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In a major victory for labor rights activists, the Bangladesh government on Monday granted the right of workers to form trade unions in the core textile and apparel industry.
This story first appeared in the May 14, 2013 issue of WWD. Subscribe Today.
The move came in a day of dramatic developments as five of Europe’s largest retailers — H&M, Inditex, C&A, Primark and Tesco — agreed to sign a binding, five-year fire and building safety agreement covering hundreds of factories and thousands of garment workers in Bangladesh. The decision came in the wake of one of the worst industrial accidents in history as the collapse of the Rana Plaza garment factory building in Savar, Bangladesh, has now claimed the lives of 1,127 people.
The companies said Monday they will sign on to a new agreement called the “Accord on Fire and Building Safety in Bangladesh” with labor unions that requires that companies mandate and pay for renovation and repairs to ensure factories in Bangladesh are made safe, among other provisions.
Noticeably missing from the new group of companies agreeing to sign the accord on Monday were U.S. retailers and brands. PVH Corp., owner of Calvin Klein and Tommy Hilfiger, which signed the original agreement last year along with German retailer Tchibo, is the only American company to date that has signed the accord. PVH said Monday it has agreed in principle to sign the revised agreement and will commit up to $2.5 million to underwrite the program.
The agreement is a legally enforceable pact with unions, including IndustriALL Global Union, UNI Global Union and numerous Bangaldeshi apparel unions. Nongovernmental organizations including the Worker Rights Consortium, Clean Clothes Campaign, International Labor Rights Forum and Maquila Solidarity Network will sign the accord as witnesses.
The new agreement is a legally enforceable contract between brands and retailers and unions, which will go to binding arbitration to resolve disputes. It stipulates that companies will agree to independent safety inspections with public reports; mandatory repairs and renovations, ensuring factories have the money to pay for all repairs, renovations and retro-fitting by raising prices or paying for renovations directly; require factory owners that are considered top-tier suppliers to a brand or retailer to allow union representatives to have regular access to their factories, and terminate business with any factory that refuses to make necessary safety upgrades. It also requires “a vital role” for workers and their unions, requiring the establishment of health and safety committees in all covered factories with worker representatives comprising at least 50 percent of the membership.
The signatory companies are required to develop a full implementation plan within 30 to 45 days.
“Fire and building safety are extremely important issues for us, and we put a lot of effort and resources within this area,” said Helena Helmersson, H&M’s head of sustainability. “H&M has for many years taken the lead to improve and secure the safety of the workers in the garment industry. With this commitment, we can now influence even more in this issue. We hope for a broad coalition of signatures in order for the agreement to work effectively on ground.”
Helmersson called the accord a “pragmatic step toward addressing improved fire and building safety” in the apparel industry in Bangladesh, adding that it will add to H&M’s existing and extensive strict requirements on its suppliers. She said in order to make an impact, the accord will need the signatures of a broad coalition of brands and retailers to align with government, industry associations and trade unions on the Bangladesh government’s “National Action Plan” to reach the industry’s 5,000 factories.
C&A called the agreement a “milestone,” building on a series of steps the retailer has taken to improve working conditions and fire safety in Bangladesh after the tragic fire at Tazreen Fashions in November that killed 112 garment workers.
“Alongside the strong commitments to fire safety measures, the promised support for people impacted by the fire is also in progress,” C&A said. “With the committed financial backing of the C&A Foundation, more than 1 million euros [$1.3 million] has been budgeted for programs to support the longer term needs of various groups of victims of the Tazreen fire.”
Tesco confirmed late in the day on Monday that it also had joined in the agreement.
“Tesco did not use factories in the Rana Plaza building, but we are all responsible for ensuring we prevent another tragedy,” Tesco Group commercial director Kevin Grace wrote on the company’s blog Monday. “For the multinational retailers like Tesco who source from Bangladesh, we must help it to change in a positive way, a way which sustains and improves the livelihoods of all those who work in the industry.”
Grace said Tesco has 54 people in Dhaka working on improving standards at the 100 garment factories Tesco works with in Bangladesh.
“Some argue that by staying in the meantime we are complicit in the exploitation of poor workers to satisfy demand for affordable clothing. The right thing to do, they say, is to leave and only return when standards have improved,” Grace said. “We don’t see it that way, and never have, nor do the unions who represent workers globally and others who fight for their rights every day. They tell us to stay, but stay and share the responsibility for making the lives of people in our supply chain — who work for us — better and safer. If multinational retailers left, it would damage the industry, the economy and ultimately the people who rely on it. Clothing may still be made because the demand for affordable clothing would remain, but the inspections, commitment, expertise and accountability that big multinational brands bring would go.”
Groups hailed the steps taken by five major European firms and stepped up the pressure on U.S. retailers and brands to join.
“We are talking about the largest fashion retailer, Inditex, and the largest buyer in Bangladesh, H&M, plus two other major companies and the original two, PVH and German retailer Tchibo,” said Scott Nova, executive director of the Worker Rights Consortium. “We have heard nothing from Gap, nothing from Wal-Mart on this, in terms of a public commitment. The clock is ticking.
“There are now hundreds of factories in Bangladesh covered by this agreement,” Nova added. “That in and of itself is enormous. There are many other major brands and retailers producing there and we would like to see all of them sign on. We are sure there will be major companies holding out. We also expect a number of additional companies to sign in the days ahead.”
Rep. George Miller (D., Calif.), who with Rep. Sander Levin (D., Mich.), has called on the Obama administration to convene a meeting of major apparel brands and retailers, applauded the action by the European retailers on Monday and pressed U.S. companies to sign the accord.
“They made the correct decision for their brand’s reputation and, more importantly, for the lives and safety of workers in Bangladesh,” Miller said. “Now, it is time for other retailers and brands, including Wal-Mart, J.C. Penney, the Gap, the Children’s Place and others, to become signatories of a strong building and fire safety plan for their workers. These companies’ continued absence in joining this agreement is inexcusable. Their absence from this agreement shows a callous indifference to the death and suffering of their de facto employees in Bangladesh who make the products that are placed on store shelves around the world.”
A Wal-Mart Stores Inc. spokeswoman said: “We’ve nothing to announce right now,” when asked about the new Bangladesh labor agreement. “At Wal-Mart, our goal is to positively impact global supply chain practices both by raising our own standards and by partnering with other stakeholders to improve the standards for workers across the industry. This is why Wal-Mart has been advocating for improved worker safety with the Bangladeshi government, with industry groups and with suppliers. We know that continued engagement is critical to ensure that reliable, proactive measures are in place and we are continuing to work with the industry association, suppliers, brands and other interested parties to come to an appropriate resolution on this matter and develop broad-based solutions for the industry.”
Eva Sage-Gavin, executive vice president of global human resources and corporate affairs at Gap Inc., said Monday the retailer is ready to sign the Bangladesh agreement if the labor groups are willing to make one modification.
“For the past two years, we have sat at the table with key stakeholders with the intention of creating a sustainable, multiretailer and multistakeholder agreement,” Sage-Gavin said. “Our view continues to be that the right multisector partnership is the best way to lead to systemic, lasting change in the country. We’re pleased that an accord is within reach, and Gap Inc. is ready to sign on today with a modification to a single area — how disputes are resolved in the courts. This proposal is on the table right now with the parties involved. With this single change, this global, historic agreement can move forward with a group of all retailers, not just those based in Europe.”
Gap said its own four-point plan in October that includes a commitment of financial support of up to $22 million so that improvements are made in the Bangladesh garment industry. The company currently contracts with 78 factories in Bangladesh, she said.
Unions are seen as key to the development of improved safety standards and better working conditions in the Bangladeshi sector. Under the government’s action Monday, workers can now form unions without a company’s prior approval, according to Mohammad Mosharraf Hossain, cabinet secretary.
“Labor unions are important for a sustainable development of the industry,” Roy Ramesh, secretary general, IndustriALL Bangladesh, told WWD. “These would help ensure a meaningful social dialogue between the stakeholders, including the factory owners, associations like the Bangladesh Garment Manufacturer and Exporter Association [BGMEA] and the government. As the workers do not have elected representatives, the movements sometimes become anarchic.”
The government approval of trade unions comes on the heels of an announcement on Sunday that a wage board would be constituted to look at recommendations to increase the minimum wage for workers and would be considered retroactively as of May 1.
The minimum wage for garment workers is 3,000 takas, or $38.55. It was last increased in 2010, from 1662.50 takas, or $21.36.
“It is as if the deaths have not been absolutely in vain,” said Mohammed Altaf, a worker from the Savar district, a suburb of Dhaka. “It is a sad way to make things change, and it comes at a very high cost, but at least we are seeing the government react.”
Farah Kabir, country director, ActionAid International, said that trade unions needed to be given the freedom to represent workers and manufacturers needed to consult them to better the lot of the 3.6 million garment workers in Bangladesh. “The Savar tragedy should not have happened. I was very angry and upset because it was something that was avoidable. When workers were told they had to go in, they could not bargain for themselves when they were told they would lose their wages or their jobs if they did not go in,” she said, while explaining that trade unions could help ensure better working conditions for workers.
While the cabinet agreed to trade unions, a section of the Labour Act which addresses the payment for laborers was also amended.
The proposed change would ensure that workers’ benefits increase. Under the plan, if a worker has worked for more than 15 years for a company, he or she would get one month’s salary for each year employed by the company as a bonus. If workers have worked for a company for at least one year, they would get one month’s equivalent salary as gratuity.
In addition, group insurance for employees would be stressed, with the stipulation that any garment factory with more than 100 laborers would have to ensure group insurance, which would also cover death and similar unforeseen circumstances, and for more than 5,000 employees, the factory must have a health clinic.
The announcement was made even as in Savar, the rescue mission that has been going on since April 24 was halted.
Having retrieved 1,127 dead from the debris of the building, Maj. Gen. Chowdhury Hasan Sarwardy, commanding officer of the Ninth Infantry Division of the Bangladesh Army, said that the operation was now over.
“We have ended the rescue operation as there is no possibility of any persons or bodies being trapped under the rubble,” he said, adding that 2,438 people had been rescued and 282 were still being treated in hospital.
The heavy equipment that the army brought in was removed from the site on Monday and the building would officially be handed over to the local area management on Tuesday, Sarwardy said.
However, unrest among garment workers has been continuing, and in Ashulia, an industrial area where clusters of garment factories are located, there were protests by workers on Monday. Police officials said that the protesters grew violent, attacking vehicles as well as factories.
Local press reports said that the protest was in reaction to the death of a female worker inside a garment factory.
Fearing a more widespread reaction, BGMEA on Sunday said that factories in Ashulia would stay closed on Tuesday for an indefinite period. According to police officials, BGMEA later retracted the statement.