As the main focal point of the readymade garment (RMG) industry has shifted from in-house production by foreign retailers to manufacturers and exporters in the form of outsourcing and offshoring, it is not only the quality parameters which attract foreign retailers and consumers to accept products as per their intended end-use, but also the working environment of the factories wherein the products are produced. The factory work environment and workers’ quality of work-life are important in gaining and strengthening consumer confidence and building up a more reliable manufacturer-retailer-consumer relationship. It is also important that the sweatshop concept and health and safety issues are totally settled. In order to achieve this, an acceptable level of work environment standard must be in place to achieve the objectives of social compliance issues. Therefore, reputed foreign retailers tend to design and develop their own Code of Conduct (CoC) as per their social accountability standards. These CoCs are then made obligatory for the outsourced Bangladeshi factories that are given work orders to manufacture clothes. Social accountability standards have been developed by international organisations, such as Fair Labor Association (FLA), Social Accountability International (SAI), Worldwide Responsible Apparel Production (WRAP), Council on Economic Priorities Accreditation Agency (CEPAA), Ethical Trading Initiative (ETI), and Business for Social Responsibility (BSR). Reputed global buyers/retailers in the large supply chain take the guideline from these organisations and formulate their own standard of CoC and also the acceptance criteria. These CoCs tend to rely heavily on the idea of social compliance. Similarly, a specific CoC that protects the basic human rights of the workforce engaged in the trade is to be respected in order to satisfy consumers and also to add social value to the product. A basic awareness of social accountability helps us to understand and monitor the compliance aspect in protecting the image of a particular brand of product. In order to do so, the reputed and leading buyers in the readymade garment (RMG) trade have compelled their outsourced factories to achieve those objectives as a condition of their export contract. Exports have either been withheld or cancelled on numerous occasions in the event of non-compliance with such issues. Bangladesh has been working on the specifications set by global buyers which has helped some local manufacturers in the country to upgrade their production process, obtain advanced know-how (e.g. designing, cutting and making), and provide a modern, safe work environment. In spite of this, while following the CoC criteria is compulsory for satisfying the retailers’ requirements, the local Bangladeshi culture and regulations of the government cannot be overlooked; for instance, setting a limit on regular work and overtime hours or the pay rate for overtime may not be the same for all geographical zones across the globe. The minimum basic wage also depends on the economic situation of the country in question but it has been observed that global buyers fear that trade unions, nongovernmental organisations (NGOs), human rights groups, and consumer associations may accuse them of encouraging the use of sweatshops with unacceptable working conditions. To avoid such accusations, despite the existence of the country’s labour act and BGMEA’s standard, foreign retailers have made it mandatory for local outsourced factories to follow their individual CoC regarding product and workplace safety, labour standards, work environment and child labour issues. On top of this, recent pressure from the Accord and the Alliance agreements also indicate that the global supply chain does not hesitate to take its own initiative when the implementation of the local safety programmes by Bangladeshi factories cannot be trusted. Although it seems that the imposition of the global supply chain’s safety requirements on local producers have generated positive changes with regard to workplace health and safety issues, it has similarly made it very difficult for many local factory owners to operate their factories under the individual CoCs provided by each buyer. For example, instead of having one standard buyer’s CoC, each buyer tends to have its own safety and security standards, whereby the terms and conditions differ from one buyer to another. Although, on the one hand, some of these conditions are justified, on the other, some buyers tend to impose conditions which have been found to be irrelevant and very difficult for the factory owners to incorporate. From consultancy experience with some of the largest RMG factories, this writer once saw Nike’s CoC mandates that a social compliance audit must be carried out with their suppliers to check compliance with social welfare practices such as employees’ weekly days-off and limited overtime hours. This is a justified condition which is reasonable for factories to follow. In contrast, Reebok used to force its locally outsourced factory in Tongi to have mandatory flower gardens on the factory premises. Although not a bad thing, this condition does not show any link between factory beautification through gardening and workforce safety, or any increase in production or product quality whatsoever, and thus can be considered irrelevant. In recent interaction with some of the biggest global retailers (Walmart & H&M) in Dhaka, they claimed that producing garments in countries which are new to the industrialisation process (such as Bangladesh) is a painful process. They argued that considering the fierce global pricing competition, it is impossible for them to increase the CMT (cutting, making, trimming) price. In the last workshop with IKEA, this scribe noted their concern about the ‘fare wage’ and ‘living wage’ policy, and their indication for Bangladesh to adopt the ‘fare wage’ policy soon to keep the relationship sustainable. We saw how rigid and uncompromising these global buyers become when it comes to the CMT cost calculation. There is a big gap between the FOB price and buyers’ sale price, but still these buyers bargain for even 1 cent, but reduce the lead time of manufacturing, demand an advanced level of workplace safety and welfare facilities, and refuse to accept goods if there has been any delay in shipment that might have occurred due to forces beyond the control of the manufacturer. It was also seen that due to only a couple of days delay in shipment, how a buyer/retailer, upon cancelling a work-order, returned with a later offer to its local manufacturer to buy the apparel at a third of the original cost of production. In reality, some re-adjustments are also required on the part of such retailers as well. It is of course desirable that our factories should pay higher wages and provide an acceptable level of welfare-oriented services to their workers. Empirical studies show that many factories in Bangladesh have made a considerable investment in equipment and facilities in order to comply with the global buyers’ CoC and with the Accord and the Alliance safety assurance programmes. Nevertheless, it was observed that the abrupt reduction in CMT charges in recent years by these retailers and the increasing pressure to comply with their industrial safety and product quality requirements have resulted in huge additional expenditure on overhead costs by the majority of factory owners in the country. As a consequence, despite the availability of a skilled workforce, a large number of small and medium-sized RMG factories are becoming unable to spend adequately to meet the high demand of the global supply chain, and will be forced to close within the next few years. Notwithstanding that BGMEA, BKMEA and BTMA have been making efforts to carry out the corrective action plans suggested by Accord and Alliance, ensuring an appropriate level of occupational health and safety (OHS) in every factory is an enormous task which needs both time and money to accomplish. Do we have that time and money? In the last three and a half decades, the RMG sector has made a tremendous growth. According to the international consulting firm McKinsey & Company, currently, Bangladesh is the second largest manufacturer and exporter of apparel after China, and on its way to becoming the largest within the next 5 years. To pave the way to becoming the largest, we think that 2-year time frame stated by Accord and Alliance is too short. For a 35-year old industry, a 5-year time frame to bring about the reforms required to transform this industry to a global standard seems more appropriate. However, in terms of the money and investment needed, we believe that global retailers could play a far more beneficial role compared to the current situation. This writer spent a year in Scotland conducting research work a few months after the collapse of Rana Plaza. During that time, it was seen that as an ongoing attempt to promote responsible business practice, renowned global brands frequently assure their customers that their clothes are made ethically in factories where fare wages are paid, and the factories are regularly audited for OHS compliance and certified as safe, and have decent working conditions. Shortly after the fire at Tazreen Fashions and the collapse of Rana Plaza, customers were bewildered by these claims and shocked by the striking number of deaths and injuries caused by these accidents. There were many overt protests by regular customers in front of Benetton, Primark and Matalan stores in London and elsewhere, and these ordinary consumers were outraged to find that the outsourced Bangladeshi factories had unsafe working conditions and that the wages of the workers were the lowest in the world. They were demanding an explanation from their retailers about the claim of ‘fair trading’ and ‘ethical business practice’. These buyers were also questioned by perplexed consumers around the globe to justify their claim to incorporate ethical business practices and compliance audits with the local manufacturers. Interestingly, in response, some of these big brands have been said to be contemplating doing just that – not only do they fear that the higher standards in Bangladeshi factories will raise their product costs, but they also fear that another tragedy would damage their reputation – published in the Economist. Contrastingly, it was documented by many corporate social responsibility (CSR) stakeholders, nongovernmental organisations (NGO), and researchers that customers are willing to pay more for their product if this extra money is spent on improving the livelihood of the workers and ensuring a safer workplace. This is a clear indication that retailers can charge their customers a slightly increased price of the products and accordingly this extra money can cover reasonable CMT charges by local manufacturers. Thus, the local RMG factories can invest this money to ensure appropriate welfare services for workers, offering fare wages, complying with structural integrity standards and other compliance factors. The responsibility for ensuring workplace safety applies to all parties involved: manufacturers, retailers, consumers and the government. Notably, given the proliferation of the use of all of the OHS instruments (e.g. the labour act of Bangladesh, retailers’ CoC, the Accord & Alliance agreement etc. as a means of preventing workplace accidents), the question of whether any level of leniency or negligence is observed among the factory owners in administering these provisions requires investigation. Certainly, repeat offenders and violators of the OHS provisions and compliance requirements must be brought to justice and penalised heavily. A breach of non-compliance with the CoC or OHS provisions may result in work-order cancellation or withholding, so it is worth further investigating the manufacturers’ perceptions about incorporating the OHS provisions or why a few of them neglect or avoid these provisions. Similarly, the global buyers/retailers cannot deny their accountability and should also continually push their CSR efforts to allocate funds to increase and maintain compliance standards in their outsourced factories and to foster full transparency in the supply chain via their local sourcing offices. In order to secure Bangladesh as their sourcing powerhouse, these buyers must engage in a ‘fair price’ practice, and should change from a ‘directive’ role to a ‘cooperative’ role to enable a close buyer-supplier relationship.
