Thursday, May 30, 2013

How Bangladesh Garment Industry Traded Workplace Safety For Jobs


DAVE JAMIESON, EMRAN HOSSAIN and KIM BHASIN

Like millions of other young women in Bangladesh, Sumi Abedin forged her place in the modern economy at a sewing machine inside an urban garment factory.

The ready-made garment industry now accounts for a whopping 80 percent of Bangladesh's exports, making the country the third largest exporter of garments in the world. The explosive growth in business over the past two decades has helped create more than 3.5 million garment jobs in the country, particularly for women like Abedin, who, just a generation ago, may have had no formal position in Bangladesh's workforce.

Until recently, Abedin, 24, worked sewing pockets onto pants in the factory known as Tazreen Fashions, outside Dhaka. She earned meager wages by global standards -- roughly $55 a month, comparable to what other garment workers in her country make. This cash was critical for the survival of her family. Her father works as a rickshaw puller, and his earnings alone did not cover food and other basic necessities. Their combined income was just enough to support themselves and Abedin's mother.

But such opportunity comes with steep costs. Abedin knows people who paid for it with their lives.

Abedin no longer has a job. Last November, her factory burned to the ground, killing 112 people. She leaped from the third floor, breaking her right leg and left hand in the process. The young man who landed beside her died.

As proponents of expanded global trade are quick to highlight, Bangladesh's stratospheric rise in the apparel world has helped alleviate the country's grinding poverty. But in Abedin's case, the boom has taken more than it's given. After losing her job, she said, she was left with a payment of $150 from her employer, to cover back pay and severance, and another $1,200, from a fund supported by Li and Fung Ltd., a retail giant that contracted to have its clothes made inside the doomed factory. Medical bills have already swallowed about three-quarters of that money, and her doctor has told her she needs a year to recover before she can hope to work again.

Along with other hardships, she carries the knowledge that more factory disasters have happened since her own and that even more will almost certainly happen in the future.

"We want a safe workplace," Abedin recently told HuffPost, speaking Bengali. Even before the fire, "the working conditions were poor in my factory. We were verbally and physically abused."

Last month, Bangladesh suffered what has been called the world’s most deadly garment industry disaster -- the collapse of a factory complex inside the Rana Plaza building in a suburb of Dhaka. The tragedy, which took the lives of more than 1,100 workers, focused global attention on a reality that Abedin and other workers said they already knew too well: The garment trade in Bangladesh is a dangerous enterprise rife with factory fires and other deadly calamities. The industry has grown so rapidly that it has outpaced the government’s ability to monitor and enforce workplace safety standards. Indeed, the growth appears fueled in part by the government’s willingness to look the other way.

The substandard working conditions that Abedin and other garment workers have confronted are the byproduct of a globalization success story. Bangladesh has transformed itself into one of the world's leading exporters of clothing, generating millions of jobs that have financed housing, basic nutrition and education for some of the poorest people on earth. But this refashioning has been engineered through means that labor advocates portray as fundamentally exploitative, by courting foreign investors with some of the globe’s cheapest, most disenfranchised workers.

Bangladesh has proven irresistible to international clothing brands and retailers, who have found a refuge from the higher costs associated with stricter enforcement of health, safety and labor laws. Indeed, until the recent of string of industrial accidents big enough to capture headlines in the United States and Europe, Bangladesh factories had seen little regulation.

"Bangladesh made it possible mainly because of its cheap labor force," said Mohammad Giasuddin, whose father launched one of the first modern export of garments in Bangladesh. "And our laborers are industrious and good at it."

When Giasuddin's father, Mohammad Reazuddin, sent his first shipment to France in 1977, his effort was lampooned in a newspaper cartoon that suggested fashion-forward Paris would return the clothes to their sender. Leading Bangladesh businessmen mocked the very idea of the country producing garments primarily for Westerners. But Reazuddin and a small group of factory owners had the benefit of cheap labor -- the wage of a factory floor worker was about $2 a month then, Giasuddin recalled -- as well as the backing of the Bangladesh government.

Plenty of other countries in Asia and Latin America have abundant workers willing to work for little money. But hardly any countries have wage floors quite as low as Bangladesh's, and few have courted and fostered the garment industry with such strategic coherence.
In the 1980s, the government put a new emphasis on economic growth through exports and direct foreign investment, particularly with the establishment of export processing zones, like the ones that are now home to the country's thousands of garment factories. The government also allowed for the duty-free import of machinery and raw garment materials.

"The government and industry leaders made a judgment that they could compete globally in the garment industry," said Michael Posner, the former U.S. assistant secretary of state for democracy, human rights and labor under President Barack Obama. "The infrastructure is weak. The government's enforcement of both labor laws and safety laws is weak -- or non-existent in many places. And the sourcing model for big companies has encouraged them to go to places where they can produce things as cheaply as possible."

The garment industry would bring needed jobs to the country, putting wages into the pockets of Bangladeshis struggling to survive through agriculture. Farms had been split into ever-smaller parcels, while farmers themselves felt increasingly squeezed by the rising costs of power and fertilizer. Garment jobs were seen as a crucial source of earnings for the poor.

The factory owners' greatest asset was a largely untapped pool of labor -- rural women. For decades, women in predominantly Muslim areas outside of cities had been relegated to informal, indoor agricultural work that added modestly to their husbands’ monthly incomes. The new garment factories presented the opportunity for formal work that was religiously permissible for these women -- a marginalized and underprivileged class that happened to carry a long tradition of stitching and weaving. (It's likely that muslin, long a coveted fabric in European countries, originated in Dhaka centuries ago.)

With no labor organizations to contend with, the men who owned the factories could pay their workers very little, with only small concern for strikes or protests over working conditions. Even today, most supervisory roles in the factories are held by men. Women now make up the overwhelming majority of line workers.

"It was a classic situation of having all this surplus labor in rural areas," said Martha Chen, an expert on Bangladesh at the Harvard Kennedy School. "You had this huge pool of women who'd never done paid work, so they were willing to work for nada. There was an extraordinary setup for it."

THE END OF QUOTAS
Even with such an abundance of low-wage labor, the furious growth of apparel-making in Bangladesh over the past decade would not have been possible without another element: The scrapping of a complex system of trade quotas that effectively limited how much clothing any one developing country could export to the wealthy world.

Exports of garments to the United States and other Western countries used to be governed by something known as the Multi Fibre Arrangement. Enforced by the World Trade Organization, the agreement specified the number of polo shirts, blue jeans, blazers and other garments that each developing country could send to the U.S. and Europe.

The agreement was meant to function as a kind of aid, extending profits from the worldwide clothing trade to poor countries like Bangladesh. But it also set production caps at a time when developed countries feared the lower production costs of countries like Singapore and South Korea, according to Mark Anner, director of the Center for Global Workers’ Rights at Penn State University.

The poorest countries, including Bangladesh, benefited from the arrangement. International companies manufacturing elsewhere in the region, pressured by quota restrictions in their own countries, gravitated toward nations like Bangladesh because of the availability of cheaper labor. Bangladesh was also able to export to the European Union duty-free and quota-free due to an exemption from the World Trade Organization.

But that arrangement came to an end in 2004. Many observers assumed that the change would hurt Bangladesh, considered less competitive than other developing players at the time. By such accounts, investment would exit nearly every country and rush into China, which presented its own low wages along with the largest workforce on the planet and formidable infrastructure for trade, from modern ports, to highways and rail. As the thinking went, poor countries like Bangladesh would lose millions of jobs and wind up even poorer.

China was under very tight constraints up until the beginning of 2005,” said Pietra Rivoli, a professor of finance and international business at Georgetown University, and author of the book The Travels of a T-Shirt in the Global Economy. “Everyone was wondering if you take the constraints off of China, who's going to lose?“

But the end of the global quota system wound up proving a great boon for Bangladesh.
Once the quota system was phased out, "it allowed for tremendous concentration in the industry," said Anner. "It just allowed companies to pick winners and losers."

China’s apparel industry took off, with the production of many clothing categories multiplying as much as 1,000 percent above previous levels, according to Rivoli. Production dipped in South Korea, Taiwan, the Philippines, Hong Kong and other higher-wage countries formerly protected by the quotas.

But, over time, other winners emerged as well -- low-wage nations, such as India, Pakistan, Vietnam and Bangladesh.

Production in the apparel industry tends to flow toward lower-wage countries because labor is such a large part of the process, and each worker requires only a low level of skill. It also requires basic infrastructure from reliable power supplies to transport facilities. While the fundamental industrial structure in Bangladesh isn’t very efficient, it’s better than many of the other countries capable of providing comparably low wages, said Rivoli.
China's labor costs rose as Bangladesh's remained near rock-bottom, reinforcing its appeal for global apparel brands.

Back in 1994, Bangladeshi workers had gained a hard-won minimum wage of roughly $11 per month, but that level remained in place for more than a decade. In 2006, workers took to the streets to demand an increase. Police mounted a bloody crackdown, arresting, beating and even killing workers. The result was a doubling of the official minimum wage to $22 per month. Against a backdrop of double-digit inflation, that increase did not go far. Three years ago, Bangladesh again lifted the minimum wage, this time to about $37 a month. That’s where it remains today, constituting one of the lowest minimum wages in the world.

"Talk to people in China or India, and their perspective is that the pay rates in Bangladesh are abysmally low," said Alice Tepper Marlin, the head of Social Accountability International, a non-profit that helps monitor overseas factories in the garment industry.

"Desperately poor people are willing to work for wages that are way below the prevalent in neighboring countries.

"But without the apparel industry," Tepper Marlin added, "things would be worse."

Indeed, the rise of the garment industry has made many lives in Bangladesh less miserable than they were previously, and not just in the growing urban industrial hubs. Rural areas, too, have benefited from the growth in jobs, particularly through the remittance of wages from the factories back to the country, leading to what Chen described as "a revolution of a kind in the villages.”

CAPTURING THE LEVERS OF POWER
The export boom has given rise to a new uber-wealthy class of Bangladesh garment industry businessmen estimated at about 2,000, who collectively now wield enormous influence over the national economy, policymaking and the media.

A prime example is Sohel Rana, the owner of the building that crumbled. Before his arrest, he was a local ruling-party political figure who loomed like a local mafia don, as The New York Times reported. Despite the obvious structural cracks, Rana had claimed his building would stand "for a century."

Most businessmen-turned-politicians in the Bangladesh parliament hail from the garment industry, partly explaining the government's laissez-faire regulation of factories. Their coziness with the country's newspaper owners also means that worker discontent in garment plants goes largely unreported. The Rana Plaza collapse and its attendant protests were ultimately too large to ignore. Yet even as the death toll rose to unprecedented numbers, accounts were buried deeper and deeper inside domestic newspapers.

The industry's fast rise has led to widespread corruption, evident in scandals like the Hallmark loan scam. In that case, the owner of the garment-producing Hallmark Group siphoned more than $300 million from the state-owned Sonali Bank. By the time the scandal became public, Hallmark had already been formally honored by government officials for outstanding service to the country.

These industry captains' connections with government often shield them from consequences in deadly disasters. After 54 workers were burned alive at a factory overseen by garment company KTS in 2006, company managers were acquitted of charges of culpable homicide, even though they admitted in court that they'd locked the factory gates from the outside after the fire had started to prevent worker theft.

No one was held to account after the Spectrum Sweaters factory collapsed in 2005, killing more than 60 workers, even though the company was in violation of its building permit.
"There's a lot of collusion between the government and the factory owners and the building owners," said Chen. "There are lots of layers of really cynical exploitation of these women."

Chen generally ascribed to the Nicholas Kristof school of thought on sweatshops -- that they're mostly a good thing, offering what Kristof described in a controversial column as "an escalator out of poverty."

"They aren't really desirable, but it's better than what they had," Chen said. "I can say 'two cheers' for everything but the lack of safety. That's just egregious."

Many of the workers themselves, however, have a hard time recognizing the garment boom as a great fortune, especially when they risk their lives extracting poverty wages from it.


"The garment business is profitable only for the owners," said Abu Bakar, a laborer who works in the dye department of a factory in the industrial zone of Gazipur. "You cannot imagine how we maintain a life on these earnings. We get nothing in comparison to what the [Bangladesh Garment Manufacturers and Exporters Association] or the buyers or the owners get. We toil over eight hours, six days a week, only to make ends meet."


PUSHED TOO FAR
The recent disasters, combined with paltry wages and substandard working conditions, have crystallized deep resentment among Bangladeshi laborers, threatening social stability. Angry workers have filled the streets, calling for the deaths of both negligent factory owners and their political allies.

American and European apparel labels are weighing their options, cognizant that their brands are increasingly vulnerable to public relations debacles when their goods turn up inside factories that prove to be deadly workplaces.

This represents a new development in the relationship between the global companies and the factories that produce their wares in Bangladesh, said Daniel Diermeier, a professor of managerial economics and decision sciences at Northwestern University, and author of Reputation Rules: Strategies for Building Your Company’s Most Valuable Asset. When retailers first established supplier relationships inside the country, he said, they were chiefly concerned with finding factories that could make what they needed on time and at the lowest prices.

“The whole issue of human labor practices and justice issues were not part of the decision process.” Diermeier said. “It wasn't on the radar.”

At first, retailers treated deadly events in Bangladesh as isolated incidents, Diermeier said. But that has changed in recent years, as their customers have gained awareness about the provenance of their products.

When public opinion turned on Nike in the 1990s after revelations of adolescents working in sweatshops, much of the industry instituted checks for child labor. New requirements for building standards never made it into those codes.

Now, in the aftermath of the Rana Plaza disaster, global apparel labels are devoting substantial energy to protecting their reputations. A group of major European brands has pledged to abide by a legally binding package of factory standards aimed at improving workplace safety in Bangladesh. Walmart, the world’s largest retailer, has declined to participate in that effort while announcing its own program to boost worker safety.

But labor rights groups have questioned the efficacy of these efforts. If American and European retailers come to view the “Made in Bangladesh” label as emblem of exploitation, that may prompt global brands to pursue a simpler course: They may leave the country altogether, shifting their orders to factories in other low-wage countries that -- at least for now -- lack the taint of headline-capturing industrial catastrophes.

“It’s easy to move,” explained Rivoli. “All you really need is sewing machines. It's not as if you're building an auto factory.”

If the industry does uproot, that would be a significant setback for Bangladesh, said Rivoli. In the traditional pattern of industrial development, the textile industry tends to be first, followed by the expansion into other industries. Once the industry booms and the nation advances to more complex endeavors, such as electronics and automobiles, the apparel industry shrinks, as it did in China. Bangladesh hasn’t reached that point yet.

Posner said he believes leaving the country is a mistake for retailers as well. If companies search the globe for comparably cheap labor, they'll end up in regions where human rights records or government safety enforcement are just as dubious, such as Burma. He said he'd prefer that large apparel players remain in Bangladesh while committing themselves to making the factories safe and the wages liveable.

"They're kind of running out of road," Posner said of the Western brands. "But I can guarantee you, someone is looking right now."

Many people in Bangladesh now fear the exit of Western brands, from factory owners down to line workers. Though the conditions may be oppressive, for many laborers the garment business provides their only hope of a nominal wage. They would rather see the industry stay and raise its standards.

Bakar, the dye worker, understands this trade-off all too well. After several years toiling in the garment industry without a raise, he quit his job in 2008 in quiet protest.

But after six hopeless months of looking for work, he was back inside a garment factory in order to survive. He may feel exploited by the system, but he prefers it to the alternative.

"Without the garment business,” Bakar said, “thousands and thousands of poor people would be jobless."

First appeared in The Huffington Post, May 23, 2013

Dave Jamieson, dave.jamieson@huffingtonpost.com
Emran Hossain, emran.hossain@huffingtonpost.com
Kim Bhasin, Kim.Bhasin@huffingtonpost.com