Fast food workers protest for higher wages in New York City, July 2013. Credit: Annette Bernhardt/cc by 2.0

By Jim Lobe
WASHINGTON, Apr 16 2014 (IPS)

In new data certain to fuel the growing public debate over economic inequality, a survey released Tuesday by the biggest U.S. trade-union federation found that the CEOs of top U.S. corporations were paid 331 times more money than the average U.S. worker in 2013.

According to the AFL-CIO’s 2014 Executive PayWatch database, U.S. CEOs of 350 companies made an average of 11.7 million dollars last year compared to the average worker who earned 35,293 dollars.Of all Western countries, income inequality is greatest in the United States, according to a variety of measures.

The same CEOs averaged an income 774 times greater than U.S. workers who earned the federal hourly minimum wage of 7.25 dollars in 2013, or just over 15,000 dollars a year, according to the database.

A separate survey of the top 100 U.S. corporations released by the New York Times Sunday found that the media compensation of CEOs of those companies last year was yet higher — 13.9 million dollars.

That survey, the Equilar 100 CEO Pay Study, found that those CEOs took home a combined 1.5 billion dollars in 2013, slightly higher than their haul the previous year. As in past years, the biggest earner was Lawrence Ellison, CEO of Oracle, who landed 78.4 million dollars in a combination of cash, stocks, and options.

The two surveys, both released as tens of millions of people filed their annual tax returns, are certain to add to the growing public debate about rising income and wealth inequality.

It is a theme that came to the fore during the 2011 Occupy Wall Street movement and that President Barack Obama has described as the “defining challenge of our time” as the 2014 mid-term election campaign gets underway. He has sought to address it by, among other measures, seeking an increase the minimum wage, extending unemployment benefits, and expanding overtime pay for federal workers.

Obama’s focus on inequality — and the dangers it poses — has gained some important intellectual and even theological backing in recent months.

In a major revision of its traditional neo-liberal orthodoxy, the International Monetary Fund (IMF) last month released a study raising the alarm about the impact of negative impacts of inequality on both economic growth and political stability, with IMF Managing Director Christine Lagarde warning that it created “an economy of exclusion, and a wasteland of discarded potential” and threatens “the precious fabric that holds our society together.”

Pope Francis has also spoken repeatedly – including in a private meeting with Obama at the Vatican last month – about the dangers posed by economic inequality, while the World Economic Forum’s Global Risks Report, published in January, identified severe income disparity as the biggest risk to global stability over the next decade.

Meanwhile, an epic new study by French economist Thomas Piketty, ‘Capital in the Twenty-First Century,’ that compares today’s levels of inequality to those of the Gilded Age of the late 19^th century, is gaining favourable reviews in virtually every mainstream publication.

Piketty, whose work is based on data from dozens of Western countries dating back two centuries and argues that radical redistribution measures, including a “global tax on capital,” are needed to reverse current trends toward greater inequality, is speaking to standing-room-only audiences in think tanks here this week.

In addition, the Supreme Court’s ruling earlier this month lifting the aggregate limits that wealthy individuals can contribute to political campaigns and parties has added to fears that, in the words of a number of civic organisations, the U.S. political system is moving increasingly towards a “plutocracy”.

Of all Western countries, income inequality is greatest in the United States, according to a variety of measures. In his book, Pikkety shows that inequality of both wealth and income in the U.S. exceeds that of Europe in 1900.

The 331:1 ratio between the income of the 350 corporate CEOs in the Pay Watch survey and average workers is generally consistent with the pay gap that has prevailed over the past decade.

That ratio contrasts dramatically with the average that prevailed after World War II. In 1950, for example, the differential between the top corporate earners and the average workers was only around 20:1. As recently as 1980 – just before the Reagan administration began implementing its “magic of the marketplace” economic policies – the ratio had climbed only to 42:1, according to Sarah Anderson, a veteran compensation watcher at the Institute for Policy Studies here.

“I don’t think that anyone, except maybe Larry Ellison, would claim that today’s managers are somehow an evolved form of homo sapiens compared to their predecessors 30 or 60 years ago,” said Bart Naylor, Financial Policy Advocate at Public Citizen, a civic accountability group.

“Those who built the pharmaceutical industry and the hi-tech industry …were fine senior executives, and they didn’t drain the economy the way today’s senior executives insist on doing,” he told IPS. “The machinery of awarding senior executive pay is clearly broken.”

What is particularly galling to unions and their allies is that many top companies argue that they can’t afford to raise wages at the same time that they are earning higher profits per employee than they did five years ago. While the average worker earned 35,293 dollars last year, the S&P’s 500 Index companies earned an average of 41,249 dollars in profits per employee – a 38 percent increase.

“Pay Watch calls attention to the insane level of compensation for CEOs, while the workers who create those corporate profits struggle for enough money to take care of the basics,” said AFL-CIO President Richard Trumka.

“Consider that the retirement benefits of the CEO of Yum Brands, which owns KFC, Taco Bell, and Pizza Hut, has benefits of over 232 million dollars in his company retirement fund, all of which is tax deferred,” said Anderson. “It’s quite obscene when you know it’s a corporation that relies on very low-paid labour.”

Congress is currently considering several measures to address the issue, although most of them are opposed by Republicans who enjoy a majority in the House of Representatives.

Nonetheless, a tax package introduced by the Republican chairman of the powerful House Ways and Means Committee would close one large loophole that permits CEOs to deduct so-called “performance pay” – what they earn when they achieve certain benchmarks set by their board of directors – from their taxes.

“It’s pretty outrageous when the CEOs of some of the biggest companies of the National Restaurant Association are essentially getting heavily subsidised when so many of their workers are relying on public assistance and fighting for an increase in the minimum wage,” Anderson told IPS.

In addition, the Securities and Exchange Commission (SEC) is expected to formally adopt a long-pending rule that would require publicly held corporations to disclose how the pay received by their CEO compares to that of their employees, including full-times, part-time, temporary, seasonal and non-U.S. staff.

Military checkpoint on the Atrato River. Credit: Jesús Abad Colorado/IPS

By Jim Lobe
WASHINGTON, Apr 9 2014 (IPS)

Three years after Colombia agreed to U.S. demands to better protect labour rights and activists, a “Labour Plan of Action” (LPA) drawn up by the two nations is showing mixed results at best, according to U.S. officials and union and rights activists from both countries.

Pointing to continuing assassinations of union organisers, among other abuses, U.S. lawmakers and union leaders here are calling on President Barack Obama and Colombian President Juan Manuel Santos to do much more to ensure that the LPA achieves its aims.“In spite of numerous new labour laws and decrees... companies still are violating worker rights in Colombia with impunity." -- Richard Trumka

“(V)iolence against trade unionists continues; in the three years since the Labour Action Plan was signed, 73 more trade unionists were murdered in Colombia. That alone is reason enough to say the Labour Action Plan has failed,” said Richard Trumka, the president of the biggest U.S. union confederation, the AFL-CIO, Monday in response to a new report by the Colombia’s National Labour School (ENS).

“In spite of numerous new labour laws and decrees, and hundreds of new labour inspectors not a single company fined by the Ministry of Labour for violating the law and workers’ rights has paid up, and companies still are violating worker rights in Colombia with impunity,” he added.

For years Colombia has been considered one of the most dangerous countries in the world for trade unionists, more than 3,000 of whom have been killed since the mid-1980s.

While Colombia has long been given preferential trade treatment by Washington as part of its broader “war against drugs” in the Andean region, the administration of President George W. Bush negotiated a free-trade agreement (FTA) with Colombian President Alvaro Uribe in 2006.

But the deal was strongly opposed by the AFL-CIO, labour and human rights-groups, and their allies in Congress who refused to ratify the FTA without provisions designed to substantially improve the country’s labour rights performance.

The pact was essentially put on ice until Obama and Santos signed what is formally known as the United States–Colombia Trade Promotion Agreement in April 2011 to which the Labor Action Plan (LAP) was attached.

The LAP — which, among other provisions, required the Colombian government to protect union leaders; enact legislation to ensure that workers could become direct employees instead of subcontractors; establish a new ministry of labour; and prosecute companies that prevent workers from organising — aimed to bring Colombia’s labour practices up to international standards.

While the original intention was to delay the FTA’s implementation until after the LAP’s conditions had been met, Congress approved the FTA in October 2011.

The activists insisted this week that the approval was premature in that it relieved the pressure on the Santos government to fully carry out the LAP.

“The approval of the FTA by the United States Congress, without verifying full compliance with the LAP, significantly reduced the political will behind the plan and contributed to decisively in turning the LAP into a new frustration for Colombian workers,” according to a joint statement issued Monday by Trumka and the leaders of two of Colombia’s trade union movements, the Confederation of Workers of Colombia (CTC) and the Union of Colombian Workers (CUT).

The statement, which also called for a “serious review” of the FTA’s impact on Colombia’s agricultural and industrial sectors and on its exports to the U.S., was also signed by more than a dozen other trade-union and human rights groups in the U.S. and Colombia.

For its part, the Office of the U.S. Trade Representative (USTR), which oversees the implementation of both the LAP and the FTA, gave the record of the past three years a more positive spin in its own report released Monday.

“Three years ago, the Colombian Labor Action Plan gave the United States and Colombia an important new framework, tools and processes to improve safety for union members and protections for labor rights. We have made meaningful progress to date, but this is a long-term effort and there is still work to be done,” USTR Michael Froman said.

The department’s report noted that 671 union members have been placed in a protection programme, which in 2013 had a nearly 200 million dollar budget; that more than 250 vehicles had been assigned assigned to union leaders and labour activists for full-time protection; and that the prosecutor general has assigned over 20 prosecutors to devote full-time to crimes against union members and activists, among other achievements.

It also noted that the number of union members who have been murdered for their organising activities has been reduced to an average of 26 per year since the LAP took effect from an annual average of nearly 100 in the decade before it.

“The action plan has been a good effort, and I know the government [in Bogota] has been taking it seriously,” said Michael Shifter, president of the Inter-American Dialogue (IAD), a hemispheric think tank.

“Of course, the activist groups are right to press harder for compliance and to hold both the U.S. and the Colombian governments to account on this, but the fact is that there has been progress and there should be more,” Shifter, a specialist on the Andean countries, told IPS.

In its report, the ENS concluded that the LAP had overall failed to produce meaningful results in protecting worker rights, including the right to be free from threats and violence or in prosecuting recent and past murders of trade union leaders.

“We would like to emphasize that thousands of workers and their trade union organizations have tried to make use of the new legal provisions that protect them against labor abuses, but mmost have found themselves more vulnerable since judges, prosecutors, and labor inspectors almost always refuse to provide the protection available under the new legal framework,” the ENS report concluded.

In many cases, it said, efforts to gain protection had “only backfired on workers,” particularly those working in ports and palm plantations.

ENS’s conclusions echoed those of a report released last October by U.S. Reps. George Miller and James McGovern, both of whom serve on the Congressional Monitoring Group on Labor Rights in Colombia.

“The ENS report reminds us that we have a very long way to go in successfully implementing the LAP and ensuring that workers can safely and freely exercise their fundamental rights,” the Group said, adding that the new U.S. ambassador to Colombia, Kevin Whitaker, make LAP’s implementation a priority and highlight illegal forms of hiring, the use of collective pacts by companies to thwart union organising, and the problem of impunity for anti-union activity.

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

A New York City rally to raise the minimum wage at Herald Square, Manhattan, Oct. 24, 2013. Credit: The All-Nite Images/cc by 2.0

By Bryant Harris
WASHINGTON, Jan 15 2014 (IPS)

Seventy-five economists, including seven Nobel Prize laureates, sent an open letter to President Barack Obama and the U.S. Congress on Tuesday, urging them to raise the federal minimum wage.

The same day, the president formally endorsed legislation that would incrementally raise the minimum wage to 10.10 dollars by 2016."When you’re cutting the pay for people at the bottom by one third, you shouldn’t be that surprised that you’re not making progress on poverty.” -- Jason Furman

“I think the fact that you see such a broad based list of economists there means that the economic case for raising the minimum wage is really mainstream and increasingly the consensus view of the economics profession,” Jason Furman, chair of the White House’s Council of Economic Advisers, told a panel at the Economic Policy Institute (EPI), a Washington-based think tank.

Labour rights advocates are also backing the proposal. “We call on Congress to enact a jobs bill, invest in our future, raise the minimum wage to $10.10, and devote its full attention to restoring full employment and raising wages,” writes Richard Trumka, the president of the AFL-CIO, a federation of unions.

The proposed legislation would raise the minimum wage by 95 cents per year over the next three years. This would increase the earnings of full-time minimum-wage workers from 15,000 dollars to 21,000 dollars per year.

Additionally, the bill would also seek to raise the minimum wage for tipped workers by 70 percent. Sen. Tom Harkin, one of the proposal’s co-sponsors, says the tipped minimum wage has not increased in 20 years.

Harkin argues that the fall in minimum wage is related to public policy that no longer guarantees an equal opportunity for low-income citizens.

“We used to agree that if you worked hard and played by the rules you could have a good economic stake in our society,” he said at Tuesday’s panel discussion. “But in recent years it’s been alarming to see how these fundamental principles and values are being degraded in our public policies.”

The bill’s other sponsor, Rep. George Miller, partially attributed the relative fall in wages to corporate labour practices.

“Those in the corporate world, some of the largest corporations in the world, decided that they’re just going to take more,” he said Tuesday. “They’ve assembled enough poor workers to make themselves rich.”

Senate Democrats intend to introduce the bill later this month.

The White House’s Furman contends that the proposed legislation would lift 1.6 million people out of poverty, while 8.6 million would witness a wage hike. Lawrence Mishel, the EPI’s president, estimates that as many as 27 million people will benefit from the proposal.

Depoliticising the minimum wage?

By many analyses, the United States is vastly overdue for an increase in its minimum wage. Furman and other economists note that when inflation is taken into account, today’s minimum wage is below where it was in 1950.

“The minimum wage was on an upward trend and reached its peak in 1968 and has fallen by one-third since,” Furman says.

“If you look at the poverty rate and don’t take into account public policy, it’s actually gone up since 1967. When you’re cutting the pay for people at the bottom by one third, you shouldn’t be that surprised that you’re not making progress on poverty.”

Part of the reason for this tardiness clearly comes down to political wrangling. The Harkin-Miller bill would thus also link and “index” future wage increases to inflation, taking the decision-making process out of the polarised confines of the U.S. Congress.

“When our bill is fully implemented, the minimum wage will no longer be at poverty wage,” Harkin explained. “The other thing is indexing, so it can’t fall down below that [poverty level] again.”

Yet business interests have long rallied against this idea.

“Indexing the minimum wage to inflation means that employers will likely be faced with automatically increasing labour costs without an automatic increase in revenues or profits,” Randy Johnson, a senior vice-president at the U.S. Chamber of Commerce, the country’s largest business lobby group, told IPS.

Conservatives also contend that increasing the minimum wage would lead to an increase in unemployment. As businesses incur higher labour costs, they say, they will inevitably be less likely to hire.

Labour groups argue that employers will be able to compensate for higher wages because of increases in worker productivity. “If it [the minimum wage] had kept up with productivity growth [since 1969] it would be $18.72,” writes Trumka in an analysis sent to IPS.

The Chamber of Commerce also raises concerns about a spike in unemployment. “While raising the minimum wage may help some low wage workers who retain their jobs,” Johnson says, “it will lead to less job creation and higher unemployment that falls disproportionately on the weakest segments of society, those with few skills and lower training.”

Furman, however, asserts that “the vast bulk of studies find that minimum wage has zero effect on unemployment.” In fact, he suggests that a higher wage would have an opposite effect, helping to “attract, motivate, and retain workers.”

Pressure building

Despite this, most Congressional Republicans will likely oppose the proposal, particularly in the heavily conservative House of Representatives. Miller admits to heavy Republican opposition, but notes that some Republicans have indicated that they may be able to find a way to commit to the bill.

While Democrats are willing to negotiate with Republicans on the bill, they remain adamant about a commitment to 10.10 dollars an hour. Harkin says this is a “bottom line”.

“If we had kept up the minimum wage from 1968, it’d be about 10.75 dollars an hour,” he says. “So to somehow bring it below that and lock in a sub-par minimum wage for the future is just not acceptable.”

Harkin also believes that an election year is the most appropriate time to fight for minimum wage legislation. He notes that public pressure leading up to the 1996 elections prompted Republicans to vote in favour of increasing the minimum wage.

“The American people are calling on us to do this clearly and unequivocally, and pressure will build,” he says.

President Barack Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. Credit: Lawrence Jackson, Official White House Photo/Leader Nancy Pelosi/CC by 2.0

By Carey L. Biron
WASHINGTON, Aug 28 2013 (IPS)

Three years after the passage of landmark legislation aimed at strengthening regulation of major U.S. companies, one of the most criticised disparities characterising today’s corporate culture – the outsized compensation offered to top executives – continues to grow.

These extraordinarily lucrative salaries and benefits appear to have little connection to overall corporate performance. According to estimates released Wednesday, 38 percent of the top-paid chief executive officers (CEOs) of U.S. companies over the past two decades were fired or headed companies that were either bailed out by taxpayers or forced to pay significant fraud-related fines.

“An alarming number of CEOs are not adding exceptional value to [the U.S.] economy. They are extracting vast sums from it,” a new report from the Institute for Policy Studies, a Washington think tank, stated.“An alarming number of CEOs are not adding exceptional value to economy. They are extracting vast sums from it.”
-- The Institute for Policy Studies

“American chief executive compensation continues on what has become an inexorable upward march, even as the overall economy sputters through five years of Great Recession and tepid recovery. The most widely heralded CEO pay reforms…have so far done little to slow the executive pay march.”

The study looks at the performance of the 241 CEOs who have ranked among the United States’ 25 highest-paid executives at some point over the past 20 years. Researchers found that many of their companies reported “blatantly” poor performances.

Nearly a quarter of the companies either shut down or received government bailouts following the 2008-2009 financial crash. Eight percent of these CEOs were fired but still received final bonuses averaging 48 million dollars, while an additional eight percent headed companies that had to pay fraud-related settlements of more than 100 million dollars per firm.

“Shareholder representatives say that the problem of excessive CEO pay is so widespread that even if you wanted to create a portfolio of those companies that enforce reasonable CEO pay, it would be very difficult to do so,” Sarah Anderson, an author of the new report and director of the Global Economy Project at the Institute for Policy Studies, told IPS.

“This is not just a problem of a few bad apples,” Anderson said. “Rather, it’s about a corporate culture that’s encouraging CEOs to demand this type of compensation – even though it’s bad for workers, shareholders and taxpayers.”

The U.S. model

The average compensation for heads of the country’s 500 largest companies was around 12.3 million dollars in 2012, according to estimates by the AFL-CIO, one of the United States’ largest trade union federations. Excluding an unusual massive pay cut taken by one executive (Apple CEO Tim Cook), that figure rose five percent over 2011, despite the fact that median incomes for most U.S. households fell from 2009 to 2011 by 0.4 percent.

CEO pay has skyrocketed in recent years compared to average U.S. salaries. In 1993, executive salaries were around 195 times those of average workers, according to the AFL-CIO. Last year, they were 354 times larger.

“Two decades have essentially recalibrated our nation’s moral sensibilities,” the Institute for Policy Studies report states. “The outrageous has become the everyday.”

Meanwhile, this U.S. “model” of outsized executive salaries is widely credited with encouraging executives in other countries, particularly Europe, to push for similar levels of compensation, to the anxiety of top economic analysts.

“We must move in the direction of more prudent compensation practices,” Christine Lagarde, head of the International Monetary Fund, the Washington-based institution tasked with ensuring global economic stability, said in January at the World Economic Forum.

“Excessive inequality is corrosive to growth; it is corrosive to society…We can already see too many signs of waning commitment – dilution of reforms, delays in implementation, inconsistency of approaches.”

In the aftermath of the 2008-2009 financial crisis, much of the legislative push to reel in executive pay in the United States became part of a huge bill known as the Dodd-Frank Act, which is aimed at strengthening oversight of the financial services industry and broader corporate culture.

While that bill, signed into law in 2010, mandated federal regulators to take multiple steps to address the issue of excessive executive compensation, today relatively few of these rules have been finalised.

Some of those that have – including allowing shareholders to vote regularly on executive salaries – are less effectual than was anticipated. In fact, the new report includes a detailed “scorecard” of the efficacy of these reforms, both proposed and potential, that affect executive compensation in the United States and Europe.

Recent polling suggests that support among the U.S. public for strengthened regulation is growing. In July, pollsters found that 83 percent of likely U.S. voters supported tougher regulations for financial companies – up from 73 percent last year (respondents weren’t specifically asked about executive pay).

President Barack Obama has also recently stepped up calls for regulators to move more quickly on Dodd-Frank rules, including on executive pay and equality issues more broadly.

“We’ve got more work to do,” Obama said on Jul. 24. “Nearly all the income gains of the past 10 years have continued to flow to the top one percent.”

“The average CEO has gotten a raise of nearly 40 percent since 2009. The average American earns less than he or she did in 1999.”

Narrowing pay ratios

Some movement is ongoing to address executive compensation. In early September, the Securities and Exchange Commission (SEC), which regulates all companies listed on U.S. stock exchanges, is slated to finalise a rule that would require corporations to regularly publish the ratio of pay between its workers and executives.

While some business interests have derided such disclosure as unnecessary (and legislation proposed in June would undo it completely), at least one important lobby group, the Business Roundtable, told IPS that it would be withholding judgement until after details of the rule, known as Section 953(b), are published.

And while there is some concern over how the SEC will allow companies to define their employee pool when calculating this ratio, advocates of stricter regulation are saying this would be an important step.

“We do think this is a big deal, in that it legitimises the idea that narrow ratios are a good practice,” the Institute for Policy Studies’ Anderson says.

“Eventually, you could also use those ratios in other ways – considering that ratio when determining government contracts, for instance, or linking the ratio to favourable tax policies.”

Twenty-five-year-old Razia is one of 2,500 survivors of the factory collapse in Bangladesh. Credit: Naimul Haq/IPS

By Carey L. Biron
WASHINGTON, Jul 11 2013 (IPS)

An alliance of 17 major U.S. brands and retailers, including Walmart and the Gap, has unveiled a five-year agreement aimed at strengthening conditions and worker rights at garment factories in Bangladesh.

The new alliance, announced here in Washington on Wednesday, received cautious initial approval from some sectors. Yet the response from labour rights groups has been excoriating, with advocates particularly warning that the agreement’s enforcement provisions are too weak to ensure robust implementation.

“The so-called Global Alliance for Bangladesh Worker Safety was developed without consultation with workers or their representatives and is yet another ‘voluntary’ scheme with no meaningful enforcement mechanisms,” Richard Trumka, president of the AFL-CIO, one of the largest labour unions in the United States, told IPS in a statement.

“Companies that sign onto the alliance but fail to meet a commitment face no adverse consequences beyond expulsion from the scheme. Instead, workers will continue to pay.”

Indeed, according to a joint response by a half-dozen labour rights groups (not including the AFL-CIO) shared with IPS, companies that decide to withdraw from the alliance are only penalised by being forced to pay their share of administrative costs. For large companies, this would work out to around five million dollars – while Walmart alone brings in more than 400 billion dollars annually.

“For a company with billions of dollars in revenue, such a penalty is a minimal cost of doing business, not a serious deterrent,” the groups, which include the International Labor Rights Forum, the Worker Rights Consortium and others, stated.

“This confirms what labor rights advocates have long predicted: that Walmart, Gap and companies like them simply do not want to make any promises they actually have to keep. What they want is to be able to make promises now, at a time of major public and media scrutiny, that they can walk away from whenever it suits them, at a token cost.”

The creation of the new alliance follows a five-week process of negotiations among the companies and two and a half months after a factory collapse in Dhaka killed more than 1,100 people, the worst disaster in the garment industry’s history.

Fear of liability

But the agreement also comes after nearly 70 other companies, primarily in Europe, agreed to support a new fire and building safety accord that has won widespread approval from labour groups. Nearly all major U.S. and Canadian companies refused to sign onto the accord, however, saying it would open them up to too much legal liability.

“The main … reason we couldn’t sign the accord, is Europe has a different legal environment than we do in the United States and Canada,” Jay Jorgensen, Wal-Mart’s senior vice president and global chief compliance officer, said at the public unveiling of the new agreement here on Wednesday.

“The accord had some provisions that under the U.S. and Canadian legal system would subject us to potentially unlimited legal liability and litigation … These companies here have put up around 146 million dollars so far to fix the situation in Bangladesh – we don’t want one dollar of that to go to lawyers; we want every cent of that to go to the factories.”

The alliance also includes such major retailers as Target, Macy’s, Nordstrom, Kohl’s, Sears, L.L. Bean and J.C. Penney.

Under the terms of the new agreement, by October a common set of safety standards will be created for all factories producing products for alliance members. After one year, those factories will have to undergo an external verification process, by auditors chosen by the companies.

The alliance also says that worker empowerment will play a key role in its new approach, promising to institute, among other things, new worker representation committees. Yet critics point out that the alliance agreement makes no provision under which workers can refuse to do dangerous work.

Further, while an alliance hotline for worker complaints is to be set up by November, the European accord goes much farther, allowing workers to initiate enforcement proceedings.

Thus far, alliance members have pledged 42 million dollars to a worker safety fund, and have said they will provide more than 100 million dollars in capital for improving factory infrastructure. Those contributions are to continue for the next five years, though critics warn that this aspect of the plan is only voluntary.

Aligning goals

Initially it had seemed as though the North American companies, in refusing to sign the European accord, would simply proceed with individual plans for remediation in Bangladesh and public relations elsewhere.

Yet as analysts were suggesting that Bangladeshi-made clothing might soon become taboo to consumers, in early June several of the largest companies here agreed to negotiations hosted by the Bipartisan Policy Center, a Washington think tank.

Over the past five weeks, these talks were led by two widely respected former U.S. senators, George Mitchell and Olympia Snowe. While both Wednesday offered their support for the results, the spectre of the European accord clearly remains foremost in many minds.

“Before they began this process, the members of the alliance decided that they would not join the accord, so this was not and is not a question of the alliance versus the accord,” Mitchell said Wednesday.

Yet he noted in closing: “My hope, and here I speak personally, is that the members of the alliance and the accord will one day soon make their efforts common to the extent possible. The criterion should be simply, what’s the best way to improve worker safety.”

Indeed, harmonising the two approaches appears to remain an important medium-term goal, at least for some. Also speaking Wednesday, Snowe noted that the new agreement was “designed to work in conjunction with the accord”, including though the establishment of a joint advisory board that “can hopefully align their goals”.

That sense is shared by some U.S. lawmakers, many of whom in late June withdrew lucrative trade concessions to Bangladesh – though not those that would impact on the massive garment industry, which is expected to be valued at some 21 billion dollars this year.

“The creation of the Alliance for Bangladesh Worker Safety is an important first step toward addressing the dismal plight of Bangladeshi garment workers,” Senator Robert Menendez, chair of the powerful Senate Foreign Relations Committee, said Wednesday.

“[But] North American and European retailers, which often source from the same factories, must now closely coordinate efforts on their various initiatives to ensure that there is a common unified safety standard going forward.”