The largest garment industrial accident in Savar, Dhaka killed 1134 garments labourers and injured approximately 2500 garment labourers. After the collapse in 2013, international pressure grew and two large groups of brands/retailers formed unique transnational initiatives in order to address the safety problems of Bangladeshi garment labourers.
Author: Zobaida Khan, Innovation Fellow, Corporate Accountability Lab
While evaluating the coverage of these initiatives and how they have tried to address some of the labour-capital asymmetries, this blog asks: did these initiatives address the safety problems of garment labourers only, or did they create any space or capacity for these labourers to confront the negative impacts of the globalized production and distributions systems? It appears that for preventing the recurrence of Rana Plaza, we need to learn from its lessons.[1] Recent reports have widely criticized the ‘exaggerated picture’ of safety progress and absence of public scrutiny on the actual safety conditions at supplier factories covered by one of the safety initiatives.[2] The voluntary nature, limited coverage, and restrictive focus of corporate social responsibility (CSR) codes have failed to accommodate the necessary space for attending the labour concerns. Thus, what matters is not just theoretically enhancing the level of compliance with some labour safety programmes. Rather, achieving better work conditions in a safe work place should start from identifying the root causes of poor labour governance and remedying them. Although the transnational safety initiatives emerged with novel structures and commitments, it appears that there is no easy quick-fix solution. In order to design an effective and long-term solution it is necessary to take a bottom-up approach and focus on the very pre-conditions that deny effective factory inspections, that compromise the organizing and bargaining rights of labour, and that exclude worker’s representatives from the labour governance mechanisms. [S1] Challenging the growing and persisting gaps and inequalities between sourcing corporations and workers, it is necessary to search not just for rights that would enable workers to adapt with the market realities or to contribute in the export growth, but also for rights that would ensure their health, safety and wellbeing, rights that would empower them both economically and politically. Thus, the search for the solution should start from understanding and connecting different problems and struggles of labour in a more comprehensive way.
Protesters at Rana Plaza
A brief outline of the blog:
1. Corporate safety initiatives: the Accord and the Alliance
2. Innovative features of the initiatives
3. Where are the initiatives today
4. A journey to economic growth
i. Maintaining competitiveness with low labour standards
ii. Abandoning the dignity, capability and wellbeing of labourers
iii. Labour governance made easier: weakening of trade unions versus growing political influence of capital-owners
5. CSR framework and its transformation
i. Drawing the line of corporate responsibility
ii. Ensuring a coherent and long-term corporate commitment
iii. Indirect and remote effects of business activity or operation
iv. The perils of disconnecting freedom of association, collective bargaining and labourers’ right to receive a living wage
1. Corporate Safety Initiatives: the Accord and the Alliance
The Accord on Building and Fire Safety in Bangladesh (‘Accord’), consisting of approximately 222 brands and retailers from over 20 countries in Europe, North America, Asia and Australia was signed by eight local trade union federations, two global trade unions (IndustriALL and UNI) and aimed to improve building and fire safety through independent inspections amongst 1674 supplier factories in Bangladesh covering approximately 2 million labourers.[3]
Objecting to the binding nature of the Accord, the North American Apparel Retailers’ Alliance for Bangladesh Worker Safety (‘Alliance’) consisting of 29 retailers and brands was formed in July, 2013. Later the Alliance launched a ‘Bangladesh Worker Safety Initiative’ in 714 supplier factories, employing approximately 1.6 million labourers.[4]
2. Innovative features of the initiatives
Though both corporate safety initiatives have taken different formats and commitments, it is important to identify their common theme. These initiatives showed that even in a lower middle-income economy, there is an underlying consensus to consider and connect labour issues with economic growth policy, provided appropriate commitment and assistance mechanisms are in place. When compared with existing CSR codes, both corporate initiatives emerged with some distinctive and interesting features in the labour and corporate governance arena.[5]
First, both initiatives brought some labour governance issues (fire and building safety) to the center of CSR frameworks. Both initiatives undertook detailed procedures to administer the safety issues at the factory-level. For example, both cooperated to harmonize the safety standards, and their prescribed standards were higher than national standards. Both required uniform and stringent application of safety measures and prescribed a timeline for the inspection procedures.
Second, both initiatives took some practical steps to materialize the objective of providing a safe garment industry. They both prescribed detailed strategies for operating, financing and monitoring the safety mechanisms. They both developed elaborate structures for the necessary safety inspections and monitoring of safety concerns. For both initiatives, the signatory brands/retailers funded the necessary operational costs of safety inspections and for undertaking safety trainings for labourers. It is alleged by labour rights activists that although the Accord mandated independent monitoring, public reporting of inspection results, and detailed information on the progress of factory remediation, the Alliance offered controlled monitoring and selective reporting on safety remediation with no possible option for public scrutiny.[6]
Third, both provided some space for the labour unions. As a unique multi-stakeholder initiative, Accord was signed by local trade unions and two major global unions. Trade union representatives were included in the oversight and implementation of safety measure under the Accord (Section 4). With a restrictive approach, initially the Alliance did not include any labour representative in the governance of the programme. Later three prominent Bangladeshi labour leaders were included on its Board of Advisors, and a Broad Labour Committee was formed with seven prominent labour leaders from the Bangladesh RMG sector.
The Accord and the Alliance differ widely in a few important respects. First, unlike the Alliance, the Accord provided some attention to corporate sourcing and pricing policies from its inception. Under the Accord, the signatory brands or retailers committed to maintain long-term sourcing relationship in Bangladesh and to negotiate contractual terms and pricing in a manner that render it financially feasible for the suppliers to maintain a safe workplace and undertake necessary upgrades or remediation. The Accord, thus, distinctively introduced the concept of ethical pricing policy in the sourcing practices of brands or retailers (Section 23). However, the Accord distinguished suppliers into tier 1, 2 and 3 depending on the percentage of signatory companies’ annual production in Bangladesh. While tier 1 and 2 included major and long-term suppliers that produce at least 65% of signatory companies’ total production in Bangladesh, tier 3 included occasional suppliers who produce less than 10% of signatory companies’ production in Bangladesh by volume. The sourcing commitment was valid for the first two years with tier 1 and 2 supplier companies, as long as business is commercially viable and the factories continue to meet the member company’s requirements under the Accord. This means that ultimately the brands/retailers would determine the continuance and the terms of the ethical sourcing policy and the pricing policy would favour only the major and long-term supplier factories. This would leave the short-term, occasional suppliers to struggle with safety renovations with no safety net for their supply orders and prices.
In sharp contrast with the Accord, without committing for any changes in their pricing policy, the signatory retailers/brands under the Alliance agreed to review their internal policies that would prevent unauthorized subcontracting. Also, the Alliance obliged the signatory retailers/brands to participate in the initiative for the first two years. The retailers/brands would face higher rates of financial penalty if they leave the initiative prior to the completion of two years. The annual reports of the Alliance do not mention whether any changes were undertaken for these signatory companies’ internal pricing policies.
Second, the Accord emphasized the workers’ right to refuse to enter into a facility or engage in work that he/she reasonably believes to be unsafe without suffering discrimination or loss of pay from the beginning (Section 15). The Alliance Members Agreement was amended to formally include the workers’ right to refuse unsafe work or to work in dangerous conditions[7] after much international criticism was posed against its restrictive nature and commitments.[8] The Alliance covered factory workers are allowed to communicate their concerns about factory management using an anonymous hotline or mobile technology ‘without fear of retaliation.’[9]
Finally, the Accord developed a model for transnational legal responsibility. The legal enforcement of the provisions and obligations of the Accord constitutes a unique feature in transnational labour regulatory model. Apparently, the dispute resolution clause of the Accord is equivalent to a standard dispute resolution clause in commercial agreements. However, its inclusion signifies an important step towards mandatory corporate responsibility. Differing from existing CSR codes including the Alliance, the Accord’s dispute resolution clause is important not for its form or contents, but for its inclusion in a legally binding transnational agreement that aims to protect labour safety.
3. Where are the initiatives today?
Both initiatives ended their initial five-year term at the end of 2018. At the end of its term, the Alliance declared that the participating brand members would collaborate with a local organization for monitoring the safety conditions at their supplier factories.[10] As mentioned above, this has exposed the Alliance to criticism, as the local organization is a voluntary agency with no regulatory capacity to require safety-related remediation and no mandate to publicly identify non-compliant factories.[11]
In contrast, the Accord wanted to extend its initial term through a 3-year agreement on transition. The validity of the extension was challenged in the High Court of Bangladesh. Eventually the Supreme Court of Bangladesh allowed the Accord to work for 13 more months after it reached a memorandum of understanding with the Bangladesh Garment Manufacturers and Employers Association (BGMEA). From the annual reports of these initiatives it is clear that both provided huge commitment and resources (both invested approximately US$ 25 million) for the safety inspections and for worker training on building and fire safety. The fifth annual report of the Alliance mentions that while 178 factories were suspended for inadequate remediation, 90% of high-priority safety deficiencies had been corrected in the remaining factories, all Alliance-covered supplier workers received basic safety training and had access to the 24-hour worker helpline. Refresher safety training had been arranged and funded for approximately 1.3 million workers.[12] Similar achievements are reported in the Accord’s quarterly aggregate report dated July, 2019. Factory inspections have been completed for 1672 factories. 488 of those factories are no longer covered by the Accord, with 142 out of that 488 being made ‘ineligible for business’ with Accord brands/retailers. The rest were either closed or relocated. 90% initial safety remediation progressed at all Accord covered factories, 497 worker health and safety committees completed the safety training, and another 676 committees are still in training. About 359 worker complaints had been resolved through the Accord’s health and safety complaint mechanism and another 199 complains are under investigation.[13]
“The Rana Plaza collapse effectively unveiled the failures or omissions of opening markets while ignoring distributional issues or social justice. It challenged our existing understandings on the boundaries of corporate responsibility and questioned the necessity for unconditional mobility of capital. [c2]”
The search for the promises and the failures of these partnership-type initiatives are still ongoing. A serious limitation to both initiatives is that they did not cover labourers engaged by unauthorized subcontractors or suppliers, a relatively common practice in the industry. While finding problems is easy, it would be much more useful to connect the related problems and see the bigger picture.
Rana Plaza collapse is not an isolated incident but its lessons are multifaceted. Before the collapse of Rana Plaza, fire at Tazreen fashions, a ready-made garment factory in Dhaka, caused death of 112 factory labourers who were trapped in a locked premise when the fire started.[14] Tazreen fashions and most of the supplier factories situated at Rana Plaza were suppliers of reputed western brand/retailers and were either subject to corporate codes of conduct or were theoretically in compliance with safe working conditions. So what went wrong? Are these just labour governance or enforcement problems in developing countries? Are these the problems of voluntary monitoring of factory conditions? Bangladesh has ratified 33 International Labour Organization (ILO) conventions, including 7 fundamental conventions of the ILO. After the collapse, some impressive changes were rendered in the local labour law in 2015.[15] However, a large gap exists between national/international rules and standards and their enforcement. On the surface, it appears that addressing these domestic regulatory problems through independent inspections and/or monitoring of factory working conditions, should be enough. However, in order to address labour governance problems in developing countries, it is necessary to connect the bigger and deeper issues underlying the deadliest garment factory accident in human history and collaborate to find long-lasting solutions.
The Rana Plaza collapse effectively unveiled the failures or omissions of opening markets while ignoring distributional issues or social justice. It challenged our existing understandings on the boundaries of corporate responsibility and questioned the necessity for unconditional mobility of capital. [c2] What made the labourers work in a building, which was already declared unsafe? Prior to the collapse in 2013, local factory owners/management forced the labourers to enter and continue working, even though large cracks were visible in its columns and warnings were in place to avoid any use of the building. On the surface, it appears to be the absence of right to organize that prevented the labourers to raise their voices against their work conditions. However, the problem involves a rigorous analysis of multi-dimensional issues relating to labour law, corporate responsibility, development prescriptions from international financial institutions, and globalized systems of production and distribution. What caused the garment factory management to pressure the labourers to continue their work and fulfill the supply timeline, although other companies or offices in that Plaza remained closed? How could the building owner, a local political leader from the ruling party, illegally transform a residential building into a factory site? What happened to the corporate monitoring by foreign buyers/retailers for whom the suppliers were producing at Rana Plaza? I discussed these issues in my doctoral research at McGill.[16] Here, I will summarize some of the relevant economic, labour and corporate responsibility issues and how despite their unique features, the corporate safety initiatives failed to attend to these complicated issues.
4. A journey to economic growth
i. Maintaining competitiveness with low labour standards
If economic growth is designed and valued for the positive results it generates for society, only then we could rationally demand safer workplaces and better work conditions. However, after the second world war, neo-liberal ideas promoted a single and uniform template for economic growth and the newly independent developing countries followed it: liberalized markets, mobility of capital and goods (but not labour), and efficiency in allocation of resources would ensure steady economic growth and eventually take care of all social or distributive issues. Following the prescriptions, in order to win the highly competitive rat-race to attract global capital, not only national investment laws/regulations were made hospitable for the foreign investors, but also labour governance and enforcement of existing laws became relaxed. Low labour standards with lax enforcement, low-cost unskilled labour with negative work entitlements and bargaining capacity provided the low-income developing countries the perfect choice for retaining competitiveness in the liberalized trade system. Influencing the economic, trade, foreign investment, and labour laws and institutions of these countries and claiming that it is not necessary to monitor the possible adverse impacts of growth on different social groups, the neo-liberal institutionalization valued only the efficiency of the market. From this perspective, there is no reason to be worried about or saddened by some ‘collateral’ damages in the path to economic growth. To put it more bluntly, while neo-liberal laws and institutions isolated social or distributional issues from market-based economic development policy, the capital owners were given the freedom to choose the lowest price supplier. As a result, significant changes might not be forthcoming in delivering labourers’ core/fundamental and social rights such as the right to participate in labour regulation, to voice against exploitative work conditions, low/negative work entitlements, to demand living wage. Thus, it is not just a problem in Bangladesh or a problem of cracks in Rana Plaza’s columns.
ii. Abandoning the dignity, capability and wellbeing of labourers
When neo-liberal ideas strengthened the capital owners’ trade, investment and doing business capacities and their political power, national labour laws and governance system especially in the developing countries were sidelined. It was preached by neo-liberalists that higher economic growth from increased market participation would eventually take care of all distributional or social issues such as labour. Following the recipe, labour law and its enforcement became restrictive; only a few groups of labourers who have formal contractual relationships would receive the protection of labour law and would receive only the basic procedural protections offered by some core or fundamental labour rights which are mostly political such as freedom of assembly and association. The dignity, capability and wellbeing of labourers, their right to receive a living wage, and other crucial social or redistributive rights such as working hours, workplace safety were ignored. Shallow attention to selective core or fundamental labour rights were deemed sufficient, as if these can effectively promote foreign investments or can heal corporations’ reputational wounds sustained from systematic violation of labour rights in their supplier factories. Eventually, this produced a deep power division between capital owners and labourers. Take the example of trade in ready-made garments. At a national level, work conditions have not improved in Bangladesh despite garment sector’s growing contribution to achieve economic growth. Starting with a 3.2% GDP growth in the 1980s, Bangladesh’s GDP has grown steadily at a rate of 5.8% annually over the last decade.[17] Yet, with desperately low wages, poor working conditions and negative social protections, competitiveness for low-priced garments is retained. At a global level, profits for ready-made garments are concentrated for designing and retailing operations. Due to technological and financial changes, the upper end of ready-made garment distribution centers (which are situated mostly in the developed countries) excel in increase of sales and quick turnover of the latest fashions. On the other hand, most production bases in developing countries remain desperately at the mercy of corporate brands and retailers for orders at a competitive price and rely on abundant and cheap labourers who struggle to meet the supply deadline in unsafe and sub-standard workplaces.
It is intriguing to note how this neo-liberal shift caused the labour-intensive industrialization/manufacturing process to abandon the core of their power: the labourers! What better example than Bangladesh’s garment sector: despite employing millions and having 4.8% share in global clothing export, the ready-made garment sector failed to pay a ‘living wage’ for its labourers. Even after the recent increase in December 2019, the average wage is US$ 95 per month, the second lowest in the world! Until it was reported that Ethopia’s garment labourers are the world’s lowest paid, Bangladesh was notoriously known for the lowest wage level in ready-made garment sector.[18] Current minimum legal wage is far below the level of a living wage and is not commensurate with the rate of inflation. Despite directly participating in the production process, these labourers are the most vulnerable ones for earning, for bargaining their work entitlements, and working conditions. Millions of labourers, mostly women, work at rock-bottom wages and put their lives and wellbeing at risk. On the other hand, brands and retailers from all around the world enjoy the mobility of sourcing from the lowest-cost producers, and most producing firms or suppliers enjoy government patronage through favourable tax and investment policies. How could this scenario start and then continue for such a long time? What happened to the collective bargaining power of labour? Going deep into the relevant issues, it appears that the problems are complex.
iii. Labour governance made easier: weakening of trade unions versus growing political influence of capital-owners
The neo-liberal shift made governance of labour issues easier and organized protests from labourers rare. After Bangladesh’s independence in 1971, neo-liberal prescriptions from international financial institutions (IFIs) caused widespread changes both in the formation and capacities of trade unions. The structural adjustment policies suggested by the IFIs introduced a wide range of policy reforms in trade, labour, fiscal and monetary areas. While promoting foreign direct investment and privatization, trade unions and their capacities to organize and advocate against poor working conditions were weakened. Eventually, the union movement became an instrument of major political parties, ‘fractionalized’ and ‘corrupt.’[19] Demands for improved working conditions and wages were sporadic, unorganized and received limited political attention. The flexibility in compliance with national labour laws and international standards was sustained by inadequate regulatory attention: until the collapse of Rana Plaza, there were only 18 inspectors for about 4500 garment factories in Dhaka! These inspectors are poorly paid and lack the utilities and technical skills necessary to monitor multifaceted production systems.[20]
The political sidelining of labour continued with growing political influence of garment factory owners. A report prepared in 2013 by Transparency International in Bangladesh notes that 10% of the country’s legislators directly own garment factories or have financial interests in the RMG industry. There are favourable tax and investment laws and policies for these owners and delays are rampant for enforcing labour law or in enacting necessary reforms.[21] However, this is not just the scenario in Bangladesh. In many developing countries, these regulatory vacuums perpetuate through states’ insufficient will or power to enforce their laws. The pursuit of neo-liberal economic growth continues by allowing the regulatory vacuums to continue. Dividing the line between unions and the general labourers, between codified laws and their enforcement, it became easier to govern/ignore labour matters.
5. CSR Framework and its transformation
To complement some of these national labour regulatory failures or incapacities, CSR framework emerged as a promising alternative. Treating labour as equivalent to other production processes such as environmental protection, the CSR framework attempted to correct poor work conditions when these are cost-effective and would enhance business opportunity and reputation. With significant intellectual and on-the-ground challenges to the voluntary nature of CSR framework, there has been a slow transformation in the nature of corporate responsibility.[22] The safety initiatives, i.e. the Accord and the Alliance are the practical examples of such transformation. Both prescribed some responsibilities, which to some extent supersede the existing boundaries and forms of corporate responsibility. Beyond addressing the ‘direct impacts’ of business activity, or protecting direct and supply chain employees or individuals directly harmed by their operation, both initiatives tackled regulatory deficiencies and failures that can primarily be attributed to the national government and/or to the supplier firms. It is the national government who failed to enforce its building codes and local factory owners/management who forced the labourers to work in the Rana Plaza. Yet, both safety initiatives prescribed some responsibilities for the participating brands/retailers and attempted to change not just one company’s policy but introduced the idea of institutional changes in areas like corporate sourcing (the Accord), public reporting (the Accord), and occupational health and safety of factory labourers (the Accord and the Alliance).
“Neither the Accord nor the Alliance—formed for Bangladeshi garment labourers—covered the labourers employed by unauthorized sub-contractors. Should it be different if there is a defacto knowledge of the usage of sub-contractors? What happens if sub-contracting is a ‘routine’ business practice?”
i. Drawing the line of corporate responsibility
“Using cheaper sub-contracting outlets, where competition is fierce and work conditions are the worst, supplier factories manage timely delivery of larger orders and brands/retailers profit from the lesser prices of larger orders knowing (directly or indirectly) the suppliers’ incapacity to undertake /fulfill these orders.”
While initiation of institutional changes and the broad commitment to oversee some safety measures at the producing factories signify a slow transition towards transnational legal responsibility, it raises a lot of questions. How and where to draw the line of corporate responsibility? Would they cover any corporate responsibility beyond the point of ‘established commercial relationship?’ Would they cover labourers working for the sub-contractors of suppliers, for suppliers on a ‘test’ basis[23] and temporary labourers supplying independently to the sub-contractors? Neither the Accord nor the Alliance--formed for Bangladeshi garment labourers--covered the labourers employed by unauthorized sub-contractors. Should it be different if there is a defacto knowledge of the usage of sub-contractors? What happens if sub-contracting is a ‘routine’ business practice?[24] [c3] What happens if the sourcing pressures (i.e. buyers’ exclusive power to determine the supply timeline and the products’ quantity, quality and price) are such that they indirectly mandate subcontracting? Local and international newspapers have reported widely on the regular usage of sub-contracting by garment suppliers in Bangladesh. While the gigantic corporate brands/retailers bargain for the lowest price supplier and fluctuate the timeline and quantity of the order at their will, the supplier factories race towards the bottom for work conditions and wages. Using cheaper sub-contracting outlets, where competition is fierce and work conditions are the worst, supplier factories manage timely delivery of larger orders and brands/retailers profit from the lesser prices of larger orders knowing (directly or indirectly) the suppliers’ incapacity to undertake /fulfill these orders.[c4]
ii. Ensuring a coherent and long-term corporate commitment
The list of questions on CSR framework could go on. How to ensure a coherent, long-term and sustainable corporate commitment that aims to improve working conditions at a factory level? Corporate investment, sourcing and pricing commitments may not produce tangible benefit for the labourers, if these are adopted for a short period of time, with some vague standards, and with no provision for independently monitoring the follow up on their commitments. When measured with this perspective, both corporate safety initiatives had no provision for post-supply feedback from suppliers. It is true that both initiatives provided substantial finance for the operational costs of safety inspection, worker training and worker empowerment processes so that labourers can express concerns on unsafe work. However, no attention has been paid to financing long-term infrastructural needs and industrial capacity building in the Bangladesh’s garments sector. It is not possible for the corporations to undertake such huge responsibility, but even with regard to safety-related factory renovations, both corporate initiatives prescribed limited financial responsibility. Though both assisted the factory owners in finding the necessary funds through various financing mechanisms (loans, joint investment), none attempted to incur a direct responsibility in undertaking or funding the renovation or modification necessary to provide a safe workplace. Ultimately, the sole responsibility to incur the huge costs for factory remediation belonged to the factory owners, though both initiatives lasted for only 5 years. To make things worse, despite the sourcing commitment (in the Accord) and the commitment to review internal policies of the brands/retailers (in the Alliance), in general the supplier factories have consistently experienced a falling terms of trade for ready-made garments. A recent survey found ‘a decline in nominal prices’ paid for per unit of garment.[25] Kashyap writes tellingly,
[B]etween 2011 and 2016, the price drop for garments exported to the US was about 11 percent, in comparison to a 9 percent decline for EU apparel exports. Bangladeshi manufacturers are right to feel outraged by the hypocrisy brands display when they demand expensive improvements while insisting on cut-rate prices, and in that they will find support from labourers and labor advocates.’[26]
iii. Indirect and remote effects of business activity or operation
While designing an effective corporate responsibility code, another concern is how far these frameworks would prevent and address labour rights violations resulting from their business activities? What happens if corporate investment and sourcing policies contribute to marginalize labour issues in an indirect or remote way? There is no doubt that economic growth based on low-skill manufacturing offers a better route to reduce poverty than economic growth based on commodity export. Labour-intensive manufacturing creates jobs for millions and the fluctuation of market price is lesser. However the vulnerabilities of low-priced garment manufacturing are huge: unless labour productivity is increased, the export sector will continue to face fierce competition from other low-wage suppliers. This would eventually cause extreme price fluctuations, lower wages, and lessen the bargaining capacity of labourers. This is exactly what has happened for the Bangladeshi garment sector. With low labour productivity, the terms of trade for garment price continue to decline and so do the wage and work entitlements of the labourers. In order to avoid this, some economists have suggested that instead of relying on ‘revealed comparative advantages,’ a nation state needs to ‘purposefully’ build its comparative advantage.[27] They suggested that increasing labour productivity is a first big step to purposefully redirect economic growth. Reduction of productivity gap (through skill upgrading, training and technical assistance) with competing garment exporting countries not only offers the option to retain the competitive advantage of the RMG sector in Bangladesh, but also provides the long-term potential to increase the bargaining capacity of labourers. Unfortunately, none of the corporate initiatives had any provision for skill or productivity improvement training for the labourers in their supplier factories. It is true that these corporations should not undertake duties that traditionally belonged to the nation states. However, when we consider the aggregate effects of direct and indirect operations and activities of corporations, it is logical to find some profound connections between the corporate mobility, their sourcing policies and profit margin, and the diminishing bargaining capacity of labourers with respect to wages and work entitlements. In order to confront these indirect but overwhelming influences of corporate activities, focused, mandatory and long-term commitment to improve the productive capacity of labourers should be an essential part of future CSR frameworks.
iv. The perils of disconnecting freedom of association, collective bargaining and labourers’ right to receive a living wage
“While absence of real unions weakens labour’s power to demand work entitlements, absence of a living wage and other socio-economic rights suppresses the voice of labour either by corrupting or by intimidating union leaders and/or activists.”
While it was efficient and urgent to design CSR frameworks that dealt with some specific problems (e.g. safety of factory-floor) and for specific labourers (i.e. labourers who have formal contractual relationship with the factories), the multifaceted lessons from the Rana Plaza collapse show why such a framework might not provide a viable, long-term solution. Narrow coverage of some specific problems might address some urgent issues, like workplace safety, for a shorter period of time. Yet, improved labour governance is neither a routine result of increased export performance nor should it result from attention to some selective labour rights. Rather, it requires a coherent, sector-sensitive and integrated understanding of labour problems: effective realization of one labour right depends on fulfilling some connected labour rights. Going back to Bangladesh’s example, despite its recent labour law reform on the right to unionize, a Human Rights Watch report elaborates why there are few factory-level effective unions. A recent audit found that only 5% of factories have registered unions.[28] Labourers are either threatened not to join or support the union, or management-chosen worker representatives form ‘yellow unions.’ ‘While absence of real unions weakens labour’s power to demand work entitlements, absence of a living wage and other socio-economic rights suppresses the voice of labour either by corrupting or by intimidating union leaders and/or activists.’ [c5] [29]An express or implicit threat of losing ones’ job or even life demoralizes any potential organized movement in support of unionized demands. Recently it has been alleged that when general labourers tried to organize, a company supplying to reputed brands responded with mass dismissal of 701 workers and claimed that the ‘lawful’ dismissals were made due to shortages of international orders.[30] The lessons from Rana Plaza collapse should help us to trace these integral connections between different labour rights, understand the gaps in national, international and transnational law and governance instead of just focusing on compliance with some safety measures.
Even with regard to the limited aspect of safety, both initiatives covered the safety of factory-floor. Though workplace safety requires urgent attention, it is necessary to contextualize the labour problems and realize how integral their connections are. Going back to Bangladesh’s RMG sector, approximately 60% of garment labourers in Bangladesh are women. A report by Human Rights Watch illustrates how labourers, especially women, face sexual abuse or threats while trying to organize or join factory-level unions. [31] Yet, the safety initiatives disregarded pay differences, unequal treatment and even sexual harassment issues that are causally related to the female labourers physical safety and wellbeing. Some attention has been paid to the sexual harassment issues in an indirect manner. For example, both initiatives attempted to resolve sexual harassment complaints received in their hotlines or worker safety committees. However, it is important to realize that a combination of absence of some core/fundamental and social/redistributive labour rights such as low wages, a high level of inflation, long working hours,[32] sexual harassment, unequal pay for women, absence of job security, unsafe and sub-standard workplaces, and the difficulties/the challenges of forming effective unions, produce a deep barrier that undermine the labourers’ power or ability to refuse to work in a dangerous place, to bargain for a living wage, or to confront the status quo.
I am not suggesting that a robust approach in monitoring factory-floor safety had not produced much benefit. Both initiatives incurred huge resources, time and commitment and introduced the concept of factory-floor safety as one of the necessary work-related rights. Before the collapse, corporate inspections were undertaken for some of the suppliers producing at Rana Plaza. However, although the inspections covered factory-floor safety issues (such as the presence of first aid kits, worker training on machine safety, and the presence of a doctor or nurse), the brands admitted that none could foresee that they would need to inspect the ‘structural soundness’ of the factory building. Thus, my point is that in order to design an effective and long-term solution, it is necessary to emphasize effective transnational and international assistance and coordination amongst diverse actors and institutions to strengthen nation states’ labour governance capacity and their capacity to identify and fund their distributive priorities. At the same time, it is important to engage powerful brands/retailers to accept joint, mandatory and meaningful responsibility, which would usefully complement the search for solution. From this perspective, a good starting point for an effective and wider form of CSR framework is to integrate a deep sense of responsibility for ensuring both core/fundamental and redistributive/social labour rights. Utilizing the overwhelming force, capacity and resources of these corporate actors, it is possible to address some of the distributional challenges in labour governance. The appalling collapse blatantly exposed these challenges. Although the safety initiatives showed that a collective effort could address some of these urgent problems, without challenging this compartmentalization of related issues and taking shared efforts to undo these problems, the bitter reality is that the Rana Plaza tragedy could be repeated in Bangladesh and elsewhere.
Zobaida Khan is a 2019 Innovation Fellow at Corporate Accountability Lab.
[1] <https://www.nytimes.com/2018/04/24/style/survivors-of-rana-plaza-disaster.html? >
[2]<https://cleanclothes.org/news/2016/11/21/alliance-for-bangladesh-worker-safety-overstates-progress-while-workers-lives-remain-at-risk>
[3] Accord on Fire and Building Safety in Bangladesh’ (13 May 2013) online: Accord on Fire and Building Safety in Bangladesh <www.bangladeshaccord.org> [hereinafter referred to as ‘Accord’]
[4] Member Agreement, Alliance for Bangladesh Worker Safety (2013), online: <www.bangladeshworkersafety.org> [hereinafter referred to as ‘Alliance Members Agreement’].
[5] I have discussed these issues in details in doctoral thesis. Zobaida Khan, ‘Trade, labour and sustainable development: An integrated perspective,’ DCL thesis, McGill University, 2017.
[6]https://cleanclothes.org/news/2016/11/21/alliance-for-bangladesh-worker-safety-overstates-progress-while-workers-lives-remain-at-risk
[7] Alliance Members Agreement, supra note 4 at section 3.1, amendment 1.
[8] <http://www.industriall-union.org/walmart-gap-bangladesh-safety-plan-pale-imitation-of-accord>
[9] Alliance Members Agreement, supra n. 4 at sections 3.1 and 3.2.
[10] ‘Alliance announced end of its tenure’ December 14, 2018, Newage, online: www.newagebd.net.
[11] <https://www.just-style.com/news/alliance-brands-back-new-bangladesh-factory-safety-scheme_id135825.aspx>
[12] <www.bangladeshworkersafety.org>
[13] For the report and for more information see <www.bangladeshaccord.org>.
[14] Julfikar Ali Manik & Jim Yardley, "Bangladesh Finds Gross Negligence in Factory Fire" New York Times (December 18, 2012) online: <www.nytimes.com>..
[15] “ILO Statement on Reform of Bangladesh Labour Law,” International Labour Organization (July 22, 2013) online: ILO <www.ilo.org/global/about-the-ilo/media-centre/statements-and-speeches/WCMS_218067/lang--en/index.htm>.
[16] Supra n. 5. Also see Khan, Z. “Transnational Labour Governance: A Critical Review of Proposals for Linkage through the lens of the Rana Plaza Factory Collapse in Bangladesh” (2018) 33:2 Canadian Journal of Law and Society, online: <http://dx.doi.org/10.1017/cls.2018.12>.
[17] Bangladesh: Seeking Better Employment Conditions for Better Socio-economic Outcomes, Studies on Growth and Equity (Geneva, Switzerland: International Labour Organization (ILO) and International Institute of Labour Studies (IILS), 2013).
[18] ‘Ethiopia’s garment workers are world’s lowest paid’ CNBC, May 7, 2019. Until Ethiopia became the garment producing country that offers the lowest wage, Bangladesh was consistently known for the lowest wage level.
[19] Anu Muhammad, ‘Globalization and Economic Transformation in a Peripheral economy, the Bangladesh experience’ (Apr., 2006) 41:15 Econ Polit Wkly 1459
[20] ILO and IILS Study on Bangladesh, 2013, supra n. 17. Rana Plaza, Two Years on: Progress Made and Challenges Ahead for Bangladesh RMG Sector (ILO, April 21, 2015). Online: ILO <www.ilo.org/global/about-the-ilo/media-centre/press-releases/WCMS_229135/lang--en/index.htm>
[21] Baumann-Pauly Dorotheé, Sarah Labowitz & Nayantara Banerjee, Closing Governance Gaps in Bangladesh's Garment Industry – The Power and Limitations of Private Governance (SSRN, March 12, 2015).
[22] For some forceful intellectual critiques see B De Souza Santos & CA Rodriguez-Garavito, eds, Law and Globalization from Below: Towards a Cosmopolitan Legality (Cambridge: Cambridge University Press 2005); Isabelle Martin, "Corporate governance structures and practices: From ordeal to opportunities and challenges for transnational labour law" in Adelle Blackett & Anne Trebilcock, eds., Research Handbook on Transnational Labour Law (Cheltenham, UK: Edward Elgar Publishing, 2015) 51-64.
[23] See Steven Greenhouse, ‘$40 Million in Aid set for Bangladesh Garment Labourers’ The New York Times (December 23, 2013) online: <www.nytimes.com/2013/12/24/business/international/40-million-in-aid-set-for-bangladesh-garment-labourers.html>.
[24] Sarah Labowitz & Baumann-Pauly Dorothee, Business as Usual is Not an Option: Supply Chains and Sourcing after Rana Plaza (New York University Stern School of Business, April, 2014).
[25] Arnuna Kashyap, ‘Looming Accord Closure a Risk to Bangladesh Sourcing,’ Human Rights Watch, (November 22, 2018); <https://www.reuters.com/article/us-bangladesh-labour-fashion/six-years-after-bangladeshs-rana-plaza-disaster-fashion-brands-urged-to-pay-more-idUSKCN1S01BI>
[26] Ibid.
[27] Erik S Reinert, "Emulation Versus Comparative Advantage: Competing and Complementary Policies in the History of Economic Policy" in Mario Cimoli, Giovanni Dosi & Joseph E Stiglitz, ed., Economic Development and Environmental Sustainability: New Policy Options (Oxford/New York: Oxford University Press, 2006) 79-103.
[28] Bangladesh Country Study, Fair Wear Foundation, 2018 at 24. .
[29] Khan, supra n. 16.
[30] <https://www.business-humanrights.org/en/bangladesh-unions-allege-700-garment-workers-dismissed-from-factory-producing-for-ca-hm-benetton-were-targeted-for-union-activities-incl-co-responses>
[31] Bangladesh: Protect Garment Workers’ Rights. Factory Owners Use Beatings, Threats to Kill, to Stop Labor Organizers (New York: Human Rights Watch, 6 February 2014). Though recently women’s participation in garment production has decreased significantly, they still constitute 55-60% of total workforce. Supra n. 28.
[32] <https://en.prothomalo.com/bangladesh/news/197686/Working-hours-remain-the-same-as-100-years-ago>
