Bangladesh must prosecute any factory owners found to be flouting regulations, a global retail pressure group urged yesterday amid growing signs that the country’s garment industry may lose out to rivals.
The Ethical Trading Initiative, a global alliance of trade unions and companies including Primark and Burberry, said the tragedy in Dhaka should mark a “turning point” for the industry.
More than 500 people are so far known to have died after a building housing a clothes factory collapsed, making it Bangladesh’s worst industrial disaster and sparking anger among both workers in the country and foreign buyers.
Peter McAllister, director of the ETI, told Emerging Markets that Bangladesh must enforce its own laws, make sure that it had the resources to ensure buildings were built to appropriate standards and that the factory inspectorate was actively enforcing standards. “They can send a strong signal to others by prosecuting any owners who are found to be flouting the law and who do not remediate the situation,” he said.
The scale of the disaster has prompted a frantic response by retailers who have sourced garments from the factory. Companies such as Matalan and Primark have offered financial assistance for the victims.
The United States and the European Union, the largest importers of Bangladeshi clothes, have both warned they may withdraw preferential treatment that allows duty- and quota-free imports.
As many as 3.6 million people work in Bangladesh’s garment industry, making it the world’s second-largest clothing exporter after China and bringing in $12 billion in revenue. However workers earn as little as $38 a month, prompting conditions Pope Francis likened to slave labour.
“We certainly hear of a lot of anger and frustration from consumer representatives,” McAllister said. “Whether this results in people voting with their feet is another question, and it is probably too early to say.” He said the ETI did not recommend boycotts by companies because of the potential negative impact on workers’ livelihoods.
But he added: “There is serious concern among retailers, the majority of whom want to see dramatic improvements to the situation. While companies appear willing to give Bangladesh time to improve, they expect to see meaningful change, as they may not want to put their brand at risk for much longer.”
Simon Evenett, professor of international trade and economic development at St Gallen University, said the tragedy would affect Bangladesh more than it affected long-term global trade. “The protests in Dhaka compound difficulties for exporters there, as buyers won’t tolerate more than two weeks of delays,” he told Emerging Markets.
“Buyers have started switching their orders to Bangladesh’s low wage rivals. Outsourcing trade will be reshuffled, not cut. To personal tragedy will be added commercial losses.”
Sarath Amunugama, Sri Lanka’s minister of finance and planning, expressed his sorrow at the tragedy. He said his country “can regain its earlier position [as a major textile producer].”
McAllister said he hoped the collapse would mark a turning point and that there would be “real tangible change in the industry and its approach to the safety and welfare of workers”.
Bangladesh finance minister Abul Maal Abdul Muhith said the factory collapse was “a huge tragedy” but defended the growth in the industry. “We became the second-biggest garment exporter in the world. Some of these plants have problems, and we have had some incidents,” he told Emerging Markets.
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