This week, two different accords were announced for improving working conditions for garment workers in Bangladesh. One agreement was worked out with trade unions and includes primarily European retailers. The other is more government-based and includes North American retailers.
In the past nine months, two major disasters in Bangladeshi garment factories have caused international urgency to improve conditions for the workers, 82% of whom are female. As I outlined in previous posts, there are multiple parties who must come together to make these workplaces safe–factory owners and the retailers who contract with them for export to the West, workers, and governments (local, national, and international)–but the press has tended to focus pressure on the retailers.
The European agreement includes 75 retailers as signatories. Well known participants include Marks & Spencer, H & M, and Primark. There are also two or three American firms, such as Calvin Klein and Abercrombie & Fitch. The agreement includes a legally-binding guarantee that retailers will pay all costs necessary to bring a list of factories to acceptable standards within nine months. The factory list has not yet been disclosed: retailers say they will release a list on July 15 and that there will be at least 1,000 sites. Covered under the agreement are “grave hazards” and “urgent repairs,” as determined by teams of international safety inspectors. Price increases, which will be passed along to consumers, are expected to be quite minimal.
The North American agreement, announced yesterday, brings together 17 retailers in the United States and Canada, including major names like Target and Walmart. The North Americans are being roundly criticized for not signing the European agreement (one labor leader called the North American accord “a sham”). Labor leaders are angry because the North American pact does not include unions; North American retailers said they did not like the unlimited liability and lack of accountability in the European agreement.
The North American agreement promises to bring all the factories that the signatories use into safety compliance. Though the American group will make initial basic changes within a year–just like the European agreement–the pact is for substantial change over a five-year period. The alliance members have pledged immediate funds of $42 million for safety repairs and another $100 million in loans to local factory owners for further work.
The North American group says the European agreement lacks accountability for the funding provided by retailers, while the European group says the North American alliance lacks enough provision for transparency. Both issues are important in a country where corruption is a very big problem and neither local manufacturers nor the Bangladeshi government have shown adequate concern for the safety of the workers.
The North American group worked through U. S. Senate representatives and has the backing of the U. S. State Department. This connection, especially in light of the recent announcement that the State Department will be suspending trade preferences for Bangladesh until this problem is solved, suggests that the U. S. government is putting its weight behind this initiative. This is very important since a major problem in resolving this issue is the tepid engagement of the Bangladeshi government. While the European agreement does have the engagement of the labor unions, it does not have official backing from governments. It is important to bear in mind that European imports of Bangladeshi garments are much larger—$12 billion a year–than those going into North America (U. S. imports of garments from Bangladesh are $5 billion).
In the end, it is likely that both approaches will have to be brought more closely into alignment. That’s because, in practice, the manufacturers contract with multiple retailers, thus there will be retailers belonging to different accords producing in the same factories.