Race to the bottom must end

The owner of Hashem Foods factory remarked that they were not the ones who set the fire that took 52 lives, including children and adolescents. While that may be true, the fact that a large amount of combustible and flammable goods were in the same place where people work, with the exit door locked—were these done by others? As usual, a committee has been set up to investigate the causes of the fire and we are assured that the guilty will be punished. However, we have not yet heard any announcement saying that steps will be taken to stop the recurrence of such accidents in future. It may be that this will also come.

A key word that comes along with globalisation is competitiveness, be that in the international or domestic market. That means the ability to make goods and services available to consumers at the lowest possible price. Now, prices of raw materials and other such inputs are often beyond the control of manufacturers. So, to keep costs of production low many factory owners tend to economise on wages of workers and on costs relating to the factory premises—the latter often compromising on safety and work environment. In a country like Bangladesh where there is no shortage of workers, mechanisms for monitoring the safety of workplaces are at best questionable and the ultimate impact of cost-cutting measures usually falls on workers.

Wage repression is used as a way of keeping the cost of labour to the minimum possible, a global phenomenon of the past few decades. The share of wages in value added has declined in many countries irrespective of the level of development. In Bangladesh, although there were years when real wages of workers in manufacturing rose—in 2020, there has been a downward trend.

In order to maintain competitiveness, not only are wages kept under constant watch, safety standards of factories and work environments are also neglected. Measures that are needed to meet safety and health standards of factories often require some investment. That's why they are usually regarded as impediments to competitiveness. And in order to minimise costs, production is carried out without regard to safety and environment, leading to horrible accidents. Disasters like those in Tazrin Fashion and Rana Plaza are remembered because they took place in the high-profile export-oriented ready-made garments (RMG) industry. But there have been many more accidents that remain alive for some time and are forgotten at some point.

However, there has been a major change after the Rana Plaza disaster—some formal action was taken in order to ensure safety in RMG factories. A plan of action was prepared with the joint involvement of the government, employers, workers, buyers, and a few international organisations. In addition to a national tripartite committee, two groups of buyers—one each from the European countries and from the US—formed two teams in order to inspect factories, identify their safety issues, and to monitor the work required to remedy them. After the duration of their work was completed, the responsibility for the remaining tasks was taken over by the national committee.

As a result of the work mentioned above, there have been some structural improvement—at least in the formal sector factories, although it cannot be concluded that the problems have been solved completely.

While the RMG industry attracted attention because of the international spotlight, that has not been so for the rest of the industrial sector. Domestic market-oriented industries are not linked directly to the international market and foreign buyers and usually remain out of the spotlight.

In principle, the government's supervisory and monitoring mechanism should apply to all industries. Reports in the media after the accident in Hashem Foods provide painful details of how various government agencies are trying to shift responsibilities onto others. It is quite clear that there is an issue of the effectiveness of the government's supervisory and monitoring mechanism and governance.

Another area of deprivation of workers is the denial of their fundamental right to form their own organisations and bargain collectively with employers. There was a time when official government announcements advertised Bangladesh as a country of cheap labour and where workers are not allowed to form trade unions in the export processing zones (EPZs). The language of such advertisements may have changed slightly. International pressure, including from the International Labour Organisation (ILO), have also compelled the government to allow some kind of workers' representation in the EPZs. And yet, full-fledged trade unions are still not allowed there. Outside those zones, workers can, in principle, join trade unions; but labour laws, in general, remain restrictive.

I am not aware of any official statistics in Bangladesh on the proportion of industrial workers who are members of trade unions. However, some idea of the situation can be formed from one example–the RMG industry. Before the Rana Plaza accident–in 2011 and 2012, applications for official recognition of trade unions in the industry numbered 10 and 12 respectively, and one application was approved each year. In 2013 and 2014, the number of applications rose to 158 and 392 respectively (with 84 and 182 respective approvals). It may be remembered that in the aftermath of the accident, in addition to factory safety, the issue of workers' rights also came under the spotlight which resulted in pressure for granting this fundamental right. However, from 2015 onwards, the number of applications started to decline, and in 2017 stood at 78 (with 57 approvals). Quite clearly, as international attention shifted away, the issue lost its urgency. So, one can easily imagine what the situation is in domestic market-oriented industries where there is not much international or national attention.

While recognising the importance of competitiveness, it needs to be understood that short-term gains made by keeping wages low and by neglecting safety and work environment do not produce positive and sustainable results in the long run. Labour productivity is extremely important for competitiveness, and wages and work environment are important factors influencing labour productivity. Low wages, and unsafe, unhygienic work environments can have a negative effect on labour productivity. If one adopts a long-term and enlightened view of competitiveness, one would have to take these factors into consideration.

However, accidents like Tazreen Fashion, Rana Plaza and Hashem Foods show that the desired goals cannot be reached if the issues are left entirely to enterprises. Public policy has to play a much more proactive role, and the government will have to be much more careful and active. The pursuit of competitiveness cannot be allowed to degenerate into a race to the bottom. Three areas of work need to be noted in that respect.

Firstly, there can be no compromise regarding security of life which in turn is linked to safety in places of work and a healthy work environment. The accident at Hashem Foods must act as the last wake-up call–irrespective of the sector and the type of enterprise. Future action should include a tripartite mechanism–involving the government, employers and workers–in addition to the formal government mechanism of factory supervision. That, in turn, would require representation of workers and hence workers' organisations.

The second area where improvements are needed is workers' wages and allowances. On paper, there are mechanisms for fixing minimum wages in various sectors and for periodically updating them. But experience shows that the process often is not smooth. Even in the high-profile RMG industry, the Prime Minister herself had to intervene in order to bring the negotiations to a reasonable conclusion. Even after that, in order to receive the wages and allowance thus determined, workers often have to resort to street demonstrations. One can imagine the situation in other sectors or industries which are not under such a spotlight. 

The third area of action is to ensure dignity of workers and their fundamental rights. This issue needs to be brought into the development discourse irrespective of the level of development and the sector of work. It is the democratic right of workers to speak and negotiate about the terms of work and the environment in which work is carried out. In order to exercise this right, the worker needs to have the opportunity to express her/his views through her representative or organisation. In the absence of that opportunity, the worker may feel compelled to use alternatives, some of which may not be desirable.

Rizwanul Islam, an economist, is former Special Adviser, Employment Sector, International Labour Office, Geneva. He is the author, most recently, of Coronaghatay Orthoniti O Shromobajar (Baatighar, Dhaka, 2021).