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The $250 million commitment to Bangladesh’s factories misses the point

Bangladesh factory workers
Reuters/Andrew Biraj
The factories that need the money most may never see it.
  • Sarah Labowitz
By Sarah Labowitz

Co-founder, Center for Business and Human Rights, NYU Stern School of Business

Published Last updated This article is more than 2 years old.

Last week, almost 100 US and European companies made groundbreaking announcements about their efforts to improve working conditions in Bangladesh over the next five years. This was big news in the US, but hardly registered in Dhaka, where I was doing a fact-finding trip examining workplace safety in the garment sector. This disconnect is troubling and must be overcome if the efforts to improve factory safety and working conditions are to be successful.

There are two foreign plans to enhance working conditions in Bangladesh, both of which made major announcements last week. On July 8, the Accord for Fire and Building Safety in Bangladesh announced a five-year implementation plan, to which 81 brands—most based in Europe—have signed on.

On July 10, American brands, led by Wal-Mart and Gap, created the Alliance for Bangladesh Worker Safety. Like the Accord, the Alliance adopts a collective workplace safety standard and auditing plan and makes funds available for remediation of safety threats. Together, the plans encompass financial commitments of almost $250 million, plus up to an additional $100 million in low-cost loans to help pay for building upgrades.

I spoke with one factory owner whose small operation relies on subcontracts and is located in rented space in a mixed-use building. Two and a half months after the collapse of Rana Plaza, the landlord still has not received a credible building safety inspection. This factory embodies the heart of the problem of factory safety in Bangladesh, and the owner knows it. He told me that with a modest investment of $5,000 – $10,000, he could upgrade his fire safety equipment and electrical wiring, and renovate his toilet and water facilities, which workers had been asking for.

This is the kind of factory that is most in need of the resources the foreign plans provide. When I asked the factory owner about the initiatives, he said, “I am happy about this news, but I need a practical plan.” Unfortunately, it is not at all clear if the factory will be covered by either the Alliance or the Accord because it is a sub-contracting factory and does not have direct relationships with Western brands. This is the essence of the challenge: real reform of workplace safety will only come about if reforms encompass the entire garment industry.

Creating decent factory conditions in Bangladesh means overcoming immense obstacles. It is a desperately poor, crowded country, with 150 million people (roughly the population of Russia) located within a landmass the size of Utah. Annual per capita income in 2012 was less than $900. It will require collective action on the part of the brands, greater government oversight, resources, and incentives for making improvements. The two plans initiated by US and European brands are an unprecedented acknowledgment of their responsibility and commitment to improve working conditions where their products are made. To be sure, there are flaws in both plans and their competing nature makes implementation all the more challenging. But they are an important step forward for workers in Bangladesh. The success of these efforts will depend on how well their participants can begin to bridge the divide between Dhaka, Geneva, and Washington by providing information and resources to local actors and even more importantly, engaging them as true stakeholders.

Here are photos from some of the factories that I visited in Dhaka:

Women comprise the majority of the garment workers in Bangladesh, drawn to Dhaka from rural areas by the prospect of jobs that can support their families at home. Photo by Sarah Labowitz.
Many factories rely on the line system of production in which each worker is responsible for sewing a single small aspect of a larger garment. Photo by Sarah Labowitz.
Some factories have expanded beyond cut and sew production to become more vertically integrated, including spinning cotton thread. Here, raw cotton is prepared for processing. Photo by Sarah Labowitz.
Cotton is spun into thread using sophisticated machinery that requires many fewer workers than cut and sew production. Photo by Sarah Labowitz.
Workers cleaning up loose threads from a finished garment. Photo by Sarah Labowitz.
Jeans piled high behind a garment worker. Large quantities of fabric can increase fire risk. Photo by Sarah Labowitz.
Fire buckets are part of factories’ fire safety systems. Photo by Sarah Labowitz.

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