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New Report Says Bangladesh May Not Be Rife With Subcontracting

A report from New York University’s Stern Center for Business and Human Rights released in December claimed more than half of Bangladesh garment factories are engaged in subcontracting, but now a new report has come to quite the opposite conclusion.

In its own research for “The Bulk of the Iceberg: A Critique of the Stern Center’s Report on Worker Safety in Bangladesh,” Penn State’s Center for Global Workers’ Rights (CGWR) found that 89 percent of workers are either covered by the Accord or Alliance safety initiatives or the International Labour Organization’s (ILO) National Initiative, another government factory inspection program.

The finding refutes the claim that so much of Bangladesh’s garment factories are unapproved or unaccounted for.

CGWR also said Stern “greatly overestimated” the number of factories in Bangladesh, which the initial report put at 7,000, as well as the size of the workforce, which Stern estimated as roughly 5.1 million workers—three million of which purportedly produce for brands at unregulated factories.

But according to CGWR, Stern’s account included a number of closed factories, even the five destroyed in the Rana Plaza building collapse, and overestimated the size of the sector by at least 2,000 factories.

The worker count would also have been off since it was based on the allegedly erroneous factory count.

“When Stern researchers attempted to validate its official factory list via field research in two sub-districts of Dhaka, they could not find the majority of the factories in these areas, which further indicates that Stern’s database includes many faulty entries,” CGWR said.

To validate its official factory list, Stern sent inspectors to stroll the streets of two Dhaka sub-districts, Rampura and Tongi, looking for factories, and according to CGWR, they didn’t even find half of them.

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“Through email correspondence with the authors of the report, we learned that the teams were not able to find 237 of the 377 factories on the official list—that is, the field researchers could only identify 140 (37 percent) of the factories located in these two sub-districts,” CGWR said.

In a statement responding to CGWR’s report released Friday, Sarah Labowitz co-director of the Stern Center and co-author of the report with research director Dorothée Baumann-Pauly, said, “We dispute many of your assertions about our work.”

The prevalence of subcontracting was the crux of Stern’s report and as Labowitz wrote in the report in December, “Our research shows that indirect sourcing is an essential element of Bangladesh’s low-cost, high-volume model of garment production.” She added, “Though global brands assert that they have strict policies against unauthorized subcontracting, in reality, millions of workers at thousands of smaller factories are producing their goods. Working in these factories is often highly risky, yet virtually no international resources are being applied to them.”

While on assignment, Stern’s factory presence assessors found 153 factories that were not on the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) or Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) lists, or authorized for export. These factories employed an average of 55 workers.

Addressing the subcontracting call out, CGWR said, “Stern’s own estimate of the average size of such facilities (55 workers) suggests that unregistered, informal factories employ a very small percentage (approximately less than 2 percent) of workers producing garments for export.”

In other words, even if there were 1,000 “informal” factories, CGWR said, with an average of 55 workers, the total 55,000 workforce would account for less than 1.5% of total employment.

“The prevalence of subcontracting and the lack of resources to fix a large number of direct and indirect sourcing factories are inconvenient truths for many of the players involved in the apparel supply chain in Bangladesh,” Friday’s response from Stern asserted, adding that BGMEA president Siddiqur Rahman said in response to their report, “Subcontracting factories don’t exist.” Stern said, “This kind of denial has become a common public response to our research.”

Closed and duplicate factories also served to inflate Stern’s final count, according to CGWR.

The BGMEA and the BKMEA maintain their own factory lists, but because these lists also serve as a voter roll for BGMEA leadership elections, defunct factories are often intentionally left on the list.

“Factory owners who no longer maintain operational factories could still wield political influence by maintaining those factories on the BGMEA list,” Stern said in its report.

Leaving those out-of-business factories—including the five that were razed in the deadly Rana Plaza building collapse—in the total is part of what CGWR said swelled Stern’s final factory count.

Stern said while the factory count may have been over-inclusive of factories that have been closed (like those in Rana Plaza), it is also under-inclusive of factories not registered anywhere, namely indirect suppliers. The report’s authors defended their data estimates.

“While there are gaps in the data, it is a useful and unique contribution to have built a database of this size and scope,” Stern said in response. “You make several assumptions about the data that are not supported by evidence presented in your critique. For example, you assert that our estimate of 7,100 factories is ‘inflated by at least 2,000 factories.’ This assertion is not born out by your analysis of our research, nor have you indicated that it is based on any on-the-ground evaluation or new study on your part.”

That subcontracting exists wasn’t in question in CGWR’s response report, but the extent to which it’s occurring in Bangladesh was called to question. And having the wrong factory and worker counts can’t paint a clear picture of the situation in the sector.

“Clearly, identifying the best available employment estimate is critical for addressing what is arguably the most important question when evaluating developments in the post-Rana Plaza RMG sector, and the one to which we now turn: how many garment workers in Bangladesh are employed in unsafe factories?” CGWR said.

The two reports agreed on one point, and that was that workers need a safe place to work, whether employed in official or subcontractor factories.

“Will the factory inspection programs reach every workplace and protect every worker? Almost certainly, no. Is it taking too long to address the problems identified via the inspection process? Absolutely, yes,” CGWR noted. “But suggesting, as the Stern report does, that the post-Rana Plaza efforts have been so ineffective, and/or so limited in scope, as to be barely touching the ‘tip of the iceberg’ is inaccurate and misleading, especially at a time when clear-eyed assessments of where current efforts are falling short, and how they can be strengthened, are urgently needed.”

In their response, Labowitz and Baumann-Pauly welcomed original research on post-Rana Plaza reforms from CGWR.