Who is going to pay and how much?
This story first appeared in the May 3, 2013 issue of WWD. Subscribe Today.
That is among the questions being asked as the death toll from the collapse of the apparel factory building in Savar, near Dhaka, Bangladesh, rose to 430 on Thursday, with more than 520 injured, out of which 100 amputations have been estimated.
The rest of the rescued workers will also need new jobs, as well as immediate payments. Hundreds of workers are still missing, and eight days after the eight-story building collapsed, bodies are still being recovered from the debris.
The building, Rana Plaza, housed five garment factories, with more than 3,000 workers in the building at the time of the collapse. The incident is being described by authorities as the worst industrial accident in the garment industry in Bangladesh and the world.
“The total compensation figure is likely to be over $30 million in addition to the cost of emergency treatment,” the Clean Clothes Campaign said last week, when the death toll was known to be 300.
But a presentation by the Bangladesh Garment Manufacturers & Exports Association earlier this week noted a vastly different number, stating that the amount needed for “compensation, rehabilitation and long-term treatment was estimated at $12 million.” The organization also noted that an amount of 125 million Bangladesh taka, or $1.6 million at current exchange rates, had already been spent on rescue activities and treatment.
Treatment has been provided free of charge to all of the injured, officials said.
Talking about the range of estimates, a senior economist in the government told WWD that would vary widely, depending on who was paying.
“Living standards are experienced in substantially different ways in an emerging economy. On the other hand, the expectation also goes up substantially when the money is coming from a global brand or retailer,” he said, while explaining that although $38 a month, the minimum wage that is paid to the garment workers in Bangladesh, appears paltry, it is substantially higher than what the same workers would make in alternative professions and is considered a substantial living wage within the parameters of the society.
Moshrefa Mishu, president of the Garment Workers Unity Forum, said, “The compensation should be equivalent to a whole-life earning for each of the victims who are injured, 3 million Bangladesh taka, or around $38,000, for those injured, and 5 million Bangladesh taka, or around $64,000, for the family of the deceased workers.”
Yet the experiences of the Tazreen Fashion Ltd. fire in November, where 111 garment workers lost their lives, have cautioned many of the garment workers who seek compensation.
Despite many promises, local press reports quote government officials as saying that only 62 of the 112 deceased’s families have received compensation of 600,000 Bangladesh taka, or $7,676, each. A protest on Tuesday by the families of the workers who lost their lives in the fire marked the grave fact that 37 families had not yet received any compensation and that 13 bodies had not yet been identified.
Galen Weston, executive chairman of Joe Fresh parent Loblaw Cos., calling for a more proactive approach to compensation, said Thursday, “I’m troubled by the deafening silence from other apparel retailers on this.”
Several brands that manufactured through companies at Rana Plaza have unveiled plans to pay compensation to victims of the disaster. These include Joe Fresh, and Primark and Matalan of the U.K. The worry, leaders of garment unions in Bangladesh said, is that there is no clear indication at this time about the amounts or a time line for the compensation.
Joe Fresh founder Joe Mimran and Weston spoke to the press on Thursday, reiterating that they would provide compensation for victims, establish a new standard for production that includes structural integrity of facilities, and send Loblaw representatives to the country to ensure buildings “reflect Canadian standards.”
The company said Monday it would be “providing compensation for the families of the victims who worked for our supplier. We are working to ensure that we will deliver support in the best and most meaningful way possible, and with the goal of ensuring that victims and their families receive benefits now and in the future. Our priorities are helping the victims and their families, and driving change to help prevent similar incidents in the future.”
Mimran said the company would continue to work with Bangladesh and continue to help in building in trade.
Primark said it “will also pay compensation to the victims of this disaster who worked for its supplier. This will include the provision of long-term aid for children who have lost parents, financial aid for those injured and payments to the families of the deceased. We shall be reviewing our commitments constantly to ensure that they meet the needs of the victims as the tragedy continues to unfold.”
Matalan confirmed that New Wave, one of the companies at Rana Plaza, had been a supplier for the brand and said it would provide some financial support even though it didn’t have any current production there.
“We can confirm that we are working closely with the Bangladesh Garment Manufacturers & Export Association and our local team in Bangladesh to provide financial and other support to help those affected,” the company said.
El Corte Inglés of Spain and PVT from Denmark have also committed to pay some financial compensation, according to Clean Clothes Campaign.
Others, such as Bon Marché, said that they would decide how best to offer support to those affected. Benetton and Mango, both of which said they had one-time orders at the location, have not made any commitments so far.
Efforts to pay immediate compensation have begun in Bangladesh itself, with companies, individuals and organizations coming forth with help.
The BGMEA and Bangladesh Knitwear Manufacturers and Exporters Association committed in a meeting on April 27 that each member unit of the two organizations would donate not less than 25,000 Bangladesh taka, or $320 each, a BGMEA official told WWD.
The BGMEA and BKMEA have both said that employment would be ensured for recovered workers or their families, support provided to traumatized workers who need long-term treatment to get back to normal life and that disabled workers will be rehabilitated.
Meanwhile, the Bangladesh High Court had ordered an “immediate confiscation” of the property of Sohel Rana, the owner of the collapsed building, on Tuesday. The High Court further ordered that the assets of the owners of the five garment factories be frozen and the money used to pay salaries and other benefits to the workers.
There has also been an extraordinary amount of compassion at ground level.
On Tuesday, a compendium of four companies — Chaity Group, Modele de Capital Ind. Ltd., Epyllion Group and Ashiana Group — got together to give a check to BGMEA equalling $41,000 as donations for the victims, coming out of a day of salaries from the workers and the management of the companies.
The Jahangirnagar University authority has granted 100,000 taka, or $1,280, to help the victims.
The government is encouraging further donations, having made a statutory regulatory order on Tuesday offering tax exemption on donation for the victims of the Savar factory tragedy.