Bangladesh tragedy sparks call for retail accountability

Dhaka, Bangladesh, May 15, 2013 / 03:03 am

After the collapse of a garment factory in Bangladesh which killed at least 1,127 workers, demands for better oversight from Western retailers as well as local manufacturers have been widespread.

"The question is whether U.S. importers have an obligation to do something about working conditions in other countries," Edward J. O'Boyle, senior research associate with Mayo Research Institute, told CNA May 14.

He pointed to John Paul II's 1981 encyclical "Laborem Exercens," where the late pontiff said that labor's effect on the worker is more important than both its effect on the product and on profits.

"We cannot purchase imported goods at the price of the lives of people in other countries simply because they live in other countries where working conditions are deplorable; we have an obligation to intervene," O'Boyle, a retired economics professor, added.

On April 24, the eight-story Rana Plaza collapsed in Savar, near the country's capital of Dhaka. Bangladesh is the world's second-largest garment exporter. Since the tragedy, some 300 similar factories have closed following worker unrest.

O'Boyle noted that Western retailers already intervene with their suppliers in developing countries when they are provided with faulty garments.

"John Paul is asserting that substandard working conditions are a more compelling reason for intervention with the manufacturer than defects in the manufacturer's product," he noted.

"As necessary as they are to the survival of any business enterprise, the profits of the firm that derive directly from selling its products are subordinate to the well-being of the workers who make those products."

O'Boyle suggested two avenues by which Bangladeshi working conditions might be improved, either through government intervention or by working agreements among manufacturers.

Since importers must be licensed, he said governments in Western countries might make the licenses "contingent on demonstrating that working conditions...are acceptable."

His suggestion for manufacturers' working agreements is currently being undertaken. Several European  clothing retailers, including H&M, the single largest clothing buyer in Bangladesh, have signed the Accord on Fire and Building Safety in Bangladesh, which obliges them to conduct safety inspections and pay for repairs at factories in the nation.

The Associated Press reports that the accord is a revision of an agreement which was rejected by retailers two years ago "because of cost and legal concerns." The April 24 collapse was the latest in a series of incidents at Bangladeshi factories. A fire in November killed 112, and May 9, another fire killed eight.

American retailers have yet to sign the agreement. Gap wants the accord's rules on dispute resolution changed, and Walmart, Bangladesh's second-largest clothing buyer, will not sign.

Christopher Westley, an economics professor at Jacksonville State University and an adjunct scholar at the Ludwig von Mises Institute, addressed the factory collapse by iterating that economic and social systems "have to be based upon the primacy of the human person," as Catholic social teaching says.

"In Bangladesh, it doesn't sound like whoever was controlling (the factory) had taken any of those lessons to heart," he said to CNA May 13.

He added, however, that he was unsure if this is a "systemic issue" in the country, bringing in issues of corruption, because such events "can still happen in a free society, because of the human condition, because people are imperfect."

Westley suggested that Bangladeshi workers are "vulnerable," because they are easily available, their labor is cheap, and they are easily exchanged.

"Maybe over time, that causes the owners of capital to lose sight that these are living breathing human beings made in the image of God," he considered.

He added that laborers there might be "kind of treated like capital...not seen as being people, they're just seen as being inputs in a production process," in a mentality that says that "if the safety regulations are too expensive, we can replace them if something bad happens."

What Westley finds concerning is that labor conditions in Bangladesh do not seem to have improved over time. Bangladeshis are choosing to work in industries known to be unsafe despite the risks because "it beats whatever their next available option will be."

"Working conditions in any developing economy usually are dangerous," but that the situation normally improves, as societies become wealthier and can afford investments in safe workplaces.

"What is it about Bangladeshi society that makes it persistently be poor," Westley asked. He suggested such social institutions as a corrupt government and the hindrance of capital investment as possible answers.

Westley contrasted the nation with South Korea, which was in a similar state after the Korean War. Yet South Korea has grown from being among the poorest countries, to a developed nation among the top 20 economies.

While Bangladesh has made slight strides in fighting corruption, it remains a worrisome situation in the country. In 2005, it shared the distinction of being the most corrupt country in the world with Chad, according to Transparency International.

By 2012, Bangladesh had moved up to rank 144 in public sector corruption, among 176 countries considered by the organization, in the company of the Central African Republic, Syria, and Ukraine. South Korea, meanwhile, was ranked 45, behind Poland but ahead of Hungary.

On the recent factory collapse, Westley reflected that producers, consumers and governments all have a place in ensuring that such tragedies are not repeated.

"It does seem like human life is treated much less valuably in that situation, and it's something we should be concerned about."

Thomas Storck, an author and a member of the editorial board of The Distributist Review, noted that "market forces, the mere play of supply and demand is not going to bring about economic justice."

"The popes have been quite clear that this is not an acceptable opinion for Catholics," he told CNA May 13.

Storck noted Pius XI's 1931 encyclical "Quadragesimo Anno," in which the pontiff wrote that "the right ordering of economic life cannot be left to a free competition of forces."

To tame free market forces, Catholic social teaching suggests either government regulation or, more favorably, Storck said, "the idea of intermediate groups which would do economic regulation."

He said these intermediate groups are among the solutions of distributism, an economic system developed in large part by the English writer G. K. Chesterton in concert with then-emerging Catholic social teaching. It seeks widespread property ownership rather than the ownership of capital primarily by a small number of very wealthy individuals or by the state.

Storck suggested that guilds or occupational groups, including labor unions, could contribute to worker safety in Bangladeshi clothing factories.

"When you have very large companies that have a tremendous amount of economic power" – such as the European and American companies which purchase from Bangladeshi suppliers – "then they can in various ways drive down wages, and persuade governments that are weak to ignore their own health and safety laws."

The concentration of economic power among a few very wealthy companies enables those companies to "exploit the workers" in such developing countries as Bangladesh, said Storck.

Distributism "champions the idea of worker-ownership because then there's no pressure" to cut the cost of labor in production. "That's what drove these companies to produce in Bangladesh in the first place," Storck said. "They wanted to cut their labor cost."

When enterprises are owned by the laborers, the conflict between wages and profits is eliminated, Storck explained.

He concluded by saying that the social encyclicals, and the whole of Catholic social teaching, should not be approached "through the lens of the American political divide."

If a given position is supported by Church teaching, he said, "I've got to adhere to it...regardless of whether its congruent with liberalism or conservatism."

Following one of the worst industrial disasters ever, Bangladesh's government is making efforts to address workers' safety concerns. The country has moved to make unionization easier, and raising the minimum wage for factory laborers, which is currently $38 a month.