A Horrible Fire In A Bangladesh Garment Factory Places The Spotlight On Labor Standards In Emerging Markets – The Western Brands Imposed Stringent Rules On Their Suppliers – But What About Compliance?

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By Paolo von Schirach

November 27, 2012

WASHINGTON – Just a few days ago, a horrible fire in a garment factory in Dhaka, Bangladesh caused the death of more than 100 women workers. This tragedy could have been avoided or at least mitigated had their been fire escapes. But there were none and so the poor women could not leave the building on fire. They were trapped inside and died. Walmart immediately issued a statement indicating that it no longer used this factory as a supplier.

The supply chain

This tragedy and the Walmart damage limitation effort placed the spotlight once again on the rather difficult and opaque issue of the supply chains that provide the garments that eventually are bought by Western customers in inexpensive department stores such as Walmart.

Indeed the poor women workers in Bangladesh in a sense are the key factor that allows Walmart to charge very low prices for its jeans and T shirts. Yes, it all starts with cheap labor provided by illiterate workers who are paid almost nothing for their efforts. Like it or not, this is the sad face of globalization. It is relatively easy and inexpensive to source labor intensive goods in low wage countries like Bangladesh.

Let’s make it clear that Walmart, Polo, Benetton or Calvin Klein usually do not own any garment factories in Bangladesh, Vietnam, Cambodia or Nicaragua. They source from these factories and/or from intermediaries who in turn place orders with the factories. Therefore, technically speaking, the Western brands and/or major retailers bear no direct responsibility for the (usually inadequate, sometimes appalling) working conditions in these modern sweat shops.

Moral responsibility

But they do bear moral responsibility. Because of media campaigns fed by NGOs, Western consumers are becoming aware of the long supply chains that originate in poor countries. People are beginning to realize that what they buy in Chicago or Frankfurt has been made by poor, underpaid and usually exploited women in Bangladesh or India. And, yes, at last some Western consumers do care about lack of living wages, unpaid over time and bad workplace conditions in far away countries.

Labor standards

For these reasons the big Western brands and major retailers decided a few years ago that it was in their business interest to be seen as proactive on labor conditions in the countries where they source their garments. And so they started pushing their suppliers to improve work place conditions and wages for their workers.

Whether they really meant it or not, it is good PR to be seen on the side of the struggling workers as opposed to be viewed as complicit with the exploitative sweat shops owners.

Over time, because of media attention fueled by a variety of NGOs that forced the brands to act there have been improvements regarding work place conditions in factories located in emerging markets that supply the Western brands.

In many cases, the factory owners have to abide by certain work place and labor standards in order to qualify and retain their qualification as suppliers. The brands conduct routine inspections to verify compliance. Sometimes specialized NGOs participate in the monitoring process, in order to verify real compliance.

Improved conditions?

The end result should be improved working conditions for those low wage emerging markets workers (mostly women) who make it possible for us Western shoppers to buy really inexpensive socks or underwear.

But obviously the system is not really working as it should. The fire in the Dhaka factory is evidence of non compliance with elementary safety rules. And we can rest assured that, beyond glaring issues such as lack of fire escapes, most of these factories have inadequate ventilation or sanitation facilities. We can bet that women workers are routinely intimidated, threatened, fired or worse just for asking bathroom breaks. We can bet that many of them have to survive on ridiculously low wages, while they are not fully paid for their overtime.

Hidden cost of low prices

There is no doubt that the efforts promoted by NGOs and other activists helped a lot. If nothing else the Western brands felt compelled to demand compliance with new, decent standards and to issue yearly reports on working conditions in the factories operated by their main suppliers. That said, this Bangladesh avoidable tragedy shows that we are still far from a world in which all workers are treated fairly. Sadly, this is the hidden cost of your low priced jeans.

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