RMG—rising out of the ashes

Published in the Financial Express on May 7, 2017

Muhammad Zamir

The highlight of the last week of April was the observance of programmes marking the fourth anniversary of the Rana Plaza disaster. The disaster took place on April 24, 2013 which resulted in the death of 1,129 workers and injury to nearly 2,500 others.

And then the May Day offered an appropriate occasion to recall the great contribution of the workers towards our socio-economic progress and the need for the employers, entrepreneurs and all other stakeholders to have a participatory engagement with them.
Several discussions were held to evaluate the success or otherwise of the measures taken to meet the existing challenges related particularly to the readymade garment (RMG) sector. We received mixed reports – progress in certain areas but drawbacks in other facets.

The enormity of the Rana Plaza disaster hit global headlines. It highlighted concerns about the safety for workers and their working conditions in Bangladeshi RMG factories.

It may be recalled here that the then US President Obama cut off GSP (Generalised System of Preferences) facilities for Bangladesh following this incident. Dr. KAS Murshid, Director General of the Bangladesh Institute of Development Studies (BIDS), has pointed out that Bangladesh was unduly singled out on the labour standard issue while nothing was done in this regard to Nepal, India, Vietnam, China and Cambodia. Double standards were followed, he added.

JUDICIAL ACTION: The Savar police filed a case of culpable homicide against 21 persons, including the owner of the building, Sohel Rana. Forty-one others were also accused under 12 different criminal charges. The charge-sheet in the case was filed on June 21, 2016 and the indictment in the case occurred on July 28. However, depositions have not yet been completed due to judicial complexities. The case over building code violations, filed by the Rajdhani Unnayan Kartripakkha (RAJUK) is also stuck in the deposition phase.

Meanwhile, ActionAid has found in a study that 42.40 per cent of the survivors of the Rana Plaza collapse are still unemployed, some 48 per cent of the victims are physically impaired and 33.4 per cent are mentally ill. Many seriously in need of medical attention and compensation have not received their due compensatory benefits. The State Minister for Labour and Employment has, however, pointed out that Taka 2850 million compensation has already been paid to family members of the affected parties from the relief fund of the Prime Minister, by the Bangladesh Garment Manufacturers and Employees Association (BGMEA), the International Labour Organisation (ILO) and other institutions. It has been pointed out by some of the factory owners that the payment made so far was meant to be a monetary support, not compensation. The High Court’s decision on compensation is yet to be resolved.

THE ROLE OF ALLIANCE: Mr. Nasim Manzur, a former President of the Metropolitan Chamber of Commerce and Industry, in a meeting convened by the Bangladesh Institute of Development Studies (BIDS) has observed that Bangladesh is being subjected to double standards. He has drawn attention to the fact that the Alliance for Bangladesh Workers Safety (Alliance) was supposed to have provided US$100 million for enhancing safety in the factories but a single penny has not come from them to date.

Despite criticism about their role, Alliance tried to portray their recent constructive inter-engagement. Their press statement underlined that many of our factories had achieved substantial completion of their Corrective Action Plans. They also noted that millions of workers now have basic fire safety skills and access to their confidential Helpline Worker Safety committees. They have caimed that  ‘their efforts have directly translated into lives saved and not a single garment worker has perished in an Alliance factory since our remediation work began’.

AN UNJUST GLOBAL ORDER: But exasperated garment manufacturers were justifiably quite critical of fair pricing of their products in the global supply chain against the backdrop of existing pressure on them to improve safety standards. They drew the attention to the fact that over US$ 1.0 billion had already been invested so far to renovate and retrofit their factories as per the demand of the buyers, retailers and brands. Yet, according to them, retailers and brands have shown little interest in offering a reasonable price of the products they are now sourcing from Bangladesh. A garment purchased from a Bangladeshi factory at around US$ 5.0 is still being sold for between US$ 25 to US$ 30 by the retailer, with the middle man making a hefty profit. Eminent economist Professor Rehman Sobhan described this as “a manifestation of an unjust global order”. He pointed out that the current business model consequentially forces suppliers to squeeze their workers as much as they can because they have to produce the apparel piece at US$ 5.0.

In response, a senior official of a European brand has pointed out that the retailer does not make a lot of profit. Instead, they are forced to include in the pricing equation the fact that they are able to sell only 60 per cent of the products at tagged prices. Of the remaining 40 per cent, 20 per cent are sold at discount prices and the rest 20 per cent are sold at clearance outlets or eventually just donated. This explanation is only partially acceptable. However, Bangladeshi apparel manufacturers should also accept the fact that their internal unhealthy competition is partially responsible for the low prices of their products. As such, it is natural that the buyer will take advantage of this possibility.

FOUR PROBLEMS: The RMG industry is handicapped by some peculiar problems.

The first is that a geographical mismatch exists in Bangladesh in terms of availability of labour. Some entrepreneurs point out that they cannot set up a factory where there is abundance of labour and, on the other hand, they do not find labour where they can set up factories. Our regulatory bodies need to address this issue through discussion.

The second relates to abundance of University-educated professionals with Business Administration degrees but a scarcity of technically educated workforce. This is something which needs to be taken care of through technical education and vocational training. This measure could be undertaken jointly on a Public-Private Partnership basis. The UNDP and the ILO will hopefully facilitate this process.

The third refers to the positive effect that has been generated because of the National initiative introduced after the Rana Plaza disaster and the role played by Accord on Fire and Building Safety in Bangladesh and Alliance for Bangladesh Worker Safety. It has been revealed that their efforts have led to inspection and remedial measures having been undertaken until October 31, 2015 in 1,475 factories. After necessary improvements 34.8 per cent of these factories have received green mark (fully safe), 47.3 per cent yellow mark (safe to some extent), 15.4 per cent amber (still having some safety concerns) and 1.0 black (still unacceptable). It is understood that 90 engineers from 20 engineering firms are involved in the remedial process. Difficulties apparently still exist with regard to factories located in rented buildings or if they are located in buildings shared with others. nevertheless, one can term this effort as a step forward.

The fourth deals with the issue of allowing trade unions in the RMG sector. The ILO Representative in Dhaka Mr. Srinivas B Reddy has correctly pointed out that this crucial area in our economy needs a transformative change in the relationships and partnerships upon which industries are built. He has suggested that this can be brought about through greater social dialogue between the government, employers and workers.

Trade union registration has significantly increased over the last two years. As of February, 2017, the number of RMG trade unions stand at 571. Rights activists have complained that the number would have been much higher had it not been for general anxiety among workers that employers generally have a negative attitude about this and any attempt in this direction is frowned upon. Mikail Shipar, Senior Labour and Employment Secretary of the government, has however assured that the government is trying to mitigate suffering and will be introducing a standard operational method with a time-frame so workers can get registered in a shorter period of time. The relevant government authorities has also indicated that the government will now allow workers of Export Processing Zones (EPZ) factories to form trade unions.

It may be added here that Commerce Minister Tofail Ahmed has indicated that if 50 per cent of the members of the Workers Welfare Association (WWA) of the EPZ factories consented to registering as a trade union, then the WWA would be allowed to register under the Ministry of Labour and Employment as a trade union.  This decision came following repeated warnings from the European Union that unless there were some visible progress in the promotion of workers’ rights, it would affect the duty-free, and quota-free access that Bangladeshi products presently enjoy in terms of entry into the EU under the EBA (Everything but Arms) principle.

Any analysis of the above aspects would only reiterate the government’s political will to overcoming the challenges in the RMG sector. We have to be more patient and work together in a coordinated manner. This will enable the Phoenix to rise from the ashes more effectively.

The writer, a former Ambassador and Chief Information Commissioner of the Information Commission, is an analyst specialised in foreign affairs, right to information and good governance.

muhammadzamir0@gmail.com