Preventing another Rana Plaza disaster

Have reforms to Bangladesh’s garment industry gone far enough?

Shahidur Rahman

Development, Government and governance, Trade and industry | Asia, South Asia

22 February 2017

More than 1,100 factory workers perished in the 2013 Rana Plaza disaster – a tragedy that has prompted major reforms in Bangladesh’s garment industry, but Shahidur Rahman says more needs to be done.

The Rana Plaza disaster in the Bangladesh garment industry claimed the lives of more than 1100 factory workers and sent shockwaves around the world. As a consequence of the disaster, international brands faced immense pressure from labour activists, with retailers deemed by many to be responsible for the accident. Also blamed was the local inability of the legislative framework to uphold labour and industrial laws.

In the aftermath of the tragedy, stakeholders worked together to solve and upgrade worker safety in the ready-made garments sector of Bangladesh. As a result, much has changed in the industry. These changes are the catalyst for a new industrial culture in the country.

Within three months of the tragic accident, the Bangladesh Labour Act 2006 was amended to focus on the obligations of rights to freedom of association as well as collective bargaining and, most importantly, occupational health and safety. The Bangladesh government also made several major commitments to revamp the Department of Inspections for Factories and Establishments (DIFE). Positions for 392 new inspectors were created in 2014, and DIFE’s budget was increased from US$900,000 to US$4.1 million in 2015-2016.

Due to international pressure, there has also been a sharp rise in the number of trade unions since the Rana Plaza collapse. According to the Labour Ministry, a total of 326 trade unions have been registered with the Directorate of Labour since 2013, putting the total number of trade unions at 464. The Generalised System of Preferences in the US market was suspended a few months after the Rana Plaza incident, due to shortcomings in labour rights in the Export Processing Zones (EPZs). In response, the Workers’ Welfare Association was formed in 2016 to serve the role of a trade union in the EPZs.

The Rana Plaza incident served as a wake-up call not only to local entrepreneurs and global retailers, but also to NGOs operating in Bangladesh, many of which had not previously been focused on issues related to compliance and worker safety in the ready-made garments sector.

More on this: Building business in Bangladesh

For instance, development organisation BRAC USA, the North American affiliate of BRAC, announced a multi-year fundraising initiative in 2014 to ensure that progress continues on humanitarian aid and support for workers in the Bangladeshi ready-made garments industry. The International Labour Organisation (ILO), with the support of a number of countries, development partners and other international development agencies, is also currently implementing 20 programs in the industry.

Of all the initiatives launched following the Rana Plaza tragedy, the most significant has been the emergence of three monitoring regimes: the business-dominated Alliance (US-led), the multi-stakeholder-oriented Accord (EU-led) and the Bangladeshi government’s National Tripartite Plan of Action (NTPA) in collaboration with the ILO. The key responsibility of these bodies is to inspect factories with reported safety issues and attempt to rectify them.

However, all these efforts will be in vain if the garment factory owners themselves don’t fix the problems identified by the Accord, the Alliance and the NTPA.

As at January 2017, of the 1,635 garment factories covered under the Accord, 85 per cent of factories are behind the scheduled timeframe to fix identified structural, fire and electrical problems. The principal reason for these delays is the need to procure the money required to secure the safety of factory buildings. Those garment firms which can easily access these funds are fortunate, but finding the money is a significant challenge for many small and medium garment factories. Even if they want to obtain bank loans the process is complicated and time-consuming.

While Accord inspections are funded by signatory companies (whose maximum contribution is $500,000 per year, in line with the proportion of the annual volume of garments produced in Bangladesh), the safety improvements or remediation work is usually not directly funded. There is negotiation between the retailers and suppliers on whether the factories are financially feasible candidates for remediation. Alternative means are used, such as loans from the International Finance Corporation, joint investments, donor or government support. But, unfortunately, only a few garment factories so far have been able to access these funds.

This is a real challenge, but one that must be addressed appropriately in cooperation with all stakeholders for the sake of the sustainable growth of the garment industry in Bangladesh. Despite the controversies, the Accord and the Alliance have changed the focus of the garment industry, as there is more emphasis on workers’ safety, which was previously unheard of. But there is still more to be done to bring the country’s factories up to acceptable safety standards and ensure there can be no repeat of that terrible tragedy.

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