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Transnational Governance in Labour Regulation

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By many measures, the Bangladesh ready-made garments (RMG) industry has performed enormously well over the last forty years. From a less-than-million-dollar industry in the early 1980s, it reached a $30 billion sector in 2022, accounting for 11% to GDP and 80% of exports. Because of the hard work of more than 4 million workers, of whom 80% are women, Bangladesh is now the second largest exporter of RMG, behind China. The positive socio-economic achievements of the industry, however, have also come with a social cost – non-compliant workplaces leading to unsafe working conditions. The sustained failure of the Government of Bangladesh to address workplace safety was exposed by the Rana Plaza disaster in 2013, in which more than 1100 workers were killed. The tragedy triggered the emergence of two significant transnational governance initiatives – the Accord on Fire and Building Safety (hereafter Accord) and the Alliance for Bangladesh Worker Safety (hereafter Alliance). Hence, for the first time, different key stakeholders worked together to address fire, electrical and structural safety of factory buildings. What lessons could be taken from transnational labour regulations is the key concern of this short piece, along with the question of its sustainability.

The Accord was an independent, legally binding agreement between brands and trade unions funded by European buyers. It was a five-year agreement (2013-2018) initially but was extended later for some time as Transitional Accord. On the other hand, the Alliance was also a five-year commitment (2013-2018) to improve safety in Bangladesh’s ready-made garments factories. Similar to the Accord, the Alliance was also a transnational governance initiative that involved companies and stakeholders, including the U.S and Bangladeshi governments, NGOs, policymakers, members of civil society, as well as organized labour.  

One of the key reasons for this policy’s failure is the discontinuation of the institutionalization of factory inspection and remediation, which the Accord and Alliance had established from 2013 to 2018

Different researchers have found the positive effects of transnational governance on the Bangladesh RMG industry. Until the inception of Accord and Alliance in 2013, the primary concern of various stakeholders interested in corporate social responsibility (CSR) in Bangladesh was social compliance. Neither buyers nor suppliers were particularly concerned with the fire, electrical and structural safety of factory buildings. The majority of the factory owners had no idea on how to ensure the safety of their buildings. The inception of Accord and Alliance is seen as a revolution since it was the first multi-stakeholder agreement that engaged buyers to be committed to effectively ensuring workplace safety. The formation of the Accord and Alliance represented an unprecedented collaboration among global brands to address the safety of factory buildings for the first time in the history of the Bangladesh garment industry. A leading garment owner’s view on transnational governance sum up the overall impact in the following way: “…because of the prescribed remediation that Accord/Alliance provided for owners made it quicker to react quickly. Standards were set and laid down before the owners in an arranged and orderly way, so it was very convenient to follow those guidelines.” In spite of the positive impacts, critics claimed that there has been an asymmetric power relationship between buyers and suppliers during the Accord-Alliance regime. They said that these transnational governance initiatives had crafted an opportunity for the buyers to widen their supreme authority over suppliers. The main criticism of transnational governance was less or limited financial support from the buyers for the remediation of factories. 

Another concern was that most small factories had struggled to arrange the funds to invest in the remediation of their factories. The failure to do this resulted in closing a minimum of 800 factories. It would naturally be difficult for small factories to meet up with the global labour standards, since a compliant workplace requires investment which they would not have. Forecasting the future of small factories, one of the owners said, “small factories will be out of business as they are mostly inefficient and non-compliant. Here the intervention of the government is very important. It takes time to produce an entrepreneur class. If we lose small garment owners, it’s not good for the country’s economy. Rather we should get in touch with their financial problems, arrange low-interest bank loans and also expect support from other stakeholders so that they remain in this industry.” This is exactly what has been required. The policymakers seem to more concerned with the cream factories, leaving behind the small factories from their action plan and since these factories are far away from the power holders, they are unable to do more. 

In spite of these criticisms, there is no way to deny that transnational governance has contributed significantly to ensuring the safety of garment workers. The entrepreneurs have regained the confidence of attracting global buyers that were under threat immediately after the Rana Plaza. However, in 2017, as the transnational regulations’ five-year term came to an end and doubts about their future became more pressing, the government stood strong against the extension of the Accord and Alliance. Having claimed that the public regulation has the capacity to oversee factories that were within the purview of the Accord and Alliance, the agreements of transnational regulation were no longer extended. A national RMG safety entity known as the RMG Sustainability Council (RSC) has taken over the operations of transnational regulators, and now the RSC is governed by representatives of the BGMEA, global brands, and global and national trade unions. Whether industrial safety is maintained as per compliance and standard in the post-Accord-Alliance period has become a concern for policymakers. The Centre for Policy Dialogue (CPD) in 2021 reported that a total of 222 garment factories caught by fire in 2020, of which 60% was export-oriented garment factories, and the number of injured workers increased by 24% in 2020 compared to 2019 due to the weak maintenance of safety standard and lack of regular monitoring. The rising number of accidents raises the question about the Industrial safety policy of the government. According to CPD, the current action has failed to maintain the effectiveness of the labour regulation system, strengthen the monitoring and enforcement capacity of labour governance and establish overall coordination of factory safety. One of the key reasons for this policy’s failure is the discontinuation of the institutionalization of factory inspection and remediation, which the Accord and Alliance had established from 2013 to 2018. What is missing now is effective monitoring, enforcement and doing the needful to deal with the threats of withdrawal of orders from buyers and coordination aligned with transparency and accountability. These drawbacks need to be addressed to ensure the sustainability of the Bangladesh RMG industry in terms of labour safety.

Note: Some contents of this piece were published in the author’s book.

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