Bangladesh Re­birth of an In­dus­try

Fol­low­ing the Rana Plaza tragedy, la­bor laws in Bangladesh have re­ceived a thor­ough over­haul and the coun­try’s gar­ment in­dus­try can now of­fer more ben­e­fits to work­ers.

Southasia - - CONTENTS - By Fa­tima Si­raj Fa­tima Si­raj is cur­rently pur­su­ing a BBA de­gree at the In­sti­tute of Busi­ness Ad­min­is­tra­tion. She fre­quently writes on mar­ket­ing and so­cial is­sues.

La­bor Laws in Bangladesh may change for the bet­ter.

One of the first things you will learn in any course at busi­ness school is how im­por­tant it is for busi­nesses to achieve pro­duc­tive ef­fi­ciency. This con­cept en­tails achiev­ing the high­est out­put from the least pos­si­ble com­bi­na­tion of in­puts, which ef­fec­tively leads to max­i­miz­ing prof­its.

Large com­pa­nies of­ten achieve this ‘ef­fi­ciency’ by cap­i­tal­iz­ing on the avail­abil­ity of cheap labour in de­vel­op­ing coun­tries. Con­tro­ver­sies re­gard­ing the ex­ploita­tion of such labour have sur­rounded com­pa­nies like Nike and Ap­ple and th­ese have more to do with the man­age­ment rather than with the work­ers be­ing paid a min­i­mal wage.

The kind of con­di­tions that the work­ers are made to work in are also a cause of great con­cern and this has been high­lighted all too well in the re­cent fire that caused the col­lapse of an eight storey build­ing in Bangladesh. Over a thou­sand peo­ple were killed as the Rana Plaza, which housed five gar­ment fac­to­ries, burned down to ashes on 24th April. Th­ese fac­to­ries pro­duced clothes for in­ter­na­tional brands such as Mango, Benet­ton and Pri­mark, amongst oth­ers. The dev­as­tat­ing in­ci­dent that has been ranked as one of the world’s worst in­dus­trial ac­ci­dents oc­curred just five months af­ter 112 work­ers were killed in a sim­i­lar fire at a fac­tory pro­duc­ing gar­ments for Wal­mart and C&A.

Th­ese in­ci­dents call into ques­tion the ex­is­tence and, more im­por­tantly, ef­fec­tive im­ple­men­ta­tion of proper labour laws in Bangladesh. Such dis­as­ters high­light the cruel work­ing con­di­tions and se­ri­ous safety haz­ards that the coun­try’s 3.6 mil­lion gar­ment work­ers are ex­posed to on a daily ba­sis. In ad­di­tion, they are the low­est paid work­ers in the in­dus­try (earn­ing only $38 a month) on a world­wide ba­sis and have no sys­tem­atic unions to rep­re­sent them. Apart from re­flect­ing dis­re­gard for ba­sic hu­man rights, th­ese fires can cause se­vere harm to Bangladesh’s gar­ment in­dus­try, which con­trib­utes to 80% of the na­tion’s to­tal ex­ports, gen­er­at­ing $21 bil­lion an­nu­ally.

As global cor­po­ra­tions strive to achieve busi­ness in­tegrity and com­ply with eth­i­cal stan­dards to boost their im­age in the eyes of cus­tomers, hav­ing sup­pli­ers in coun­tries with a poor record of ef­fec­tive labour laws can se­verely dam­age their rep­u­ta­tion. Dis­ney, which had been sourc­ing their man­u­fac­tur­ing to Bangladesh de­cided it would no longer do so in March and lo­cal fac­tory own­ers fear that other com­pa­nies might pull out as well un­less the in­dus­try can im­prove its out­look and way of work­ing. Fur­ther­more, Pres­i­dent Obama with­drew a trade priv­i­lege for Bangladesh in the wake of the Rana Plaza in­ci­dent, say­ing it has not done enough to en­sure work­place safety. While this is alarm­ing news for the world’s sec­ond largest gar­ment pro­duc­ing coun­try af­ter China, Bangladesh has time to

con­vince its ex­porters that it is on its way to im­ple­ment­ing ef­fec­tive labour laws.

Hence, in an at­tempt to por­tray the in­dus­try in a bet­ter light, a joint state­ment was is­sued by three stake­hold­ers in May. The In­ter­na­tional Labour Or­ga­ni­za­tion, the govern­ment and fac­tory own­ers pledged to in­tro­duce a Labour Re­form pack­age that would in­clude a four-point plan. The plan, de­vel­oped by In­dus­triALL Global Union aims at im­ple­ment­ing the Ac­cord on Fire and Build­ing Safety, the right to form free as­so­ci­a­tions, rais­ing the min­i­mum wage rate to reach liv­ing wage by 2015 and launch­ing a mas­sive pro­ject to en­sure union pres­ence in 5000 gar­ment fac­to­ries. As Jyrki Ra­nia, the gen­eral sec­re­tary of the In­dus­triaLL Global Union pointed out ‘Rana Plaza and other in­dus­trial homi­cides have demon­strated why Bangladeshi gar­ment work­ers need strong national unions and lo­cal level union and safety rep­re­sen­ta­tives. A labour law re­form that guar­an­tees the rights en­shrined in ILO Con­ven­tions is a nec­es­sary start­ing point for that,’

The leg­is­la­tion was put into ef­fect soon af­ter in July and in­cluded a cen­tral fund for im­prov­ing the stan­dards of liv­ing of work­ers and the cre­ation of em­ployee wel­fare funds where 5% of an­nual com­pany prof­its are to be de­posited. Fur­ther­more, the govern­ment and in­dus­try of­fi­cials are to carry out a com­plete as­sess­ment of all ex­port ori­ented gar­ment fac­to­ries. The as­sess­ment, which is ex­pected to be com­pleted by the end of the year, will in­clude a com­pre­hen­sive anal­y­sis of the struc­tural in­tegrity of th­ese fac­to­ries. Fire safety pro­vi­sions will also be looked into and, de­pend­ing on the re­sults, re­me­dial ac­tion will be taken.

Given many western brands’ re­liance on the Bangladesh gar­ment in­dus­try, it would be dif­fi­cult for them to switch to other sup­pli­ers who would lack the ca­pac­ity and skills that the Bangladesh in­dus­try has. As a re­sult, there is a con­scious ef­fort on their part as well, along with lo­cal bod­ies, to bring the Bangladesh labour laws up to par with in­ter­na­tional stan­dards. In July, some 70 Euro­pean retailers an­nounced a safety plan for Bangladeshi fac­to­ries with US and Cana­dian retailers an­nounc­ing sep­a­rate pacts.

Along with sup­port from in­ter­na­tional retailers, the new law seems strong enough to al­le­vi­ate con­sumer con­cerns re­gard­ing work­place safety. It states that work­ers have the freedom to form their own union, whereas un­der the pre­vi­ous law, they had to seek per­mis­sion from their em­ploy­ers. It also says that struc­tural changes to build­ings can­not be made with­out the ap­proval of govern­ment in­spec­tors. This is in re­sponse to se­ri­ous con­cerns re­gard­ing the ad­di­tion of new floors to build­ings that can­not sup­port their ad­di­tional weight. This was also one of the al­leged rea­sons for the col­lapse of the Rana Plaza. Cracks were said to have ap­peared in the build­ing one day be­fore the disas­ter and three floors had been added over the years to the orig­i­nal de­sign. Pad­lock­ing exit gates is also banned un­der the new law - a cruel prac­tice that pre­vented work­ers from flee­ing the re­cent fires that even­tu­ally killed them.

While ef­fec­tive im­ple­men­ta­tion of this law re­mains to be seen, the swift draw­ing up of the leg­is­la­tion by the govern­ment and other bod­ies is a step in the right di­rec­tion for Bangladesh’s in­dus­tries.

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