Collapsing Worlds

Published: May 02 , 2013
Author: Stephen White

As the death toll from the collapse of the Rana Plaza garment manufacturing building in Dhaka, Bangladesh approaches 400, the attention of the world's press is focussing on the Western companies who buy merchandise from the manufacturers  located in this and other similar buildings. Reports over many years have highlighted issues of sweated labour, pitiful wages, and the employment of young children. These are disgraceful abuses of human rights which buyers claim they were unaware of at the time, and appropriate noises about improving conditions for workers are made, only for the same allegations to crop up again a few months later.

But these abuses are not in the same league as the tragic loss of life in an illegally built building which had known structural faults.  British retailers Primark and Matalan, as well as Benetton (Italy), Mango (Spain) and Loblaws (Canada) have all admitted that they are or were customers of companies based in the building; Primark have already agreed financial support for victims of the disaster; others may follow suit.

The abandonment of care, attention and responsibility displayed by the landlords, factory owners and regulatory authorities is a recurring theme in garment-trade tragedies like this. But so is the murky footprint of the Western buyers, and their pernicious demand for cheap goods. Ultimately this is fuelled by consumers, who are rarely known to turn down a 'bargain'. But the old saying 'you get what you pay for' is a universal truth. We should have been alerted when UK supermarkets  began to sell children's school uniforms for as little as £5 ($8). The quality was often very good, so cutting corners wasn't happening there. As we now know, it was in the appalling labour rates and workplace conditions.  

Which leads me to this question: given the drive for ever lower prices, acceptable margins, and the personal pressure to achieve their KPIs, what negotiating responsibility should the Western buyers take in preventing or at least improving these situations?

In my view it is not enough during the negotiating process to specify minimum standards in Service Level Agreements or other contractual documents. In practical terms this transfers responsibility to the counterparty - in these cases the manufacturer - who cannot comply either because there isn't enough profit in the deal, or because they think they can get away with it. Relying on well signposted and infrequent factory visits to check compliance isn't good enough.

The larger retailers have recruited Ethical Trading Managers and Directors in recent years, whose remit is to monitor conditions and prevent abuses in the factories they buy from. The evidence suggests that they are not doing a great job. This is probably a structural problem - in terms of management hierarchy and precedent, who has the bigger voice at Board level -  the Ethical Manager or the Procurement Manager?

Western buyers negotiating with garment factory owners have the moral responsibility to ask themselves if the numbers they are shown by manufacturers to justify and explain pricing actually add up; to check the costing information they are given by the manufacturer (can they really source raw materials that cheaply?) to estimate realistic piece-work rates (can a person really assemble a garment that quickly?) and to assess realistic overhead costs (can they really run a factory safely for that money?). And where the answers don't check out to do a kind of negative-negotiation;  taking responsibility for improving conditions by becoming actively engaged in the contracting of labour, supply of material, and negotiation with landlords.  

In other words, they should become the owners of these sweat shops, running the businesses themselves to standards they will be prepared to defend. The use of third party manufacturers is a very convenient opportunity to say 'not my fault' when things go wrong. 

And where this is not practical we in the developed world should pass or enforce legislation which makes Western companies  co-liable with the owners for the damage to human life when disaster strikes.

Stephen White


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