Large retailers have struck a deal with Bangladesh textiles and
clothing manufacturers, promising to maintain their orders and the
prices they pay in return for improvements in labour standards.
The agreement, thought to be the first of its kind for the sector,
involves Asda, Co-op, Cotton Group, Gap, KarstadtQuelle, H&M,
Inditex, Levi Strauss, Littlewoods, Marks & Spencer, Nike and
Wal-Mart, who hope to head off a ‘race to the bottom’ on workplace
standards in Bangladesh now the global Multi-Fibre Agreement has ended.
Following the introduction in January of the more liberal Agreement on
Textiles and Clothing (EP6, issue 8, p8), retail buyers are now freer
to switch from one country to another in the search for lower prices.
Industry observers fear factories in countries such as Bangladesh will
lower labour standards to remain competitive. However, the retailers
have agreed to try to avoid this by guaranteeing not to move their
business away from Bangladesh – in return for undertakings by the
suppliers to improve working conditions.
Among garment producing countries in Asia, Bangladesh has relatively
good labour standards and has ratified seven of the eight core ILO
conventions.
The retailers, who will monitor progress through existing factory
audits, also expect productivity and quality improvements allied to a
reduction in reputational risk. Garment workers in Bangladesh are less
productive than their Chinese counterparts.
The Bangladesh deal was agreed at a meeting at the end of June in Dhaka
hosted by the MFA Forum of retailers, institutions, trade unions and
NGOs that was formed last year in response to the phasing out of the
MFA.
As part of the agreement the Bangladesh government has created a cross
sector body that will work with manufacturers. The National Forum on
Social Compliance will:
develop a national strategy to improve the management skills of factory supervisors
raise awareness of workplace rights, with training for managers and staff
put in place procedures for resolving any conflicts in factories
standardize health and safety guidelines.
The retailers now want to broker similar agreements in other countries, starting with Lesotho and Sri Lanka.
Bangladesh is the ninth biggest exporter of garments to the US,
according to US International Trade Commission data for 2003. Textiles
and clothing worth €3.88billion ($4.73bn, £2.62bn) were imported into
the European Union from Bangladesh in 2004, or 5.6 per cent of total EU
imports of this product group.
