Major retailers and brands are signing on to a new safety plan for Bangladesh, in a move that has been applauded by labor and consumer groups. H&M, Inditex, PVH (owner of Calvin Klein), Tesco, Tchibo, Primark, and C&A have agreed to sign the deal.
Together, they make up a large percentage of total goods sourced from Bangladesh. H&M sources more goods from Bangladesh than any other company, and its support is what spurred other firms to sign on. But the recent factory collapse in Cambodia raises the question, is it enough to sign a deal for just one country?
The new deal is legally binding and will last five years. It requires independent, public inspections of factories, and obliges Western firms to underwrite safety improvements. At the same time, it compels those firms to stop doing business with any factory that won’t bring its facilities up to code. In all, it’s the kind of package western consumers have been waiting for since November’s Tazreen Fashions fire highlighted the dangerous working conditions in Bangladesh.
That fire, which killed over 100 people, was followed by other fires, deadly labor riots, and, finally, the collapse of the Rana Plaza factory complex, which killed almost 1000 people and led to the arrests of the building owner, factory owners, and engineers involved.
I’m excited about the new agreement, but I also wonder how it will affect the business landscape around the world. An agreement like this, which empowers unions, requires large capital upgrades, and is legally binding, will, inevitably, add to the cost of working in Bangladesh. Will firms at the bottom of barrel still be able to find profit in the country, as expectations for their behavior shift? What does it mean for a company that makes $5 jeans?
My concern with this new deal isn’t necessarily about Bangladesh. Conditions will improve in that country – there will be fewer worker deaths and, if we’re lucky, it’ll be the first step in Bangladesh’s climb up the value chain. I’m worried that the $5 jean maker will abandon Bangladesh entirely.
Maybe it’ll change his equation enough that he takes another look at Pakistan, Myanmar, or another low-cost country. The market for clothes hasn’t changed. Firms still expect a $5 jean. All this agreement does is increase the odds of that production moving to another country, where there’s no labor agreement, no enforcement, and the same cycle of dangerous manufacturing can begin again.
If the world’s retailers were serious about safety, they’d take the same deal they’ve cut for Bangladesh and make it universal – they’d make it part of the language in every single manufacturing contract. This is a half measure, and better than none, but Bangladesh isn’t the only game in town, and raising prices there just pushes the problem down the road.