It’s ten years since the tragic collapse of the Rana Plaza building near Dhaka, Bangladesh, which killed at least 1,132 garment workers and injured several thousand more. The collapse of the eight-storey building on April 24 2013, which housed five factories making clothes for western high street brands like Accessorize, Primark and Walmart, was the worst of its kind in the world.
The owner, Mohammed Sohel Rana, had allegedly been told by an engineer the day before that the building was not safe and should be evacuated. Ten years on, the murder trial against him and another 35 defendants has still not been concluded.
The tragedy shed a light on the appalling conditions that sometimes exist in the global retail supply chain. Wealthy countries have unveiled lots of initiatives in the ensuing years to make things better. Unfortunately, the situation has not improved. So where are we going wrong?
The response to Rana
Immediately after the tragedy, various global initiatives were launched to ensure the safety of garment workers in the country, such as the Accord on Fire and Building Safety and Alliance for Bangladesh Worker Safety. These focused on things like increasing building fire and safety audits and inspections, with some success in factory safety for workers.
There have also been moves to curb exploitation and forced labour. Forced labour, which is often referred to as modern slavery, includes situations where workers are not in a position to give informed consent to their conditions, and where they will be penalised if they refuse. Without getting into the fine detail of exactly where this applies, it arguably includes Rana Plaza.
Many wealthier jurisdictions including the UK, France, Germany, the EU and Australia have enacted legislation to tackle forced labour. This requires companies within those countries to produce things like annual modern slavery statements or due diligence reports to show they are managing their supply chains properly and ensuring workers are treated fairly.
Much of this legislation is disappointing. The UK Modern Slavery Act 2015 only applies to companies with upwards of £36 million annual turnover. Companies have to disclose what steps they are taking to deal with slavery risks in their supply chains, but don’t have to specify which abuses have taken place. There is also no penalty for failing to make the necessary disclosures.
On the other hand, Germany has made it mandatory for companies to enforce standards within their supply chains to make sure their suppliers are ethical employers and providing safe working conditions, as opposed to the UK approach of simply requiring a disclosure. Germany also imposes fines of up to €8 million (£7 million) or 2% of annual turnover, whichever is higher. It only applies to companies with turnover in excess of €400 million, however. There are also proposals for a mandatory due diligence directive across the EU, though it’s not yet clear whether this will go ahead.
Numerous studies have shown that – despite all the social audits, ethical codes, corporate social responsibility disclosures and moral narratives global fashion retailers use – workers’ human rights have not improved. Indeed, the situation was aggravated by COVID 19.
When some colleagues and I interviewed Bangladeshi garment workers and people in trade unions and NGOs, we found that the pandemic had led to job losses and increased people’s financial burdens. This made it harder for women workers to support themselves and their families.
In December 2021 we then surveyed 1,000 garment factories and found that more than half during the pandemic had endured retailers suddenly cancelling orders, delaying payments, reducing what they were willing to pay or refusing to pay for completed goods. Retailers on the list included (but were not limited to) Aldi, Asda, Asos, Bestseller, Costco, H&M, Kik, Lidl, New Look, Nike, Next, Pep&Co, Primark and Zara.
Yet no suppliers took customers to court for cancellations or refusing to pay for goods. Three-quarters of factories were still selling to brands at the same prices as in March 2020. Nearly one in five factories also struggled to pay the Bangladeshi minimum wage.
The situation today
Since the pandemic, suppliers continue to struggle amid high inflation. In Bangladesh, unions are demanding that the legal minimum wage for garment workers be almost tripled, but so far with no success. Garment exports have increased more than 35% since the start of the pandemic yet wages and employee numbers have stayed the same.
The collapse of British online retailer Misguided in 2022 gave more insight into the unfairness of the supply chain when it was revealed that clothing producers in Pakistan were shipping consignments and not getting paid until later. When Misguided went under, this meant not getting paid at all, leading to hundreds of workers being made redundant.
Meanwhile, International Labour Organization-led estimates suggest that the number of people in forced labour around the world rose from 24.9 million to 27.6 million between 2016 and 2021. Many workers in poor conditions in the retail supply chain would not be categorised as forced labour, but this rise is certainly not encouraging. Overall, these are various signs during and since the pandemic that suggest the modern slavery legislation is not having the desired effect.
So what can be done? Instead of more transparency regulations, we need a watchdog to investigate unfair practices around the world and punish companies that are found guilty. As well as investigating forced labour allegations, it would penalise companies for doing cut-price deals that prevent workers from receiving a living wage. It would also prevent companies from delaying payments for long periods or refusing to pay for completed goods.
A bill was tabled in the UK parliament to establish such an adjudicator last July. It has been publicly supported by more than 50 MPs and is expected to be put back before the House of Commons in the near future. For the longer term, to harmonise practices between different countries, it would also make sense to establish an international fashion watchdog.
It is unavoidable that COVID and high inflation have adversely affected supply chain workers, and no one is denying that exploitation by suppliers is part of the problem. But an international watchdog that puts more pressure on retailers to treat their supply chains fairly is an essential part of the puzzle. Until a regime is in place with genuine teeth to ensure retailers toe the line, the modern slavery behind high-street fashions will only continue.
by : Muhammad Azizul Islam, Chair in Accountancy and Professor in Sustainability Accounting and Transparency, University of Aberdeen