The Rana Plaza tragedy in Bangladesh has provided a dramatic illustration - at least for the public in Europe and the United States - of the real human cost of the permanent pressure to bring down prices of clothes for the mass market. It has taken the deaths of more than 1,100 garment industry workers, who were toiling in totally unsafe and subhuman conditions, to spur a number of big international retail brands into action. Last week some of these companies finally entered into a legally binding agreement to finance safety improvements in their production facilities in Bangladesh. Besides, the government in Dhaka allowed the creation of trade unions in the garment and textile industry, which accounts for 80 per cent of the country's exports.
Of course, the emotional impact of the images of human casualties and destruction, with people trapped under the collapsed building that housed overcrowded workshops, is already fading away from public memory. However, unlike with many previous deadly accidents in the textile industry - in Bangladesh or in other low-cost manufacturing countries such as Cambodia - this time the "critical mass" of casualties and the way the tragedy was relayed by the mass media and social networks may hopefully make a difference. It is possible that in the wake of the Rana Plaza tragedy, the world will take a step towards preventing globalisation's race to the bottom.
In that respect, three major lessons can be learned.
The first one is that we increasingly realise how much globalisation requires - in both developed and developing countries - strong governments to play a crucial role in setting the right framework for economic activity and as fair enforcers of rules-based frameworks. The alternative to that approach is a return to the law of the jungle or to the worst expression of robber-baron capitalism. Here a fine line needs to be drawn between good governance - setting clear policy frameworks, and creating and fairly enforcing a set of pragmatic rules - and compulsive over-regulation by a government meddling with anything and everything related to business activity and almost every aspect of daily life. The balancing act in that domain might possibly be one of the most demanding challenges for political leaders today, whatever the level of development in their country. In that respect, the Bangladeshi authorities failed to meet their obligations in a dramatic way - whether because of a lack of overseeing resources, or corruption, or both. Helping to establish the basis for good governance - and to train the human resources accordingly - is certainly the most valuable assistance that can be provided to developing countries.
The second lesson of the Rana Plaza tragedy and its aftermath is that the role of civil society - through non-governmental organisations - has now become essential in trying to deal with some of the excesses and distortions that globalisation is creating. One can, of course, raise some valid questions regarding the legitimacy of many of these civil society organisations or their methods of action. Nevertheless, they have become a major and unavoidable player and pressure group, with a global whistle-blowing and mobilisation capability magnified by an extremely skilful leveraging of social media. Of course, all the big international retailers claim that even before the tragedy they had been concerned about the safety conditions in their suppliers' production facilities. However, a number of previous tragedies - which resulted in significant numbers of deadly casualties among workers - did not seem to be enough to prompt them into accepting binding constraints. In a way, they considered that they were the only ones entitled to decide whether their corporate social responsibility policy and practices were sufficient or appropriate. They have been proved wrong. Responsible corporate behaviour and the attendant strict obligations and duties are no longer optional.
The third consideration is that we are going to see an increasing need - and pressure - for a closer alignment between business interests, consumers' interests, and the public interest at large, not only at national but also at international level. And multinational corporations had better adjust and even take the lead in that trend - taking the driver's seat instead of being passive followers - lest they pay a heavy price in terms of reputational damage in the form of active or passive boycott of their products by consumers. The need for this ever closer alignment arises not only from the fact that consumers are voting with their wallets, but also from the realisation that complex issues require the involvement of not only governments and business but also civil society - or at least its acquiescence.
In the aftermath of the Rana Plaza tragedy, some international brand retailers have been hinting that they might want to leave Bangladesh and go to other low-cost sourcing options, in either Latin America or Africa, so as to avoid further embarrassment with respect to working conditions in their suppliers' factories. That is obviously a wrong move. No matter which low-cost country is selected as a sourcing base, the key issues will remain the same. Also, it cannot be ignored that despite the abuses and ignominious working conditions in too many cases, becoming a sourcing base for the garment industry has been good for Bangladesh. According to the World Bank, the percentage of people living below the poverty line in Bangladesh fell from 48.9 per cent of the population in 2000 to 31.5 per cent in 2010.
So, the real challenge is to ensure that minimum safety and employment conditions are set and enforced. This is where civil society can be very effective: it can exert pressure on international businesses so that they, in turn, apply the right pressure on governments to overcome the lack of political will and/or the pervasive corruption that makes everybody turn a blind eye to outrageous abuses.
It has been calculated that an increase of just a quarter of one dollar for every garment produced in Bangladesh would be enough to improve the working conditions across the whole industry in the country. That kind of cost increase would probably also be valid and relevant in the textile and garment industry of many other sourcing countries. What would it say about our society if the lives of more than 1,100 people - just to take one tragedy that caught international attention - were not worth paying 25 or 50 cents more for the fancy T-shirts we love to wear?
The writer is President of Smadja & Smadja
https://twitter.com/ClaudeSmadja
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
