We can’t force them to make these changes,” said Jeffrey Krilla, president of the American-led alliance, who called the agreement a huge step forward.

Individual retailers can voluntarily pull out of factories that do not meet safety requirements.

The new agreement comes as hundreds of workers take to the streets, demanding higher wages in protests that resulted in the death of least two workers and suspended production in up to 200 clothing factories.

Bangladesh garment factory working conditions have been under close scrutiny since the April collapse of the Rana Plaza factory complex killed more than 1,100 garment workers and a November 2012 fire at the Tazreen factory killed 112 workers.

USA Today’s story talked about how many labor groups felt the agreement didn’t go far enough:

The agreement is less stringent than the guidelines being pushed coalition of labor groups that called for third-party monitoring and labor representation and the coalition immediately lashed out at the retailers’ plan, calling it a “sham.”

“Worker representatives are not part of the agreement and have no role whatsoever in its governance,” the labor groups said in a statement Wednesday. “Given the grave risks facing millions of workers in Bangladesh, there can be no credible or effective program without a central leadership role for worker representatives.”

Scott Nova of the Worker Rights Campaign called the deal “an attempt to side-step the issue.”

Retailers said they objected to the labor-backed pact because they say it exposes them to unlimited liability. They also say that the pact called for large funding from the retailers and other private businesses without providing accountability for how the money would be spent.

Under the retailers’ plan, inspectors will “prioritize factory safety risks for remediation efforts” and will be empowered to report dangerous safety conditions to all parties. The initiative also includes an independent chair of a board of directors responsible for oversight.

The Bloomberg story added this context about the backdrop for labor unrest and why retailers are being pressured to make changes to business practices:

Unsafe factories and wages higher than only Myanmar in Asia have sparked labor tensions in Bangladesh’s $20 billion garment industry. A series of protests by workers demanding higher wages have taken place in the past several months in the industrial zones of Gazipur and Ashulia on the outskirts of the capital Dhaka. Some workers clashed with the police in demonstrations that forced the shutdown of factories.

Two workers died and 30 others injured in a protest this week as thousands took to the streets demanding a higher monthly salary of 8,000 taka ($103). The government last week increased the minimum wage to 5,300 taka, below the amount unions are demanding.

Except for one or two factories, most that had been shut by labor unrest have resumed production, Abdus Salam Murshedy, president of Exporters Association of Bangladesh, said via phone today. “Workers have joined work,” he said. “We expect that the government will issue a formal, written notice on the new wage structure today. The situation is returning to normal.”

Bangladesh Prime Minister Sheikh Hasina yesterday urged workers to accept the wage increase and to end violence, she said in a speech broadcast by Bangladesh Television.

The standards will hopefully help relieve some of the worst labor abuses, but often when regulations are enacted, business simply moves to a less regulated environment. As pressure mounts for retailers to lower costs and increase margins, it will remain to be seen how many companies continue to manufacture in Bangladesh instead of moving to another location. What would really be newsworthy is if these standards could be applied to all countries.