Major retailers and brands are signing on to a new safety plan for
Bangladesh, in a move that has been applauded by labor and consumer groups.
H&M, Inditex, PVH (owner of Calvin Klein), Tesco, Tchibo, Primark, and
C&A have agreed to sign the deal.
Together, they make up a large percentage of total goods sourced
from Bangladesh. H&M sources more goods from Bangladesh than any other
company, and its support is what spurred other firms to sign on.
The new deal is legally binding and will last five years. It
requires independent, public inspections of factories, and obliges Western
firms to underwrite safety improvements. At the same time, it compels those
firms to stop doing business with any factory that won't bring its facilities
up to code. In all, it's the kind of package western consumers have been
waiting for since November's Tazreen Fashions fire highlighted the dangerous
working conditions in Bangladesh.
That fire, which killed over 100 people, was followed by other
fires, deadly labor riots, and, finally, the collapse of the Rana Plaza factory
complex, which killed almost 1000 people and led to the arrests of the building
owner, factory owners, and engineers involved.
I'm excited about the new agreement, but I also wonder how it will
affect the business landscape around the world. An agreement like this, which
empowers unions, requires large capital upgrades, and is legally binding, will,
inevitably, add to the cost of working in Bangladesh. Will firms at the bottom
of barrel still be able to find profit in the country, as expectations for
their behavior shift? What does it mean for a company that makes $5 jeans?
My concern with this new deal isn't necessarily about Bangladesh.
Conditions will improve in that country - there will be fewer worker deaths
and, if we're lucky, it'll be the first step in Bangladesh's climb up the value
chain. I'm worried that the $5 jean maker will abandon Bangladesh entirely.
Maybe it'll change his equation enough that he takes another look at
Pakistan, Myanmar, or another low-cost country. The market for clothes hasn't
changed. Firms still expect a $5 jean. All this agreement does is increase the
odds of that production moving to another country, where there's no labor
agreement, no enforcement, and the same cycle of dangerous manufacturing can
begin again.
If the world's retailers were serious about safety, they'd take the
same deal they've cut for Bangladesh and make it universal - they'd make it
part of the language in every single manufacturing contract. This is a half
measure, and better than none, but Bangladesh isn't the only game in town, and
raising prices there just pushes the problem down the road.