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Signing Up to Safety Laws Does Workers More Harm than Good

Authors: Jagdish N. Bhagwati, and Amrita Narlikar
July 18, 2013
Financial Times

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A disaster is, as they say, too good to be wasted. Sadly, several western groups have exploited tragedies in the Bangladesh clothes-making industry to bamboozle their governments and global retail brands into actions that are self-serving, while attempting to disguise them as beneficial to the nation and its workers. They also divert attention from a superior response that serves Bangladesh better.

So consumers have blamed those companies that buy "cheap", often high-fashion, garments for the unsafe conditions in Bangladesh's factories because low prices allegedly lead to skimping on safety. The EU has proposed that Europe's future trade agreements accord "a more prominent place" to health and safety considerations. The US, under pressure from the labour unions, has suspended Bangladesh from the World Trade Organization's Generalized System of Preferences until safety standards in factories are improved and wages are increased.

Already, responding to the refrain of the "high cost of cheap goods", and intimidated by hundreds of thousands of protesting social-media signatures, many European brands have agreed to accept responsibility for safety lapses in Bangladeshi-owned and managed garment factories via the Accord on Fire and Building Safety in Bangladesh.

But such accords fly in the face of the fact, known to safety experts, that responsibility for maintaining standards lies with factory management and owners alone. Remember that exit doors existed but were closed by the management. And these managers are Bangladeshi. This is also why most US brands have correctly refused to sign agreements that pin legal liability on them if anything goes wrong.

As it happens, the brands have been responsible, by buying garments from these locally owned factories, for one of the most remarkable improvements in the well-being of Bangladeshi workers, exactly as in China where export performance over decades led eventually to labour shortages and hence to rapid improvement in wages and working conditions. The garment industry in Bangladesh has nurtured 4m jobs, most of which have gone to women, and has provided the driver for growth in a country still awaiting the comprehensive "liberal" reforms that transformed India after 1991.

Labour organisations, by pressurising suppliers to increase wages prematurely, will deprive Bangladesh of this advantage and render its products uncompetitive in global markets. The Workers' Rights Consortium, which has tried to muscle its way into the aftermath of the Bangladesh tragedies, argues that profits can simply be converted into higher wages. This is a fallacy, of course, since the garment industry worldwide is immensely competitive and does not have the excess profits that would absorb higher wages.

Again, there is no correlation between unionisation and safety. In the US, industrial fires have become rare while unionisation rates have fallen to negligible levels in the past four decades. The garment industries in Vietnam and China have experienced few fires, even though unions do not exist. In addition, the notion that union officials will become safety experts is quixotic.

Equally, there is no guarantee that the brands that have been guilt-tripped into accepting responsibility for Bangladeshi units (over which they have no control) will not quietly seek to move to locations with better governance systems. Since the possibility of future fires cannot be ruled out, the possibility of being tainted is also very real; why take this risk? In fact, Disney in the US has already said it will shift out of Bangladesh. So in these ways, too, Bangladesh and its garment workers will stand to lose.

The appropriate way to improve safety in Bangladeshi manufacturing is not to scapegoat the brands but to recognise that the blame belongs to the indifference of the owners of the factories where safety is neglected.

If western governments are to play a creative role on safety, they need to use aid agencies such as USAid to provide technical experts on safety for all industrial factories to countries such as Bangladesh. All else is not just irrelevant; it also promises to do untold harm.

The writers are a professor at Columbia University and reader in international political economy at Cambridge university.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here (Subscription required).

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