Over the past three decades, global inequality has reached a critical level. Multinational fashion companies have secured billions of dollars by moving production locations abroad and using supply chains in developing countries including Bangladesh, China, India, and Myanmar, where labor costs are very low. The revenues of each of the 25 biggest companies are larger than the GDPs of some countries. Despite this, the lives of most of the workers involved in production for many of these companies have not improved.
Many have described the conditions of garment workers in countries across the globe as modern slavery, and their enduring plight is becoming particularly clear during the current coronavirus pandemic. According to the Penn State Center for Global Workers’ Rights, at least one-quarter of garment workers in Bangladesh – or an estimated 1 million people – have been fired or furloughed because of declining global orders amid the coronavirus crisis; many have been laid off without pay. Others, such as those in the supply chain of Boohoo Group, are reportedly being forced to work in unsafe conditions.
Over the past 15 years, Muhammad Azizul, a professor in Sustainability Accounting and Transparency at the University of Aberdeen, has been investigating corporate accountability in relation to the lives of those who work in factories that supply garments to major western companies. In conducting interviews with workers’ rights NGOs, social auditors appointed by multinational companies and those owning and working in garment factories in Bangladesh that supply goods to big multinational companies including Walmart, H&M, Zara, Marks & Spencer, Primark, Target, Reebok, Kmart, and Kohl’s, among others, Azizul and his colleagues found that for the most part, despite all the social audits, social responsibility disclosures and moral narratives that companies use, workers’ economic and human rights have not improved.
In fact, as Western retailers’ revenues continue to balloon (revenue for Walmart, for example, topped $514 billion in 2019, while Zara’s parent company Inditex generated sales of $31.9 billion, up by more than $2 billion from the year prior), and factory owners in Bangladesh – which is home to the second largest garment production market in the world after China, with the sector accounting for 80 percent of the country’s total export earnings – become ultra-rich as a result, the working conditions and standards of living for the individuals who labor in garments factories are seeing little improvement.
In 2018, amid international pressure in the aftermath of the Rana Plaza disaster, Bangladesh’s government raised the minimum wage for garment workers. Despite such a legally-mandated raise, the new minimum wage is still extremely low, and far below the living wage, which has prompted pro-worker NGOs and civil rights organizations to protest the massive exploitation, slavery and human rights negligence within the garment manufacturing industry.
While the government raised wages, factory owners and industry leaders similarly protested, albeit for a different reason. Many baulk at the idea that the cost of production could become any higher. One factory owner that Azizul interviewed, asserted in connection with the wage increase, “If there is a stringent regulation that leads to costs of production being higher, multinational corporations will leave for another country where they can find cheaper products.” Factories in Bangladesh “are getting more offers than ever before asmultinational companies are leaving China, as its cost of production is getting higher because of Chinese living standards. So, if somehow the cost of production becomes higher [in Bangladesh], the reality is that manufacturers will lose contracts, as there is no long-term commitment by multinational companies.”
This same factory owner reasons against any increase in production costs by indicating that profit maximization protects national economic interests. To him, more profit means more export earnings, more foreign reserves for the country, and a more stable economy. But this seems to go hand in hand with risking workers’ basic economic and human rights. In Bangladesh, the idea that national economic interest is at stake appears to be more of a concern than the protection of workers’ rights.
This is perhaps unsurprising, as the garment industry has also changed Bangladesh’s political system. Businessmen are increasingly finding roles in parliament. After Bangladesh gained independence from Pakistan in 1971, 13 percent of MPs in the country’s first parliament (1973) were businessmen. By 2014, this had risen to 59 percent by 2014 and to 61.07 percent in 2018. The massive participation of businessmen in the past two elections – both of which have been criticized over boycotts and allegations of vote rigging – has given the country a new shape.
Factories and coronavirus
In 2020, this has come to a head. The export-oriented garment industry in Bangladesh comprises more than 4,000 factories and five million workers, the majority of whom are women. The industry earns approximately $35 billion each year by supplying garments to western companies. While such trade has already boosted the huge economic power of factory owners, the coronavirus pandemic is leaving workers in a much more vulnerable position than factory owners.
Western multinational companies have started cancelling orders, some reportedly without paying for production costs already laid out. Millions of workers are facing destitution having been sent home without pay. As of April, more than $3 billion in orders to around 1,150 factories were in limbo, leaving around 2.8 million workers, mostly women, facing poverty and hunger. In order to complete those orders not yet cancelled, some owners have kept factories open through lockdown without scope for proper social distancing. Restrictions for factories were then relaxed in May despite the increasing number of coronavirus cases in Bangladesh. Understandably, many fear that more and more workers will get infected in the factories.
Some of the biggest retail companies have taken to delaying payments and asking for discounts from factories – with potentially catastrophic consequences for the women who make their clothes. Neither government nor factory owners – nor even the multinational companies – are taking clear responsibility for workers who were sacked or lost their jobs from factories.
All the while, as the working conditions and the leverage that multinational retail companies have over their suppliers make headlines across the globe largely as a result of heightened awareness in connection with COVID-19, it is worth remembering that these situations do not differ significantly from the status quo, and that inequality between western suppliers and factory owners, and the individuals tasked with making out clothes has been growing, pandemic or not.
Muhammad Azizul is the Islam Chair in Accountancy, and a professor in Sustainability Accounting and Transparency at the University of Aberdeen. (Edits/additions courtesy of TFL)