Apparel Sourcing Intelligence - Worldwide

Did May 13 transform Bangladesh forever?

May 13 saw more dramatic changes on more fronts in Bangladesh than any single month I’ve ever witnessed. How much of it matters?

Let’s recap. During an event-packed day:
  •   The country’s leading factory owner lobby group, the BGMEA, withdrew the opposition it announced the previous night to the government’s setting up of a Wage Panel to review garment industry wage
  •  The country’s cabinet announced it would reform its Labour Law to provide an absolute right to join unions, without workers needing employers’ permissio
  • Four major European buyers (C&A, H&M, Primark and Inditex) announced they would join what is now going to be called the “Accord on Fire & Building Safety in Bangladesh” (AFBSB) – a reworking (details yet to be made clear) of the previous Bangladesh Fire and Building Safety Agreement (BFBSA) no major buyer would commit itself to. PVH, who had already agreed to the BFBSA but only if three other major buyers would join, endorsed the AFBSB, as did Germany’s Tchib
  • But Gap announced it would sign the AFBSB only if its legal enforcement clauses were changed. Walmart stayed silent. But, unprecedentedly, in an unusually undiplomatic statement, Walmart asked the government to halt production at Stitch Tone Apparels in Chittagong, and to inspect Nassa Group’s Liz Apparels Ltd factory complex in Dhaka.
  •  The BGMEA invoked its legal power in mid-afternoon to order all 300 factories in Ashulia to close, without paying workers, indefinitely after widespread strikes and riots. Later, in a semi-comprehensible statement, it seemed to change this ruling in response to member protests, limiting the closure to a small group of especially disrupted factories.
  • The Ashulia riots, which first started on May 10, are now being claimed to be largely the result of conspiracies. Though this often sounds like Bangladesh factories’ first response to anything, the claim is coming from so many sources, and backed up by so much anecdotal evidence, it looks as if it has to be taken seriously
  • We published details of the Tung Hai fire that killed eight people on May 8. Indications are that the building would have passed all safety checks: the underlying problems in Bangladesh may imperil workers at far more factories than are currently thought
Throughout the past decade, one constant feature of the Bangladesh garment trade has been its ability to produce grand announcements which turn into little but more worker frustration. How do all these stack up? In a slightly different order:
i.                    At the heart of all this. There are a very large number of very unhappy people in Bangladesh: many in the garment industry, but also many involved with the feuding political groups. Owners’ anecdotes that a small number of people are whipping up dissent does not demonstrate any organised conspiracy, by Indian, Islamists or Western activist groups. But is does demonstrate that there are enough people committed to mischief-making that any  grievance workers might have can turn into widespread, savage, violence within minutes.
ii.                  Wages. The crucial thing in the announcement is the Labour Secretary’s follow-up announcement that details of the Wage Panel would be announced “soon”. But any deal will be backdated to May 1. “Soon” in Bangladesh can mean anything (see our catalogue of recent “soons”): but I guarantee what will stick in workers’ minds is “May1”. If workers do not spontaneously get disappointed on May 31 to find no rise in their pay-packets, there are enough mischief makers to make sure they get disappointed by the day’s end.
iii.                Unions.The Bangladesh cabinet announced it would change the law. How soon it will be before unions are legal is one question: how much obstruction factories put in the way of forming legal unions another. .In my view, how dominated they are by mischief-makers is also important – but there will be such dominance. The longer factory owners obstruct union formation, the greater the influence of those mischief-makers.
It is hard to ask factory owners to sit down with people they understandably see as determined to destroy their business. But if they do not, they will inevitably foment even more dissent
iv.                Safety agreements. It seems clear that there is a huge gulf between US and European businesses over legal enforceability. Gap in particular has expressed concern about what is now known as “forum shopping”: the ability of someone aggrieved to choose the legal system that suits them to enforce suits – and the enormous possibility this raises of spectacular damages if cases are brought in the US. Personally, I don’t see why May 15 has to be a deadline: Gap is already spending more of factory safety than the activists ever asked for, and there’s no reason attempts to get Gap to accept the same disciplines as everyone else shouldn’t go on forever.
But activists need to realise they won’t necessarily win any propaganda war that results. Gap’s $22 mn is being spent on improving factories whether it’s in the AFBSB or not.
v.                  StitchTone. Walmart said it found “structural concerns” at a factory adjacent to Stitch Tone, Dresswell Ltd, which was not part of the retailer’s own supply chain. It said the Dresswell factory “appeared unstable and could cause a hazard” for workers at Stitch Tone, which was making clothes for Walmart. Walmart said it removed its business from Stitch Tone and advised the owner not to continue production. The retailer asked the Bangladesh government to close Dresswell. The episode demonstrates the limits of any accord with bib buyers. For all the activists’ delusions about the power of Walmart, big buyers will huge orders are just one influence in Bangladesh, and account for a relatively small  proportion of its $20 bn apparel exports. The AFBSB does nothing about the country’s huge tail of factories, and the need for further action remains– from the country’s government in ensuring universal inspection, by the EU in limiting duty-free access to garments made in demonstrably safe factories, and by Bangladeshi leaders of business and worker organisations to encouraging worker whistle-blowing and setting up systems for receiving worker comments.
vi.                Tung Hai.The Tung Hai deaths were due to inhaling poisonous smoke from acrylic clothes in a factory that seemed safe. Action is still necessary on issues like effective sprinkler systems and smoke-proof exits. But the real question lies over multi-storey factories, which may be the only cost-effective solution in a land-starved country like Bangladesh.
However dramatic the events of May 13, and however they turn out, the day really showed just how huge Bangladesh’s problems are. Agreement between major buyers to limit production to safe factories and subsidise upgrading, whether in a legalistically drafted Accord, or just in practice, is an essential first step. Personally I doubt it’s quite as important as everyone is making it sound whether Gap and Walmart sign a piece of paper: what matters is that they should be intransigent in enforcing safety and helpful in financing those in trouble.
But it’s just a first step, however such an agreement is documented. There’s an awful lot more to do if we want safety and rewarding jobs in Bangladesh, and the contortions of May 13 show just how much