With an agreement now in the works involving Walmart, Gap, other large American retailers, and the Bangladeshi government to improve working conditions for garment industry workers in Bangladesh, it is worth examining whether the agreement will actually accomplish anything.
The agreement is for the creation of a $50 million fund that would be used to renovate factories and bolster safety for workers, but it is contingent upon the Bangladeshi government guaranteeing accountability for safety standards, which is problematic because of widespread corruption in that government as well as the presence of powerful garment business owners in the political process. Obviously accountability is crucial, but by relying on the government to provide it, American retailers are basically punting on their responsibility in the wake of the Rana Plaza tragedy. Periodic reviews of suppliers' factories (which Walmart has promised) are better than nothing, but not enough to guarantee continuing safety.
In addition, $50 million is woefully inadequate for fixing the problem of poor working conditions for garment factory workers in Bangladesh, which has become the largest center for garment manufacturing in the world with more than 5,000 factories, and if the Rana Plaza incident is any indication, a colossal human rights issue. Renovating a manufacturing facility to make it safe is not like painting the room of a house, and the Workers Rights Consortium, a labor group involved in the crafting of an earlier agreement with European retailers (who have been a lot more responsive), estimates that costs could run as high as $3 billion.
Which brings us to the central problem.
Companies like Walmart and Gap may or may not be willfully negligent when it comes to workers' rights but often turn a blind eye to the issue until it becomes a real issue - and then their usual response is not to solve the problem but to gloss it over until it disappears from the news cycle. A good analogy for this is today's Republican Party, which believes that its main stumbling block with voters is its image, whereas the real problem lies in the anachronistic values that it represents. Similarly, Walmart and other major companies seem to be oblivious to why Americans are so angry with them, and believe that if they only make the right public relations moves, people will forget about their transgressions.
We are seeing this phenomenon play out on the minimum wage issue, wherein a growing number of companies are using back door methods of negating the minimum wage like labeling full time employees as contractors, and are now seeing it on worker safety. The agreement that these retailers are negotiating in Bangladesh is window dressing. It is the sizzle without the steak and an attempt by them to get out of the hot seat by doing the barest minimum.
1,127 people died in Rana Plaza and while no amount of money will bring them back, securing the safety of the thousands of other workers in Bangladesh should be a matter of humanitarian concern for American garment retailers and not simply one of smart business spin. $50 million will do very little and relying on the inept, or at least indifferent, Bangladeshi government to enforce safety is a major cop-out by some of our biggest corporations.
SANJAY SANGHOEE is a political and business commentator. He is a banker, has an MBA from Columbia Business School, and is the author of "Killing Wall Street." For more information, please visit www.killingwallstreet.com