Take a moment and check if any of the clothes you’re wearing right now were made in Bangladesh. And even if they’re not, if you frequent places like H&M, Zara, the Gap, or JC Penney, you’ll likely have something in your closet made in Bangladesh or in another third world country. Clothing from places like these are generally affordable and practical for most consumers—after all, you want to look decent and only have limited amount of money to spend. But competition among retailers to provide clothing that’s both cheap for customers and profitable for themselves have led to an ever increasing demand for dirt cheap labor.
Cheap labor is found in countries like Bangladesh with poor working conditions and little enforcement of labor laws—conditions ultimately led to a collapse of Rana Plaza, a large factory in Bangladesh on April 24, killing over 750 and counting. Disasters like these aren’t uncommon in the country; the Rana Plaza incident came on the heels of a fire at another factory in November 2012 that killed 112 workers.
In response to the recent tragedies, companies that source their manufacturing in Bangladesh are faced with a difficult decision: how can they improve conditions and is it worth it to remain in Bangladesh at all? One such company, Disney, announced that it was ending production of its products in Bangladesh last month, and other companies may follow suit. But how will pulling manufacturing out of Bangladesh and reallocating it to other countries prevent other similar disasters from happening in the future?
Michael Posner, a professor of business and society at Stern, criticized Disney’s decision. “Disney’s departure does nothing to address the real challenges, which require a commitment by big global brands to stay in places like Bangladesh and be part of a collective effort to protect the well-being of factory workers,” Posner told me.
Sarah Labowitz, a research scholar at Stern, explains that companies have been dealing with issues of labor rights and working conditions in developing countries since the mid 1990s. “Because wages have risen in China, companies have moved to places such as Bangladesh, Vietnam, Cambodia in search of lower production costs.”
“The reality is that companies are running out of road,” Labowitz added. “You can only do that so many times. There aren’t that many more places you can go and get those rock bottom labor production costs. It’s not really a sustainable strategy to chase lower and lower working conditions.”
Given that improving working conditions in factories will impact a company’s bottom line, why should a corporation like Disney invest in country like Bangladesh?
“Some companies perceive it in their long term interest particularly to have a stable, reliable supply chain by investing in where they buy but also where they can sell products in the future,” says Labowitz. “You want access to markets where people can afford to buy [the company’s products]. Then in your long term strategy it does make sense to invest in things like good working conditions and rising wages.”
But the companies themselves will not be able to solve all of the underlying problems in Bangladesh. The Bangladeshi government has admitted that it has only a few labor inspectors to check the country factories (it is reported that there are only 18 inspectors for the 100,000 factories located near the country’s capital, Dhaka). The government has not been able to enforce the labor laws already in place, but given the attitudes of the its high ranking officials, that doesn’t seem to be a primary concern. Bangladesh’s finance minister told reporters that “The present difficulties … well, I don’t think it is really serious, it’s an accident.”
Bangladesh’s Prime Minister, Sheikh Hasina, told CNN, “Yes, there are some problems,” but was not fearful that companies would stop doing business in Bangladesh. “[Companies] get cheap labor. That’s why they come here.” She added that in the wake of the Rana Plza collapse, a committee has been formed to ensure the safety of buildings and workers. “This committee will submit the findings to the Cabinet committee and, side by side, we have been trying our best to improve the situation.”
Yet it’s ironic that Prime Minister Hasina suggests that the formation of a committee will prevent any future disasters. Much of the outrage directed at the collapse of Rana Plaza had to do with the fact that an engineer predicted that the building could collapse after seeing cracks on its walls the day before and urging workers not to re-enter it. Workers went in anyway after pressure from management, who ostensibly needed to meet their tight deadlines for whatever company the factory was making goods for. This engineer was then arrested some days later.
Labowitz says that the Bangladeshi government must have the political will to change its attitude, but notes that “40% of the Bangladeshi parliament are the garment factory owners themselves.” The government of Bangladesh has made progress in increasing the economic output of the country, but has failed to protect its citizens. And in a system where corruption is rampant and profits are the priority, progress from a worker’s rights standpoint will take some time.
Governments in the U.S. and Western Europe also have their own roles to play in Bangladesh. These countries have leverage over Bangladesh because they grant special tariff and quota benefits to the country, and can use them to push the government of Bangladesh to enforce its labor laws and building codes.
The U.S. had its own similar tragedy back in 1911 at the Triangle Shirtwaist factory fire in New York, which killed 146 workers and galvanized lawmakers to improve factory safety conditions. The collapse of Rana Plaza should play a similar role in Bangladesh, but will it lead to any change?