5 years after Rana Plaza – Assessing transnational governance in the global garment industry

On the 24^th of April 2018, many people around the world commemorated the over 1000 lives lost and the 1800 people injured during the collapse of the Rana Plaza factory in Savar, Dhaka, Bangladesh. The Global Garment Supply Chain Governance Project, together with King’s College London, took this date as an opportunity to bring together the community of international scholars investigating the consequences of this disaster for the governance of labor standards in the global garment industry. Given the high and immediate policy relevance of this topic, the conference was not just purely academic: several representatives from lead firms, supplier factories, policy makers and civil society actively participated in debating and interpreting the research results, and also constituted the strong opening panel. So what are the news for global governance?

A focal point of the debate was the Accord for Fire and Building Safety in Bangladesh, a five-year multi-stakeholder, transnational collective agreement co-signed by over 200 brands and the UNI and IndustriaALL global unions that not only commits brands to pay into a centrally organized safety inspection regime and to ensure continuity of orders for a limited period, but also demands the introduction of worker participation into safety committees in garment factories and provides for legally binding arbitration mechanisms if complaints are unresolved. While Mark Anner, Jennifer Bair and Jeremy Blasi argue that the Accord is not unprecedented, pointing to the “jobbers agreements” drafted between workers, contractors, and lead firms in the US apparel supply chain to ensure fair prices and stable orders in the earlier 20^th century, most would agree that the Accord’s governance model is unique in a global supply chain context. Thus, it is often hailed as a solution to the industry’s ongoing and pressing problems regarding labour standards. The Accord departs most from previous initiatives in that it is a collective approach for addressing the “race to the bottom” dynamic of competing on the lowest possible labour standards characterizing the garmen industry since decade – an issue which lead firms only now begin to see as a collective action problem. In analyzing the history of the Accord, Juliane Reinecke and Jimmy Donaghey  point out, however, that the Accord was not crafted as a reaction to the Rana Plaza disaster. In fact, it existed previously as a memorandum of understanding on building and worker safety by two lead firms following earlier factory accidents – but other lead firms were not interested in signing it before the fatal factory collapse occurred. Does the Accord stand up to these hopes?

As argued by Miriam Neele, on the panel as Head of Signatory Engagement of the Accord, the Accord program has now covered approximately over 2 million workers in the Bangladesh garment industry and has ensured the remediation of about 85% of the factories covered by the Accord. Data on over 1000 garment workers collected by Naila Kabeer, London School of Economics, likewise indicates that there has been positive change on those issues that Western lead firms can influence, such as building safety and working time, at least in those factories covered by the Accord and by the US-driven Alliance for Bangladesh Worker Safety. Both Frank Hoffer (on the panel as representative of the new Action Collaboration Transformation initiative) and Giesela Burckhardt from the German NGO Femnet, however, stress that wages still need to go up – an issue that is simply not covered by the Accord. Additionally, there is some scepticism as to the actual scalability of the Accord model to other issues and other countries. The renewal of the Accord in Bangladesh has resulted in a rather slow process of getting brands to sign up to the agreement again, and the initiative has faced intense critique from various Bangladeshi stakeholders who think that the Accord has lost its purpose in Bangladesh. In a study conducted by Steve Frenkel (UNSW) and Chris Wright (University of Sydney) and myself shortly after the Rana Plaza disaster we found that intense stakeholder pressure was a main driver behind firms’ willingness to sign the Accord. In the absence of such immediate pressure, it seems that the majority of firms is only reluctantly willing to engage in stricter forms of labour standards regulation, such as those embraced by the Accord.

At least four additional problems must be noted. First, as argued by Kabeer, certain worker-related issues cannot be influenced by Western brands. Most importantly, these are the (mis-)behaviour of supervisors and the still very low level of unionization and worker representation in Bangladesh. Here local stakeholders are called upon to bring forward changes. Second, as repeatedly noted by Dorothee Baumann-Pauly and her colleagues from the NYU Stern school of business, the current safety schemes has at best created “islands of compliance” in which some of the best, most well-financed factories are getting better, while the smaller, already struggling factories remain off the radar – and have notoriously poor standards. Third, the Accord remains an auditing tool – and audits can easily turn into mere reputational devices for lead firms rather than creating actual accountability and liability for brands and their auditors, as Carolijn Terwind, lawyer at the European Center for Constitutional and Human Rights (ECCHR), highlighted on our panel. Fourth, evidence from a survey on 150 factory managers in Bangladesh conduced by Shahidur Rahman (BRAC University) and Kazi Mahmudur Rahman (ULAB) suggests that lead firms rarely support factory’s remediation efforts financially. Thus, while suppliers value continuity of orders, they feel heavily squeezed between ongoing price pressure exerted by lead firms and increased demands regarding infrastructure and working conditions.

An important structural condition must be noted though, which in my view is a core boundary condition for seeing continued improvements in labour standards in Bangladeshi garment factories: unless digitalization is able to replace manual labour in this industry, large volumes of garment production will remain in Bangladesh because, as China continues to reduce its capacities, no other country is to date able to absorb the high demand for garment production. In this sense, the race to the bottom is currently on hold – an unforeseen opportunity for stakeholders in the West as well as in Bangladesh to continue pressing for stricter regulations and better labour standards in this industry.