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The Rupp Report: Bangladesh: Will The Story Ever Come To An End?

Jürg Rupp, Executive Editor

It seems that the status quo in the Bangladeshi textile industry hasn't changed that much. However, the increasing pressure from some international nongovernmental organizations (NGOs) through social media and newspapers has caused some changes in the minds of the responsible people in this country.

Important Industry Sector ...
The same pressure comes from the International Labor Organization (ILO), which just presented a study on Bangladesh focusing on growth with equity, titled "Seeking better employment conditions for better socioeconomic outcomes." The big study takes into consideration that the textile sector in general, and the apparel sector in particular, is one of the pillars of the country's gross domestic product (GDP). As the study reports: "Average annual GDP growth rates rose from an average of 3.2 percent in the 1980s to 4.8 percent in the 1990s and then to 5.8 percent in the past decade. This improved economic growth performance stems from a series of economic reforms carried out in the late 1980s and early 1990s in an effort to achieve economic integration with the global economy, mainly through the intensification of export-oriented production."

... Specializing In Apparel
With its increased specialization in the apparel sector, ILO reports the country became "one of the main exporters of ready-made garments (RMG). As a result, in 2011, Bangladesh accounted for 4.8 percent of global apparel exports, compared with only 0.6 percent in 1990. Over the same period, total exports as a share of GDP increased from around 5 percent in 1990 to over 23 per cent in 2011. Even during the financial and economic crisis, exports remained rather resilient, only falling by 2 percentage points at the height of the crisis, i.e. between 2008 and 2010. This was mainly due to the fact that consumers in the advanced economies substituted towards lower-priced apparel goods."

Growth At Any Price ...
"The growth in the last two decades has created jobs, but with harsh working conditions and low pay, including in export-related industries," ILO reports. "This expansion has brought a lot of problems in the country, with two fatal events: first, in November 2012, a factory fire in which 117 workers died; and second, in April 2013, the collapse of a building that housed a number of RMG manufacturers, leaving 1,129 workers dead." The rest is history. This year, the Rupp Report has informed in different articles about the severe labor conditions of the textile workers, the unacceptable housing situation and their implications on the global textile industry. Promises have been made here and there; however, not many things have changed since the Rupp Report started this series earlier this year (See " The Rupp Report: Cheap Textiles Paid For With Human Lives," TextileWorld.com, April 30, 2013).

... But With Low Wages ...
The ILO further reports: "Bangladeshi workers earn some of the lowest wages in the world. For example, as of August 2013, the monthly minimum wage for entry-level workers in Bangladesh's garment sector was US$39 per month — about half of the lowest applicable rate in other major garment-exporting countries, such as Cambodia (US$80), India (US$71), Pakistan (US$79), Sri Lanka (US$73) and Viet Nam (US$78). And while other countries revise their minimum wages on an annual basis, Bangladesh has adjusted the RMG minimum wage only three times since it was first set in 1985."

... And No Social Protection
"Bangladesh's social protection coverage is among the lowest in the region. Even among the poorest quintile, less than 40 per cent are covered by social assistance. Urban poor tend to be left out of social assistance," the report continues. "In fact, a large fraction of social assistance goes to non-poor households. (close to 10 percent of the social assistance spending goes to the richest quintile)."

What Is One To Do?
The ILO gives some suggestions for how to get out of this virtually vicious circle: It writes: "The most important objective of labour market and social policies in Bangladesh in the short run should be to focus on improving employment prospects and working conditions at home. If concrete measures are not taken in this direction, the country risks losing its main source of export-led growth — namely, the RMG sector. For example, the United States recently suspended trade privileges for Bangladesh (breaks on tariffs under the Generalized System of Preferences of the WTO), other countries could follow suit. The severity and frequency of industrial accidents in the sector has increased to the point that it may be acting as a deterrent to international buyers and investors. The establishment of a National Tripartite Plan of Action on Building and Fire Safety in the Ready-Made Garment Sector (NAP), negotiated during a high-level mission by the ILO to Dhaka after the Rana Plaza building collapse, and the 'Accord on Fire and Building Safety in Bangladesh,' signed by international retailers and trade unions could begin to address these challenges if they are fully and promptly implemented. The objective of these agreements is to ensure a safe garment sector where workers can work without fear of fire, building collapse, or other such accidents."

Relocate Production Sites
Furthermore, the ILO writes: "There is an urgent need to inspect all existing factories in the RMG sector. As the ILO's high-level mission to Dhaka pointed out, some of the factories will need to relocate to safer buildings while the existing ones are being inspected and repaired to ensure safety and reliability. ... [M]any factories in Bangladesh are unprepared to deal with fire or other potential dangers. The National Tripartite Committee established to carry out the NAP will establish a technical sub-committee to focus on the structural integrity of buildings and fire safety."

The study also mentions the need for a strengthened capacity by the Bangladeshi government to inspect the factories: "The ILO negotiated agreement calls for 200 labor and factory inspectors to be appointed by the end of 2013 and the recruitment of another 800 inspectors in 2014; the upgrading of the Department of Chief Inspector of Factories and Establishments to a Directorate with an annual budget to run its regular activities; and the necessary infrastructure for its proper functioning."

International Standards
Most of all, as the ILO states: "The country should adopt international labor inspection standards, particularly allowing inspectors to initiate civil proceedings against violators. Countries in the region such as Indonesia, Malaysia and Vietnam, where the inspectors are trained and can initiate civil proceedings and levy fines against violators, could serve as models for Bangladesh."

As mentioned above, compared to other major RMG exporting countries, Bangladesh has the lowest wages in that sector. "Wage adjustments in recent years have remained infrequent and unpredictable. In the interim, inflation erodes the purchasing power of workers' wages," the ILO reports. As the past few months revealed, "In the garment sector, in particular, adjustments are usually adopted only after mass protests and strikes that disrupt the industry. Both workers and employers would gain from more regular and predictable revisions that bring wages in line with workers' needs and industry standards world-wide," the ILO concludes.

Pressure Needed
The list of suggestions could be easily extended. However, as has been demonstrated in the past months and years, all the suggestions and advice don't help if there is no strong pressure from the outside world. There is an old saying: "People only start to move when it hurts their wallet." In the very end, it is only the market that dictates success and failure. On the one hand, the big purchasing companies should put more pressure on the local governments instead of sticking their head in the sand and proclaiming "this is not our business." They shouldn't squeeze the local producers, but should pay fair prices and communicate with their customers about all these problems. Then, perhaps, all those people from Main Street and the NGOs shouting against the retailers would stop canting their accusations. It is exactly these people who are buying the cheapest apparel, which is produced by workers earning US$39 per month.

November 26, 2013