The fire last November at Tazreen Fashions Ltd., a garment manufacturing unit in Bangladesh, is only the most recent of a string of such disasters that have taken place in that country. This disaster killed 112, and it is reported that the total such deaths since 2006 stands at over 500.
Garments are big business in Bangladesh, which is considered second only to China in garment exports. These exports, said to be about $19 billion (about Rs. 1,04,500 crore) annually, account for about 80 per cent of the country’s total exports and about 17 per cent of total economic output.
The importance of the industry is such that the government treats it with special care. It wants to feather the nest of the golden goose and in the process has become hostage to the owners’ interests. The industry enjoys duty-free imports of inputs and preferential tax rates.
CONSUMER BACKLASH
The government has been friendly to the powerful owners of garment-making units, some of whom are also said to be members of Parliament. What else can explain the ban on unionisation in the garment industry and even regulated pay rates? It is not improbable that an owner of a garment unit would complain to ‘higher authorities’ that his exports will be affected because of a zealous fire inspector wanting to enforce rules. But there is a downside to all the ‘accommodation’ of the needs of this industry. An industry that wants to be part of a global supply chain needs to meet global standards.
If the government does not ensure oversight of the industry, it would find that Bangladesh, as a manufacturing site, would suffer from a consumer backlash in the West. That would surely kill the golden goose.
A Nike spokesperson is already quoted in the papers as saying that the company considers Bangladesh a high-risk location and minimises its exposure there.
MNC RESPONSIBILITY
Putting responsibility on the MNC for contractors’ working conditions began with Nike in the nineties when the company’s contractors in Cambodia and Pakistan were found to be employing child labour.
The company initially refused to take any responsibility, saying they had a valid contract and it was up to the contractor to adhere to it. But the power of consumer pressure finally made Nike agree to take on more responsibility, and gradually the system of audits by either the company or third party became standard practice among most firms who source items from the Third World.
The most recent highly visible pressure was that placed on Apple Inc. since Foxconn, its contractor in China, was said to be overworking its employees, some of whom were committing suicide by jumping off the upper floors of their dormitories.
Well-meaning activists in the West seem to think that the governments of countries like Bangladesh are so incapable of ensuring proper working conditions that they have to put pressure on the MNCs to take the responsibility for enforcing regulations.
Labour activists have even managed to get some retailers pay to upgrade the safety of their contractors’ factories. Similarly, activists in Bangladesh also realise that their government has been captured by powerful industrialists and their only hope is to put pressure on foreign companies and governments for redress at home.
Another area where the rich have decided that they had better do the job which the poor countries ignore is dealing with corruption.
The Foreign Corrupt Practices Act in the US (and similar legislation in European countries) makes a local firm liable for prosecution if they are found to have bribed an official overseas.
WORKING CONDITIONS
The facts about the Bangladesh garment unit fire are still trickling out and it is not clear what the precise causes were. The doors were said to be shut not allowing easy exit of the workers, there was overcrowding, the electrical wiring was not up to snuff, some of the construction was unauthorised, and so on.
Factories located in alley ways where they should not be, makes it difficult for rescue personnel to even reach the location. All factors that implementation of local laws should have taken care of.
Newspapers around the world carried pictures of a garment with a label indicating that it was being made for Walmart. The veiled accusations were that here was another MNC exploiting a poor country. Activists charged that these retailers were putting such pressure on the supplier and ignoring sweatshop conditions, and that there was a race to the bottom. The factory owner was said to be ignoring safety and proper working conditions because of competitive pressure. Nowhere are there charges against the government for failing to regulate and inspect these factories.
I’m reminded of a parallel situation in India were we regularly see scores of people dying in stampedes, often during religious events. News reports usually include a line that some official will be conducting an inquiry. This happens with such regularity that I’m sure there is enough accumulated knowledge in files about why stampedes take place and what actions can prevent them.
When large numbers of people are expected to congregate, municipal, fire, and police officials will all have to give various permissions for the event to happen. Yet, barricades, enclosure sizes, entry/exit points, etc. are not designed to prevent another stampede. Learning from the Bangladesh situation, we could force MNCs who sell their products at these fairs and pilgrimage sites to take the responsibility to inspect the barricades and threaten a boycott of their products if they don’t. It seems easier than expecting the government to do its job.
(The author is professor of International Business and Strategic Management at Suffolk University, Boston, US. >blfeedback@thehindu.co.in )