Introduction
Starting in late 1970s, Bangladesh is enjoying comparative advantage in RMG (Ready Made Garments) for its lower wages and became one of the leaders of world exporter of RMG. To minimize the cost more, the garments owner are establishing and maintain their factory in lower standard. However, these lower standard factories are the main cause behind the major accidents and hazards which had been the main reason behind the toll of many lives, e.g. Tazreen incident, Rana Plaza incident. Despite these poor work environment, unhealthy sanitation, excessive work hour, child labor, fair wages, lack of safety measures in work all these are drawing attention of the buyers and the result is so obvious, they are unwilling to import from Bangladesh. Bangladesh’s prime importer the European Union is putting pressure on government, BGMEA and BKMEA to take action against non-compliance factories.
To hold the attractiveness towards our RMG sector, the government, BGMEA and BKMEA should control the garments factories and pressurize them to upgrade themselves into compliant factories.
However, this term paper is mainly focused on current scenario of compliance issue of Bangladeshi RMG (health, environment, safety measures, wages and trade union), conflict between EU and BGMEA and BKMEA over compliance issues.
Compliance Issues of Bangladeshi RMG
As a third world country Bangladesh has huge unemployed population and lower wage rate. This led Bangladesh to set up labor intensive industries. Among those garments industry flourished much. However, with the time cost of labor has raised up, but the garments owner wants to keep the cost lower. So they are establishing their factories with minimum safety, poor environment. These things have severe negative effect on overall garments industries. As we can see two major accidents drew attention of whole world, Tazreen and Rana Plaza. Though compliance was an issue the west world previously imposing on us, very few garments was conforming those. BGMEA and BKMEA made own compliance guideline in the light of buyer compliance standard and other regulatory and right bodies.
BGMEA and BKMEA’s social compliance1:
1. Health and safety
2. Professional safety
3. Wages
4. Leave related issues
5. Pregnancy
6. Recruiting
7. Worker welfare
8. Factory management
9. Labor management
10. Environment
11. Fire safety
By conforming social compliance garments owner will be able to get the major advantages which are following2:
1. Higher price
2. Increased productivity
3. Lower turnover of workers
4. Global recognition
Though it is late but some of the garments factory owners are trying to add social compliance factors and the new plant are being established with compliance and safety measures.
Reasons for which EU is active to implement compliance in RMG
Quality of goods exported from Bangladesh has always been questioned by the EU buyers due to lack of experience and awareness of Garment manufacturers associated in the trade. In order to export readymade garments, it is not only the quality parameters which are important towards acceptance of the product as per the intended end use, but also the working environment in which the garments are to be produced, is equally important so that sweatshop concept is totally taken care of and the code of conduct must be stretched towards achieving the objectives of social compliance issues. The core areas of social accountability are, basically, based on the principles of international human rights, local culture and tradition. The prime objective of the system is to protect the human rights in ready-made garment industries. Thus, Bangladesh has a stiff challenge ahead to meet the demand of world market.
European Union found some major violation in the following issues for which they are more active to implement compliance in Bangladeshi RMG3:
1. Wages and standard work hour
2. Child labor and forced labor
3. Discrimination
4. Health and safety
5. Freedom of association
6. Compensation and overtime
Violation of these codes cause many accidents in Bangladesh for which Bangladeshi association was being questioned for their actions. Moreover as a buyer EU had to face the world human rights community and other rights body. So EU came about some serious action to implement compliance on all those factories from which they import their products.
Proposed and intended compliance management procedure in RMG
As a developing country, Bangladeshi is under close scrutiny by nongovernmental organizations and corporate social responsibility stakeholders regarding compliance. Both CSR experts and buyers report improved labor and social compliance standards, but there is still a broad range of compliance seen across suppliers and many unsolved topics still exist.
The basic principles of COC have been derived from the principles of international human rights norms as delineated in International Labor Organization Conventions, the United Nations Convention on the Rights of the Child and the Universal Declaration of Human Rights.
It has nine core areas to be addressed upon. These are as follows:
1. Child labor
2. Forced labor
3. Health and safety
4. Compensation
5. Working hours
6. Discrimination
7. Discipline
8. Free association and collective bargaining
9. Management systems
However, European Union and BGMEA/BKMEA step into conflict with the following issue
1. Trade union (Free association)
2. Minimum wages
3. Compensation
Workers are depriving from their rights for the absence of trade union, ensuring workers' rights at factory level is becoming all the more difficult because trade union activities are not allowed at enterprise-level in the RMG sector in particular. Garments owner doesn’t guarantee minimum wages conforming to the local living standard. Moreover they are not compensated or get very low compensation for any kind of losses. This has also raised worries among the buyers from the European Union (EU) and US.
Here starts the blame game, the government, trade Associations & International Brands are pointing fingers at each other for non-compliance of work station safety at garments factories. EU pressurizing on association and government to solve the compliance issues and, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said Bangladesh apparel makers are also aware of the issue. It has claimed that almost all the garment manufacturers maintain superb labor standards at their factories, noting that any strict labor policy is unlikely to hamper RMG exports to the US market.
My opinion
RMG is the major export item of Bangladesh, earned 21515.73 million USD in 2012-13. Getting the proper nourishment Bangladesh will become world leader in export. However the compliance issues come over and over again as some of the major accident caused by non-compliant factories. But, is it unprofitable establishing a compliance factory? Lal Mohon Baral (2010) stated in his paper average initial investment of complaint factories is 0.295488[1]USD and average running cost for compliance every year is 0.0015361 USD. Average turnover of these compliant factories is 0.94841 USD. On the other hand average initial investment of non-compliant factories is 0.1244491 USD with no running cost for compliance. Average turnover of these compliant factories is 0.30841 USD. So it is clear that setting up compliant factories get high turnover and strengthen the trust of buyers in long term.
However the ongoing burning issues with EU over compliance should be resolved as soon as possible. Otherwise there is high risk of losing GSP that may cause major disruption in the export. Trade union issue which the garments owners are not willing to comply with EU can be solved through round of negotiation. Garments owner can introduce trade union with limited power exerting rights, if it is not useful as the buyer thought it would be they can eliminate trade union. Moreover, the other conflict creating issues, i.e. health and safety and compensation, shouldn’t be overlooked. Ensuring health and safety increase productivity in greater extent and getting smart wage and compensation lower the employee turnover rate. Sorting these issues might regain the trust of EU buyer as well as the others and stabilize the export rate of Bangladeshi RMG.
References
1. BKMEA. (2012). Social Compliance.Available: http://www.bkmea.com/social-compliance. Last accessed 29th Mar 2014.
2. Lal Mohan Baral. (2010). Comparative Study of Compliant & Non- Compliant RMG Factories in Bangladesh. International Journal of Engineering & Technology IJET-IJENS. 10 (2), 94.
3. Md. Nasir Uddin, Md.Mozammel Haque, Md.Fakhrul Islam Sumon, Saiful Islam, Kazi Mahbubul Hoq. (2011). Compliance System of Apparel/Garment Industry In Bangladesh. Compliance System of Apparel/Garment Industry In Bangladesh. 1 (1), 3-5.
4. Dr. Achim Berg, Saskia Hedrich, Sebastian Kempf, Dr. Thomas Tochtermann. (2013). Bangladesh's ready-made garments landscape: The challenge of growth. Apparel, Fashion & Luxury Practice. 1 (1), 12.
5. Motahar Hossain. (2012). Compliant RMG Industry: Long Way to Go . Available: http://businessoutlookbd.com/index.php?option=com_content&view=article&id=171:compliant-rmg-industry-long-way-to-go&catid=43:magazine-news. Last accessed 30 Mar 2014.
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