Trade & Investment

Perhaps Platform S?

PHOTO: ANDREW BIRAJ/REUTERS

Oct 24 2018 - When Accord and Alliance came to town, the brands and retailers had offered assurance of business continuity and were paying for the audits and assessments. Taking financial responsibility for factory remediation was, of course, the manufacturer’s end of the bargain. In five years, out of Accord’s initially inspected 1,620 factories, 420 had shut shop; for Alliance, out of the initial 829 factories, 173 closed business; National Action Plan, out of its first 1,549 factories, terminated 566. In total 1,159 factories have gone out of business. In response to growing demands of remediation, Bangladeshi manufacturers have either chosen to grow or quit. Those who have managed to stay afloat, in reality, have been able to afford expansion or consolidation.

Going forward, as new markets emerge, position of the brands and retailers is bound to shift. As new capacities are added, the pressure on prices for Bangladesh will also continue to grow. This phenomenon is not a unique prediction. Even with increased capacities, manufacturers will continue receiving orders with lesser margins and a lower FOB (Free on Board) price. After all, the world’s a “fair” place and the “fairest,” alternatively known as the most competitive, will win the game.

After five years, with the possibility of Accord coming to an end on November 30, 2018 and Alliance on December 31, brands are left wondering about the future of the readymade garment industry in Bangladesh with respect to compliance codes. Beyond their terms, Alliance is ready to leave, perhaps with a heavy heart as continuation of remediation remains, to most parties, relatively uncertain. As for Accord, a special ruling from the High Court specified that Accord would cease after November 30, 2018 and could only be extended for six more months. And hence, a Transition Accord was framed to ensure the smooth transition of work and responsibility to a new organisation called the Remediation Coordination Cell (RCC).

The RCC was set up in May 2017 to supervise and monitor the remediation of factories under the Bangladesh government’s National Initiative. Out of the 809 National Initiative factories undergoing follow-up by Department of Inspection for Factories and Establishments (DIFE), 107 are fully remediated. Till March 2018, more than 50 percent factories remediated more than 50 percent and 111 factories remediated more than 80 percent.

The number of factories under RCC headed by the Ministry of Labour may depend on the new factories being added to the National Initiative or as factories leave Accord and Alliance for Bangladesh Worker Safety. RCC is set to contribute to building capacity of regulators and establish a coordinated approach to safety inspections. Ultimately, RCC hopes to offer a “one-stop-shop” service issuing factory building, fire, electrical and occupancy permits.

Since the industry is very familiar with the initial rules of engagement focusing on structural, fire and electrical integrity, all we need today is a private-sector-led structure to sustain all the improvement that has been made. What could the structure look like? For easy reference, let’s call it Platform S (S for shomman, meaning “respect” in Bengali).

Firstly, manufacturers along with brands could form S by having a Steering Committee, which would have representation from BGMEA, labour rights groups, brands and an ombudsman. In the Steering Committee, neither the BGMEA nor the brands would have a veto or majority vote. All decisions could be taken on a consensual basis. In case of dispute or vote tag, judgment of an independent ombudsman would prevail, taking in consideration views of all parties. The Committee would overview cases, implementation, financial management and management operations, while a CTO could oversee the technical operations. A review panel could be in place, consisting of elected representatives from the manufacturers, brands and labour sides. The entity would be registered in Bangladesh under the relevant Act. Laws of the land, with regard to compensation, closure, penalty, would prevail.

For the initial period of one year, it could be supported by signatory buyers, manufacturers and third-party organisations so that the costs related to remediation can be met and independent verification of the existing factories can continue. By the time it is set up, the vast majority of remediation and assessments will already have been completed. New factories entering the pool of suppliers could pay for their inspections based upon the square footage of their facility. After a year, the platform could become fully self-financing and external contributions would be discontinued. Independent third-party auditors having prior audit and certification experience could be contracted to undertake all structural, fire and electrical audits. Signatory companies would require their supplier factories to respect the right of a worker to refuse work if he or she has reasonable justification to believe that the factory is unsafe, without suffering discrimination or loss of pay, including the right to refuse to enter or to remain inside the factory.

Meanwhile, the appointed CTO would establish a workers’ complaint mechanism that would ensure that workers from factories supplying signatory companies can raise, in a timely fashion, concerns about health and safety risks, safely and confidentially, to the safety inspector. The signatories to this Agreement would, however, need to agree to ensure that suppliers who participate fully in the inspection and remediation activities of this Agreement would not be penalised as a result of the transparency provisions of this Agreement. However, if a supplier consistently fails to abide by the rules of compliance engagement within a specified period of time, the signatories could then promptly implement a notice and warning process leading to the termination of the business relationship if these efforts do not succeed.

It has been more than five years since Rana Plaza collapsed. It has been five years since factories have consolidated and moved to newer locations. It has been five years since manufacturers have struggled to sustain and grow their businesses. Five years is a long time for an industry to set its own standards.

If the industry is subjected to prescriptions from stakeholders from abroad, then the basic ability to reform ourselves will be in doubt. Irrespective of whether the Accord gets another six-month lifeline, irrespective of the RCC continuing to monitor the industry standards, the industry, on its own, needs to have a parallel platform. The best way forward would be a way to transition into a plan of self-monitoring initiated by the industry itself, which will be appropriate for the owners, workers, brands, unions and the rest.

This way, no trust will be lost and no well-meaning attempt of the suppliers, brands or the government, will be belittled.

Dr Rubana Huq is the managing director of Mohammadi Group. Her Twitter handle is @Rubanah.

This story was originally published by The Daily Star, Bangladesh

 
Republish | | Print |

Related Tags