Unsafe Working Conditions in the RMG Sector of Bangladesh: Role of the International Retailers

Unsafe Working Conditions in the RMG Sector of Bangladesh:  Role of the International Retailers

Background

Most multinational corporations or buyers of the global apparel market have adopted corporate codes of conduct. These self-imposed ethical [codes] set out basic policy standards to guide employees and officers, but they also serve to assure consumers that the products they purchase come from a principled organization. In response to the criticisms surrounding the poor labor conditions at the sourcing factories, and with a view to retain the customers’ trust, buyers had to promise publicly that the products they are selling are manufactured without any rights violation of the workers, a promise that is manifested through their codes. Indeed, codes originated because of “perceptions and evidence that suppliers were failing to ensure, among other things, a safe and fair jobsite.” Hence codes of conduct have been aptly described by some authors as a “public relations bonanza” for several buyers.

Apart from their own codes of conduct the big retailers also sign up to various declarations and initiatives that promise a certain level of working conditions for the women and men who are manufacturing the products they sell. An essential component of such efforts is independent factory inspection.  Wal-Mart, the world’s top ranked retailer, conducts 16,000 such social audits across its supply chains each year while Carrefour, another giant in retailing, states that they audited 609 factories in 2007. Despite all these efforts it is an accepted phenomenon that violation of labor rights, particularly rights relating to safety at workplaces, is widespread among the supplier factories in developing countries. The series of fire accidents and building collapses in Bangladesh’s RMG sector is one such glaring example of unsafe and poor working conditions.

In the Ready Made Garments (RMG) sector in Bangladesh, the buyers represent many of the world’s major volume retailers such as Wal-Mart, Gap, K-mart, Sears, J.C. Penney, Levi Strauss from the US, C&A, H&M, Marks and Spencer and a host of smaller brands from Europe. In almost all of the fire disasters at the garments factories in Bangladesh, the names of these international brand owners had come up as major buyers of garments produced in those factories. For instance, at the site of the disaster of Tazreen Fashions local journalists found labels, order forms, design drawings and articles of clothing from many global brands including Wal-Mart, Sears, Disney, C&A and Li & Fung. Among them the European chain C&A and Hong Kong-based Li & Fung confirmed that they had orders at Tazreen. The US retail giant Wal-Mart, although acknowledging that some of its products were made there, claimed that a supplier allegedly subcontracted to Tazreen without their knowledge.

However as yet there has been no successful suit against a multinational corporation for violations of its code or a successful tort claim for negligence in ensuring proper fire inspection at the sourcing factories, be it in the country where the company is headquartered or the country where it manufactures products. Hence this paper examines whether the buyers or international retailers can also be held legally responsible for the death and injury of workers in fires due to negligence at the garment factories in Bangladesh.

 

Legal Responsibility of the Buyers for Failing to Prevent Safety Hazards

At the global apparel market, over the past few years there has been a “sociological shift in buyer-supplier relations, with buyers assuming roles historically allocated to employers, unions, and governments”.  This growing paternalistic role of the buyers in relation to their sourcing factories in the developing countries is well articulated by Phillips and Lim supporting the views of Blackett, Esbenshade, and Ruggie by noting that,

“Buyers are setting, monitoring, and enforcing standards in areas traditionally regulated by employers, governments, and unions, namely wages, hours, safety, discipline, and minimum age. Buyers send inspectors, punish violations, and teach, train, and coach their partners and allies. Buyers directly communicate with workers through hotlines and interviews, and sometimes state that they want to empower factory employees. Not surprisingly, workers seem to view buyers as allies, and this paternalistic role is largely recognized by unions and local management.”

This is an appropriate description of the buyer-supplier relationship that exists currently in the apparel sector in Bangladesh. To take few examples of such approach: Li & Fung launched the Fire Safety Train-the-Trainer Program in 2012 which is designed for “corporate compliance management teams” of its suppliers. These teams oversee compliance conditions across 156 factories in Bangladesh with approximately 150,000 workers.  Gap Inc. is implementing a 4-part Fire Safety Action Plan to improve the safety at the sourcing factories in Bangladesh. This includes assembling dedicated fire safety teams based in Bangladesh, South Asia, and the United States which would be responsible for the implementation of the fire and building safety program and include the appointment of an independent Chief Fire Safety Inspector.  C & A declared that it is “aware of the consequences of its economic activity and assumes responsibility for its actions accordingly”.

A consequent claim that arises against the retailers from this paternalistic approach is that in case of gross violation of labor standards, the buyer can be made legally responsible to a claim of compensation by the workers for failing to take reasonable care in ensuring basic fire safety at their sourcing factories. This proposition again leads to a strong possibility of bringing a claim for compensation in the civil courts of Bangladesh against the buyers or international retailers along with the local supplier for negligence in ensuring basic safety provision to the workers. However, in terms of enforcing the decree in a foreign jurisdiction, where the company is domiciled or has its assets, the law relating to enforcement of foreign judgments applicable in that particular jurisdiction will then have to be considered.

In the international field, the volume of such claims against multinational corporations as buyers is scarce. However, in American jurisprudence there are a few cases where similar claims have been brought under the doctrine of “Good Samaritan duties of care”.  Under the Good Samaritan doctrine, once an individual undertakes to assist another either gratuitously or for a consideration, he assumes a duty to take reasonable care in doing so and will be subject to liability for failing to take reasonable care to protect his undertaking. As noted by Prosser & Keeton, by taking charge and control of the situation, the Good Samaritan is regarded as entering voluntarily into a relation which is attenuated with responsibility.

“A case where global south workers did assert a Good Samaritan claim against an American buyer is Rodriguez-Olvera v. Salant Corp where after a bus accident (purchased by the buyer) which had killed a number of workers, their families sued the buyer in Texas state court under the Good Samaritan duty of care. The workers contended that the buyer negligently rendered transportation services to the contractor for the employees’ benefit. The buyer Salant and its insurers settled the matter outside court for more than thirty million dollars.  However the application of the Good Samaritan duty had been rejected in the recent Doe v. Wal-Mart Stores, Inc. where the workers in Wal-Mart’s supplier factories in China, Bangladesh, Indonesia, Swaziland, and Nicaragua filed a class action suit against Wal-Mart claiming that Wal-Mart, by assuming the duty to be reasonably careful when contracting with suppliers to prevent international labor violations, was obligated to exercise due care in monitoring the factories, which it had failed to exercise. The court in Doe v. Wal-Mart Stores, Inc. feared that the imposition of liability would open the floodgate as all businesses would then ‘be responsible for the employment conditions for their own workers and all the workers employed by their suppliers’ However this finding has been criticized as being an ‘exaggeration of the claim’s implications’, since ‘rather than all businesses becoming responsible for their suppliers’ workers, only those that assumed a duty of care would be potentially liable.”

Nevertheless, the conceptual reasoning behind this Good Samaritan tort duty can well be applied to establish liability of the buyers in the RMG sector in Bangladesh who have similarly assumed the responsibility of factory inspection and monitoring of labor standards at their supplier factories. Poor enforcement of labor standards by the government, weak trade union activities, ineffective legal remedies and the state’s deliberate non-interventions in order to compete for foreign investment have all contributed towards such assumption of responsibility by the buyers.

These are the factors that have traditionally made the workers vulnerable to workplace deaths and injuries and thereby had attracted attention of the consumer groups and labor rights activists worldwide to the “inhumane” approach of the retailers having been detached from conditions of workers producing their merchandises at the bottom of the production chain. In the face of such criticisms, the buyers, driven by the need to appease their customers and shareholders, had to assume the task of ensuring at the minimum, the basic labor standards in their supplier factories. Hence, it is only fair that at times when the buyer’s failure to take reasonable care results in massive violations, they should be held legally responsible along with other actors, to redress the victims.

 

Impact of Purchasing Practice and Placing the Blame on Unauthorized Subcontracting:

Unlike producer-driven industries in which supply factors largely determine the nature of demand, it is decisions made by the big buyers in the clothing commodity chain that shape the structure of global production. The buyers can, on one hand “dictate ever lower prices” and on the other hand they have the “financial strength to continue to provide whatever facilities the factories are unable or unwilling to offer”. Hence, their role in creating a practice where suppliers are concentrating more on competing for orders and meeting deadlines instead of improving working conditions cannot be ignored in assessing the responsibility for the continuing death toll in the RMG industry.

The buying practices have a direct impact on the working situation of garment workers. Many companies and importers make use of their enormous power to force suppliers to produce more cheaply and quickly. In a study of eight factory owners in Dhaka in 2006/07, the suppliers reported that the prices for clothing paid to them by the retailer, Tesco, were 5-10 percent lower than in 2003/04. The suppliers also expressed that they are not in a position to negotiate because of the fear of losing the contract to another supplier or to another country. Thus, “factory owners in Bangladesh […] find themselves trapped between the buyer-driven demands of a global industry characterized by season and fashion-related fluctuations and a domestic environment characterized by extreme unpredictability. They work in a climate of extreme uncertainty which is becoming more uncertain as competition gets more intense.”

Another eventuality of such buying practices of gigantic volumes of orders in a comparatively shorter period of time is the practice of subcontracting to smaller factories which do not fall under the mandatory compliance requirements of the retailers. In fact, in most cases where a fire had killed workers, the usual defense of the buyer companies remains that their supplier had apparently subcontracted to a factory without their prior authorization or knowledge. In the case of Tazreen Fashions, Wal-Mart says it stopped ordering clothes from the factory after its auditors found safety violations. Nevertheless, orders from Wal-Mart channeled through subcontractors found their way to the factory. Investigators also found apparels made for Sears and Disney inside the factory after the fire. Both companies said suppliers had given orders to the factory without their knowledge and authorization.

However by merely passing on the blame on to unauthorized suppliers, the retailers cannot be freed from incurring liability for the deaths of workers who were working in absolutely inhumane conditions to produce merchandise for their brands. Principally because this entire practice of subcontracting without the knowledge of the retailers is directly or indirectly a result of their own purchasing practices. “Global apparel retailers often depend on hundreds of factories to fill orders. Given the scale of work, retailers frequently place orders through suppliers and other middlemen who, in turn, steer work to factories that deliver low costs”.

This is a common practice to which the retailers have long been turning a blind eye. “Often retailers do not assess the real capacity of the factories when they place their orders and without full knowledge of the factory’s production schedule, an individual retailer overestimates factory capacity and underestimates the potential for subcontracting.” Also many global apparel buyers source indirectly via importers based in Europe and the Americas, which in turn use a network of in-country agents. Unlike with direct suppliers, retailers seem to place no obligations at all on importers to check on working conditions at their suppliers’ end. An obvious consequence of these buying practices is that “the social standards in sub-suppliers and their sub-suppliers are subject to even less scrutiny and their compliance is less, if at all, externally monitored and verified.”

Unauthorized subcontracting is thus attributable to the failure of the retailers to control their supply chain and to their purchasing practices which compel the suppliers as well as make way for them to avoid the compliance procedures adopted and promised to be implemented by the retailers. Hence, the companies must be held accountable in those cases as well where their merchandises were being produced in a factory with which they are not in a direct buyer-supplier relationship. A company’s purchasing practices must take into account its direct and indirect impact on the working conditions at its sourcing factories and “it cannot be willfully ignorant of how its contractors operate”.

 

Concluding Remarks

The paper builds upon the proposition that the problem of unsafe conditions in Bangladesh’s garment factories cannot be addressed by blaming only the factory owner concerned, which is the usual scenario in Bangladesh. It must be addressed at the level of multiple stakeholders that include the State, the retailers sourcing from Bangladesh, as well as the factory owners at fault. Without a combined effort of all these stakeholders it is not possible to bring about any positive change in the working conditions in the RMG sector. If the buying practices are such that they put an undue pressure upon the suppliers in terms of delivery time and pricing, they negatively affect compliance with safety standards at the sourcing factories.

However, resting the duty upon the buyers only will not also solve the problem if there is no state mechanism to enforce compliance with national safety laws or if the inspection and licensing procedure remains mostly unreliable. Hence all of these stakeholders have a shared role in ensuring protection of RMG workers from unsafe working conditions. This perhaps leads to the proposition that at times of deadly fires all these stakeholders ought to share liabilities for death and injury particularly in terms of adequately compensating the victims and/or their families.

Taslima Yasmin
CONTRIBUTOR
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