As Companies and Governments Dither over Compensating Rana Plaza Workers, Victims Suffer

Commentary, 09 April 2015

By Salil Tripathi, Senior Advisor, Global Issues, IHRB

Board with photos of missing Rana Plaza garment workers, posted by relatives. Photo: Sharat Chowdhury. Licensed via Wikimedia Commons.

Nearly two years after the Rana Plaza factory collapse in Bangladesh, which killed over 1,000 garment workers and severely injured nearly 2,000 more, most victims’ families are still waiting for full compensation for their losses.

Now, with less than three weeks left before the second anniversary of the tragedy, a major international campaign is underway to fill the significant remaining gap in compensation funds the international community and Bangladeshi companies and government had agreed should be raised but has thus far failed to fully deliver.

To be sure, Bangladesh’s garment sector continues to face many problems. These include poor quality of factory construction, insufficient inspections and building maintenance, low wages, weak trade unions, political control over some trade unions, political affiliations of factory-owners, and an international market where consumers demand ever-lower prices, pressuring businesses to squeeze costs in vulnerable spots including wages and investment in safety.

Soon after the accident, the Rana Plaza Coordination Committee (RPCC) was formed, chaired by the International Labour Organisation (ILO), and its key members included representatives from the Bangladesh government and Bangladesh industry as well as global brands and retailers, Bangladeshi and international trade unions and Bangladeshi and international non-governmental organisations. The Committee would oversee an arrangement to establish a claims process which local organisations and international experts would implement to support victims and their families. A voluntary fund was set up, open to all to contribute, to assist Rana Plaza families financially and by providing access to medicines. The fund was initially estimated at $40 million, and later its size was settled at $30 million. At an OCED meeting in June last year, ministers from Denmark, France, Germany, Italy, the Netherlands, Spain, and the UK signed a statement recommending that “companies that sourced in Rana Plaza donate generously to the Trust Fund,” and while they did not specify any specific amount, they said the figure should be “appropriate”.

The $30 million figure was arrived at after carefully assessing the costs of all claims. Ben Vanpeperstraete, supply chain coordinator at IndustriALL and Uni Global Union in Switzerland told me that these assessments were based on the affected worker’s basic salary, life expectancy, scale of injury, and long term medical care where appropriate, among other factors drawn from the principles of the ILO’s Convention 121, on Employment Injury Benefits, Bangladesh is not among the 24 countries that have ratified the convention but that does not mean that such a scheme can’t be developed.

To date, $21 million has been raised, with a gap of $9 million remaining, and more than 85% of the $21 million raised so far has come from foreign brands. To get over the impasse, a collaborative strategy, developed by the Dutch government, is calling for the Bangladesh government, the Bangladesh Garment Manufacturers’ and Exporters’ Association (BGMEA), foreign brands (through their coordinating organisations, the Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety, and BRAC (a leading Bangladeshi NGO) to help fill the gap. This arrangement proposes that the Bangladesh government pays $3 million, while Alliance members collectively would cover $4 million, Accord signatories paying $1 million, and BRAC $1 million.

The compensation issue should have been the easiest to solve since the facts aren’t in dispute. The building collapsed; people died or were injured. But each of the potential contributors is waiting for someone else to blink first.

The stalemate is hurting the workers. Ineke Zeldenrust at the Clean Clothes Campaign in Amsterdam finds the process frustrating because, as she told me, “the compensation arrangement actually provides an opportunity for remedy that may segue into structural reform in Bangladesh, in the shape of a more permanent insurance based system for social security in cases of workplace accidents.”

Everyone agrees with the principle of workers being compensated – the dispute is over who will foot the bill. Unions are campaigning for foreign brands to make up the gap, and the lack of Bangladeshi participation is a major problem. After all, the accident occurred in Bangladesh, the building was Bangladeshi-owned and managed, as were the factories, and the inspectors and regulators were Bangladeshis. While foreign brands bought most of the goods produced at Rana Plaza, their engagement with the Bangladeshi physical infrastructure was, and remains tangential.

Bangladeshis – government representatives and companies – are waiting for foreign brands or donors to pay still more because they are perceived to have more resources – Bangladesh is after all a low income country, so runs the argument. But critics within Bangladesh say that the government has often lavished resources on questionable expenditure, such as organizing the world’s biggest simultaneous sing-along of a national anthem.

In a podcast with IHRB last year, human rights lawyer Sara Hossain stressed the urgency of the situation. Foreign brands which have not contributed to the compensation fund are hesitant for a variety of reasons – some take a narrow, legal view and are concerned that they might be held responsible in future litigation. Others believe that local companies are not doing enough – many factories are profitable and should contribute their fair share to the fund. And some do not feel compelled to contribute since the fund is voluntary. At the time of initial negotiations, the brands said the likelihood of contributions was higher if kept voluntary, and the RPCC did not set any minimum amount for any company. Now unions say the idea of voluntary contributions has “failed”. Indeed, some companies, which had contracts with factories at Rana Plaza have paid nothing as yet.

Global brands clearly aren’t legally obligated to pay compensation. Most agree that profitable Bangladeshi companies can certainly do more – the country has targeted exports of $50 billion over the next few years, up from the current figure of $19 billion. The amounts being considered are small in comparison. Vanpeperstraete adds: “We do think that foreign brands and governments can do more to pressure their suppliers to make direct contributions. Brands are refusing to publicly pressure their suppliers, or to attach commercial consequences to the lack of domestic contributions; they are increasing their sourcing, instead of doing more to pressure the key actors to make direct cash contributions.” While it is true that some Bangladeshi garment manufacturers are highly profitable, they do face relentless pressure to squeeze costs, as Sadaf Saaz Siddiqi, a women’s rights activist whose family also owns garment factories, told IHRB in a podcast in January.

This threatens to turn into a tragedy of commons, where no party has an incentive to pay. And the longer-term problems remain. For example, union busting goes on. According to recent reports, there are allegations that BEO, a factory that supplies to German brands that are part of the Accord initiative, fired workers who raised health and safety concerns. Construction quality remains sub-standard and while inspections have become more frequent, they are not necessarily more rigorous. In some cases, there are allegations that the inspectors draw conclusions arbitrarily.

Garment exports form a major part of Bangladesh’s economy, representing 77% of the country’s merchandise exports and employing nearly four million people, the majority of them women. Threats or calls of boycott aren’t the answer, as Nazma Akter, a Bangladeshi activist who has appealed to global consumer conscience, told IHRB earlier this year.

Meanwhile, other sectors have similar problems. In mid-March, a Bangladeshi cement factory collapsed, killing five workers. In early February, a fire in a plastics factory killed 13 workers. And thousands of Bangladeshis work in dangerous conditions in shipbreaking near the port city of Chittagong. Fixing the garment sector is important, but broader problems remain. 

As the grim anniversary nears, all parties involved should reflect on the importance of fully compensating victims and recognize the need for action now. Over a thousand people lost their lives at Rana Plaza two years ago; many more are suffering from permanent disabilities. Preventing such accidents should be a priority; so should healing the workers.

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