Reflections on “Unprecedented Changes” in the Garments Sector of Bangladesh

Garments workers
The Institute for Global Labour and Human Rights’ report Unprecedented Changes.

by Farida Khan for

The Tazreen fire and Rana Plaza collapse has made many Western consumers shudder at the thought of their complicity with sub-human conditions in the Third World factories where their clothes are sewn. While consumers are often careful to avoid purchasing soccer balls sewn by child labor

or reduce their trips to big bad Walmart which has acquired the reputation of sourcing from sweatshops around the world, Elizabeth Cline in her book Overdressed; The High Cost of Cheap Fashion, says that consumers are addicted to low priced fashion. She writes “we’ve grown accustomed to paying less and getting more — a lot more”. According to Cline, American families spend an average of $1,700 per year on clothing and hoard about 20 billion garments per year. The typical consumer’s thought process might be “I don’t need them, but you can never have too many pairs of jeans, right?” She finds that, contrary to popular notions, the cost of producing garments in New York’s garment center hasn’t risen much over the years. But the price of producing garments outside the United States, on the other hand, has become ridiculously low, effectively ending the heyday of domestic fashion production.

The time is ripe for consumers to scale back, to pay a few dollars more and have less clutter in their closets as the prospect of ever increasing home sizes are over in the US after the collapse of the housing boom. The time is therefore also ripe for global garment houses to be able to pay a bit more to suppliers.

Bangladesh is the second largest producer of garments in the world, after China. In a country with a large informal sector and workers readily migrating to cities for jobs, the large pool of available workers makes it easy for garment factories to find ready labor and make wages and working conditions minimal. Also, there are no unemployment benefits and no formal labor organizations that have any clout, given that Bangladesh is a developing country with relatively low income per capita and a very high population. The conditions do not create any onus on the part of employers or enable the workers to have the power to organize and negotiate with employers. Consider the options for workers – the brick industry, ship breaking, domestic work, sex work, or home based industries that have come up with micro-credit loans. The so-called formal work in garments looks to be a decent alternative.

When faced with how to better safety conditions for workers, the industrial players across the value chain exhibited a classic case of a coordination failure. Factory owners blamed buyers who paid them too little, buyers maintained that they already had low margins and although they have many other countries to choose from, they bought in Bangladesh. Most garment producers maintained that their margin was too low as well as their production completely dependent on buyer orders of inconsistent size as well as sporadic and sudden cancellation of orders. The government in its usual manner either sided with producers – it is not unusual to see this type of crony capitalism in most developing countries, and in Asia. Garment factories are dime a dozen and there are over 1,500 Tier 3 factories that have abysmal working conditions in Dhaka itself, some of them owned by elected representatives of current and past governments.

One outcome of the events was a document on 10-Point Reform Plan for the RMG Sector which include the health and safety standards, unsafe factory relocation, minimum wage increases, trade union representation, formation of a welfare fund, and moving up the value chain from cutting and sewing. (For Alal O Dulal’s critique of the 10-Point Reform Plan, click here. — Editor).

It involved what economists would call industrial policy in that it involved the government setting aside funds to help the industry attain these objectives, aided by funds from importing countries, international agencies and even some buyers. Some of the largest buyers included H&M, Inditex, Tesco and others in Europe as well as Old Navy, Abercrombie and Fitch, and even Walmart instituted its own compliance program. Labor organizations within the US, as well as international ones, even the ILO, were involved in the process. How well this process is working is the subject of current investigation by both compliance inspectors of many stripes as well as independent scholars.

A new report from the Institute for Global Labour and Human Rights, the author Charles Kernaghan says, “I never thought we would see the day when Bangladeshi garment workers would work an eight-hour shift, six days a week for a 48-hour workweek. But that is exactly what is happening in the Ha-Meem and Windy Group factories — and soon will be in other factories where workers and the Institute have demanded changes.” Although these are anecdotes from three cases, they are substantial cases and account for over half a million workers. The report contains interviews with workers who say “there are some real changes in factory conditions in 2014. Now the work hours are reasonable. They [new management] do not cut our overtime hours as they did in the past. Overtime is now paid correctly and on time. The new wage structure is now enforced at the factory, and women receive their maternity leave and benefits.” They have holidays and they are not allowed excessive overtime leading to unreasonable workweeks.

However, it is always worth examining how well worker conditions are reported to investigators. Given that there are no unions, no accounting of wages and hours for tax purposes in the same way that this is done in industrialized nations, one cannot be sure that even several anecdotes regarding working conditions in two cases is assurance that there is movement in the right direction for the 4.5 – 5 million workers in this giant sector which is the largest export earner for Bangladesh.

The pressure is on the state to allow unionization but, at the same time, producers have enough surveillance of workers both at work and in the few hours they are at home to ensure that they are not organized in a manner that could cause wage hikes. Benefits given to workers in this industry have not been studied in detail. The report tells us that producers maintain two sets of wages in their accounts – those that are said to be paid and those that are actually paid. Has that altered? Is there any accounting of accrued leave? Is it possible for a sudden change to occur simply because management said it has and few workers have provided narratives that comply? Disguising working conditions are the forte of private industries in an unregulated setting and therefore it is with some caution that we must see this sea change. Also, it is something to be monitored for several years to ensure that it is permanent and not a dressed up temporary exhibit.

The Report says what is missing is that Bangladeshi workers must be afforded their rights to organize and to bargain collectively, recognized under Bangladeshi and international law. But when one counts the factories where workers have strong worker rights, freedom of association and collective bargaining, it appears that less than 30 smaller garment factories, none of them affiliated to any of the major factory groups, respect these rights. This means that well under one half of one percent of Bangladeshi garment factories afford these rights.

It ends with a recommendation that the tariff breaks under the Generalized System of Preferences (GSP) program should remain suspended for Bangladesh. As small as it is (GSP tariff breaks cover only $35 million in exports to the United States and not the nearly $5 billion worth of garments that Bangladesh exports to the U.S. each year), the GSP privileges carry symbolic weight with the Bangladeshi

This type of pressure may be what Bangladesh needs if it is to have a long term strategy to diversify to more than cutting and sewing and find export markets for other products in industries that can come up with labor standards and laws that started in its first high growth and yet labor intensive sector. Bangladesh is a place of innovation and unusual achievements and we have to wait a few more decades to see if this pleasant surprise might be in store for us.

The full Report below:

Click to access 1410-iglhr-bangladesh-unprecedentedchanges.pdf

Farida Khan is Professor of Economic at University of Wisconsin – Parkside.

Editor’s note: Read Farhad Mahmud’s introduction to the report here.

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