US Companies Turn TheirBacks on Bangladesh’s Victims

An increasingly large difference is emerging between the great European and American textile companies in their responses to the tragedy of the Rana Plaza building collapse in Bangladesh. If a few months ago differences surfaced in the degree of commitment to improving safety in the manufacturing workshops, lately, they have resurfaced concerning financial compensation for the families of the 1,132 people killed and nearly 2,000 who were wounded in the collapse last April.

The Dhaka catastrophe last Apr. 24 shook the conscience of the West and its fashion giants, which promised to improve work conditions in a country that is the world’s second largest textile producer after China, thanks to dramatically low salaries. Eight months later, the promises have crystallized into several agreements for long-term improvements, some more concrete than others; however, the majority of the victims have yet to receive any compensation. The American companies, which have chosen to wash their hands of what happened and look forward, appear to feel comfortable with this scenario, focusing their efforts on avoiding new accidents.

“Unfortunately, while some European and Canadian firms are leading the effort to reach agreements on compensation, none of the American companies have agreed to take part in the process,” explains Liana Foxvog, director of organizing and communications for the International Labor Rights Forum, a nongovernmental organization located in Washington, D.C. that is taking part in the campaign against workplace hazards in workshops in Bangladesh.

At the time of the collapse of Rana Plaza, which had been built with poor-quality materials on swampy ground, apparel was being manufactured for two U.S. companies: The Children’s Place and Cato Fashions. Until a few months ago, they also made clothes for Wal-Mart, the world’s largest retail chain and the second biggest customer of all the factories in Bangladesh, after Swedish giant H&M. After the collapse, The Children’s Place, a popular children’s brand, promised to compensate the victims but has been ignoring the issue months later, as Foxvog laments in a telephone conversation.

However, Wal-Mart “instantly” refused to participate in any compensation process, alleging that it no longer had any production line in that complex. “Even so, they had placed significant orders in 2012, and taking into account that they benefited from the place, they should have complied with their responsibility to identify the problems in the building and inform workers of the risks they faced working there, instead of simply redirecting their orders to other factories and then leaving,” she decries.

For now, the only company that has paid compensation is Irish firm Primark, one of Rana Plaza’s most important customers. It has paid 16,000 taka (about $200) to every one of the survivors and families of the deceased. This amounts to about six months’ salary, taking into account that Bangladesh continues to pay the world’s paltriest minimum wage. Those meager $38 per month have attracted Western firms en masse and entrenched economic insecurity in this Asian country in return for supplying half the world with cheap clothing.

Recently — Foxvog explains — Primark committed to making a second payment in the same amount, while Canadian retailer Loblaw made a similar promise. Both chains, together with Italian company Benetton, Spanish El Corte Inglés and British Bonmarché — which also had apparel manufactured in the collapsed building — are the ones that have signed the universal compensation agreement that the International Labour Organization, government of Bangladesh — which has been accused of being an accomplice in the tragedy — labor unions and nongovernmental organizations have worked on since July. All these commercial chains, except Benetton, announced on Tuesday, exactly eight months after the catastrophe, a preliminary agreement to create a compensation fund that should reach $40 million. Besides the three American companies, leading European companies have also refused to sign it, such as Spanish company MANGO, which had placed a trial order, and French Carrefour.

While the battle for reparations is being waged, the textile sector as a whole fights to improve its day-to-day working conditions. In mid-November, close to 200 factories on the outskirts of Dhaka held a one-day strike to demand higher wages. A commission made up of representatives from the government, companies and unions proposed increasing the minimum wage by 77 percent, from the current $38 to $68, but textile workers are asking for an increase to $104. However, this is a precarious vicious circle of demand and supply, since local employers argue that this increase is impossible unless foreign multinationals pay them more as suppliers, something that these companies do not seem willing to do. In June, the U.S. government suspended some trade privileges Bangladesh enjoyed as a way to pressure the authorities, in contrast with the lukewarm attitude of U.S. companies.

However, beyond bleak wages, many of the injured in the Rana Plaza collapse cannot even work again as a result of the serious consequences — such as amputations — and intense pain resulting from the collapse. In fact, practically none of the injured have gone back to work, according to a survey by the NGO ActionAid. “They are in an extremely desperate situation,” warns the ILRF spokeswoman. The building collapse has impoverished employees — the vast majority were young women who were paid between $38 and $102 per month — and it is jeopardizing the near future for them and their loved ones:

“It is extremely important that they receive some compensation because there are families that have had to take their children out of school and send them to work because they have no other way of obtaining food. Some workers cannot afford their follow-up appointments with their physicians, so they are not recovering from their injuries and do not have any possibility of finding another job.”

According to some analysts, the head-on opposition of all of the American companies — they import 30 percent of the textiles produced in Bangladesh, which is even less than the European levels — to participating in the process is because of their fear that, by doing so, they would be admitting to potential negligence, which could lead to legal action and further tarnish their image. In spite of this, in cases such as Wal-Mart’s, its reputation has already been called into question because of its profound dependence on textile factories in Bangladesh — from which it purchases about $1 billion in clothing every year — and because it has been affected by other accidents in the country.

Surely, the best example must be the Tazreen factory fire in November 2012, during which 112 workers perished. At the time of the incident, five of the 14 production lines were making apparel for Wal-Mart, as documents found in the workshops after the fire revealed. However, the world’s largest retail chain absolved itself of any responsibility, argued that production had not been authorized and has refused, as it has done in the Rana Plaza disaster, to take part in the compensation process, which could reach around $6 million. Apparel was also being made in Tazreen for four other U.S. companies, including Sears. All have been opposed to paying compensation.

There is another more recent case: Last October, there was another fire in a factory in Bangladesh, in which eight people died. And textiles for Wal-Mart, as well as for fellow American company Gap and H&M, were manufactured there, too. International Labor Rights Forum has asked without success that all these U.S. flagships take part in the payment of compensation for the three incidents, although it has focused more on Wal-Mart because of its connection to all three and its commercial importance. And in the face of all the demands, the leading megastore company has chosen the same strategy of looking only toward the future, limiting itself to a commitment to improve the workshops.

“Our goal is to positively impact global supply chain practices both by raising our own standards and partnering with other stakeholders to improve the standards for workers across the industry. This is why we are focused on investing our resources in proactive programs that will address fire safety in the garment and textile industry in Bangladesh and prevent fires before they happen,” replied Rajan Kamalanathan, vice president of ethical standards for Wal-Mart, to the email sent by the organization urging him to take part in the compensation program for the Rana Plaza collapse. The company’s communications department did not reply to an email from this newspaper, which asked him about his position with respect to the compensation process.

In the last few months, Wal-Mart has announced it has stepped up inspections of its factories in Bangladesh. Gap, which works with 70 factories in the country, has made similar statements. The two giants teamed up in May to distance themselves from the European companies’ initiative and promote their own agreement to improve safety in the textile sector, which employs nearly 4 million people. They created the Alliance for Bangladesh Worker Safety, which most of the large U.S. companies that have apparel produced there, such as Target, Sears or J.C. Penney, have joined. They justified their rejection of the European agreement — called National Tripartite Plan of Action on Fire Safety, sponsored by Spanish company Inditex and H&M — on the grounds of potential lawsuits by labor unions.

The main difference between both agreements, as Foxvog explains, is that the one sponsored by the European companies is legally enforceable because it requires companies to pay for a portion of the safety improvements needed in the textile workshops, while the American agreement is not and includes loans. “In the end, it is a matter of having to pay more money for safety,” she points out. In addition, the European agreement — which 125 companies have joined, including some American firms such as Abercrombie & Fitch, American Eagle and Fruit of the Loom — gives a more powerful voice to labor unions, whereas the American agreement still leaves all the power in the companies’ hands.

This is not an insignificant issue, if we take a look at its tragic background. During the Tazreen fire, the workers, after warnings of the smell of smoke, were forced to go back to their duties because their managers thought it was a false alarm, although to prevent them from running off, just in case, they locked the factory doors, which worsened the catastrophe when it became evident that the fire was very real. And what about Rana Plaza? Employees asked not to come to work the next day after seeing cracks on the walls, but their bosses threatened to withhold a month’s salary if they did not. The next day, the building collapsed full of people. Against this background, the International Labor Rights Forum representative sums up her feelings neatly, “Giving workers the possibility of having a say can mean the difference between life and death in Bangladesh.”