Rana Plaza and the True Price of Fashion

Neha Khandhadia Vol. 37 Managing Editor Vol. 36 Associate Editor

Consumers of all ages flock to stores like H&M, Forever 21, Zara for the latest trends at bargain prices. What they do not realize is the price that is really paid to produce their bargain buys. The “fast fashion” industry is experiencing a rapid race to the bottom. “Fast Fashion” is an industry is built on getting fashion’s latest trends to the market quickly and at bargain prices. Companies continuously look to the next country with the lowest wages and labor standards for production. For example, as of mid-2014, Gap Inc. is the first American retailer to move production to Myanmar[1] and H&M is currently moving its production to Ethiopia.[2] Companies’ desire for lower prices has exacerbated terrible working conditions.  These terrible working conditions have led to deaths in the garment industries that produce clothes for “fast fashion” giants. And despite the worst accident in the garment industry just two years ago, little has changed. Bangladesh’s Garment Industry and Rana Plaza Bangladesh’s garment industry is an extremely vital part of its economy. It consists of 80% of the country’s overall exports[3] and employs four million people in 5,600 factories[4], making Bangladesh the second largest garment exporter in the world.[5] While the garment industry provides jobs for a large portion of the population, it does so in poor, haphazard conditions. Not only do workers complain about not being paid properly and having to work long hours without breaks,[6] there is also widespread violence in the workplace including verbal, physical abuse, and rape.[7] In fact, rape is used to prevent women from joining unions.[8] Even further, workers have to deal with arbitrary firings, intimidation, withholding of entitlements, and child labor.[9] On April 24, 2013, Rana Plaza, a building part of Bangladesh’s garment exporting industry, collapsed, killing 1,100 people and injuring 2,500 others.[10] Rana Plaza not only housed four garment factories that operated 24 hours a day, but it also included a market, residential apartments and a bank.[11] The day before the building collapsed, it was evacuated because several cracks appeared.[12] However, garment employers ordered employees to return to work and one hour later the building collapsed.[13] Unfortunately, Rana Plaza was not Bangladesh’s first factory accident. In November 24, 2012, Tazreen factory caught fire.[14] Workers at Tazreen worked ten to eighteen hour shifts, creating clothes for Wal-Mart and other retailers.[15] When the fire originally broke out, workers started to evacuate and were quickly told to return to their machines in order to complete the order.[16] But, the fire quickly spread killing 130 people.[17] There were also 41 other “fire incidents” in factories, which combined, killed nine workers and injured more than 600 others.[18] What’s worse is before the Rana Plaza collapse, major retailers rejected a proposal created by Bangladeshi and international unions to improve safety in garment factories.[19] The plan would have established an independent inspectorate to oversee all factories and do away with government inspections, which are infrequent and marred with corruption.[20] The inspectorate would have the power to shut down unsafe facilities as part of a legally binding contract signed by suppliers, customers and unions.[21] Companies such as Wal-Mart, Gap, and H&M rejected the proposal because it would be legally binding and costly.[22] What’s Being Done? Soon after the Rana Plaza collapse, the finger pointing began. International labor activists blamed the retailers whose desire for low prices blinded them to the wage and safety concerns in their factories. As a result, the United Nations paired with retailers and the Bangladeshi government to better regulate the garment industry. Accord on Fire and Building Safety in Bangladesh (“Accord”) The Accord is a legally binding agreement signed by over 150 garment corporations from twenty countries, two global trade unions, Bangladeshi unions and NGOs.[23] The International Labor Organization is its chair.[24] The Accord commits companies to contribute to a fund that brings signatory factories up to safe standards.[25] Factory inspections began in February 2014.[26] Alliance for Bangladesh Worker Safety (“Alliance”) The Alliance consists of 26 American or Canadian companies including Wal-Mart, Gap, Target, and Kohl’s.[27] It is a nonbinding, unilateral effort that asks members to donate to a pool to cover wages of workers whose factories are temporarily closed after inspections.[28] It also funds low-interest loans to factory owners to make repairs.[29] Reports by the New York Times and Reuters found that both groups have not fulfilled their promises to inspect and oversee repairs to factories.[30] Part of the reason is government opposition to closing factories because of corruption and fragmentation and detrimental reliance on the garment industry[31] Corruption in Bangladesh extends from the government to the factory employers, thirty of whom occupy seats in the national parliament.[32] Fragmentation of politics also makes it difficult for actual worker organization. There are around ninety unions who claim to represent garment workers.[33] This makes actual organization for change difficult. Additionally, instead of working with factory owners to fix labor and safety problems the Accord has closed garment factories its inspectors found dangerous.[34] And these factory closings have immediate economic impact on many workers, as they lose their source of income.[35]  Ordering shut downs often does more harm then good in a community that is so dependent on the garment industry. As a result the government has been reluctant to shut down factories for the Accord. There may also be issues with the process of closing factories. For example, the owner of one building which houses five factories said that the Accord did not provide him with any reasons for the shut down.[36] While the Accord and Alliance have yet to make an impact in Bangladesh as conditions continue to deteriorate. After the Rana Plaza, a mass strike of garment workers led to a 75% increase in the minimum.[37] However, workers claimed that the wage increase led employers to try to recover the extra cost by increasing hours, demanding higher production targets, and firing workers.[38] It’s sometimes easy to forget that the reason companies export from Bangladesh is the low costs. Until they take responsibility for health and safety in their factory, conditions like the ones in Bangladesh will continue all over the world.

[1] See Tim McLaughlin & Zaw Htike, ‘Made in Myanmar’ to Hit US Shelves, Myanmar Times (June 7, 2014), http://www.mmtimes.com/index.php/national-news/10598-gap-to-bring-made-in-myanmar-to-us-shelves.html.