By Sriram Puthucode and Christopher Tang
Due to higher labor and operating costs in China, more western firms now source their products from Bangladesh, Cambodia, and Vietnam, etc. While labor cost in these South East Asian countries is lower than China, competition among different factories is getting fierce as well. To compete on cost, many factory buildings do not meet building codes (e.g., unsafe building structures) or safety standards (e.g., no fire alarms, sprinklers, or emergency exits). To ensure all workers are at work, it is not uncommon that factory owners lock the gate to ensure workers do not come late or leave early. While some factory owners managed to run their factories without problems for some time, the whole world was shocked as we witness thousands of factory workers lost their lives when factory buildings in Bangladesh collapsed or caught on fire in 2013.
While western firms were not directly at fault, many international brands who sourced their garments from those affected factories feel obligated to find ways to improve workplace safety. However, according to a study conducted by Transparency International in 2012, Bangladesh’s corruption index is equal to 144 (1 = least corrupt).[1] So, what can these international brands do? As of June 2013, there are two different plans being considered and these two plans can be described as follows:[2]
- Foster close and long term relationship with fewer suppliers, but no participation of Bangladesh government. With long term commitment, factory owners in Bangladesh have incentive to make long term investment to ensure the work environment complies with the safety standards imposed by their key customers. Also, close monitoring and inspection are needed to ensure consistent compliance. On this note, major brands such as Zara, H&M, Bennetton, Calvin Klein, Tommy Hilfiger, etc., have agreed to pay for renovations and stick with Bangladeshi suppliers who agree to improve their facilities.[3]
- Set up a fund to help defray the costs of building repairs and renovations, but Bangladesh government is required to participate. Gap Inc. and Wal-Mart Stores Inc. are among U.S. retailers finalizing an agreement to establish a $50 million, five-year fund to improve safety conditions in Bangladesh garment factories. However, this agreement is contingent on the Bangladesh government meeting certain criteria that would ensure accountability for safety improvements. [4]
Will these plans be effective? Only time will tell.
Regardless which plan these companies will adopt, it is very challenging to monitor these factories to ensure all safety standards are being followed at all times. However, we think there is a simple solution that may work.
Knowing mobile phones are ubiquitous even among the poor factory workers, companies can work with various international labor-rights group to provide training workshops about work place safety and fire drills for the factory workers. At the same time, these NGOs can continue to interact with these workers via text messages or “robocalls” reminding them to report any incidents that would put their live in danger anonymously by calling a hotline or by sending a text message. As these workers understand that their lives are on the line, they are more eager to file anonymous complaints by using their mobile phones. By delegating the monitoring activities to the workers, factory owners are less likely to violate safety standards. In other words, having more cats around, mice would be more cautious!
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