Leiden Law Blog

Changing labour conditions in global supply chains

Posted on by Ruben Zandvliet in Public Law , 2
Changing labour conditions in global supply chains Photo: Flickr

“Rana Plaza had no effect on our sales,” stated Primark’s legal director yesterday in the Dutch newspaper Het Financieele Dagblad. On 24 April, the Rana Plaza building collapsed in Savar, Bangladesh. 1129 workers died, which makes it the largest industrial accident ever. The building hosted several textile companies that produce for well-known Western corporations like Primark, Mango and Walmart. These companies all embrace the concept of corporate social responsibility (CSR). Primark conducts their own inspections to see whether its suppliers abide by their code of conduct. Because these suppliers must adhere to the legal standards of the Bangladeshi governments as well, one would expect that decent labour standards would be better guaranteed than in non-export oriented work. Sadly, this is often not the case.

The disaster in Bangladesh occurred 102 years after the Triangle Shirtwaist Factory fire in New York. This fire, in which 146 textile workers lost their lives, was one of the biggest accidents of its time. It led to important changes in American legislation. One of the breakthroughs was the introduction of the 54-hour workweek for women and children. The Triangle fire had a lasting impact. One of the eyewitnesses was Frances Perkins, secretary of labour between 1933 and 1945, and the architect of the major social reforms of Roosevelt’s New Deal.

The bulk of the legislation that Perkins introduced is still in force. The sweatshops, and the atrocities that Perkins’ measures tried to mitigate, have relocated from New York to Bangladesh and other low wage economies. In a way, this is a logic result of the changing global division of labour, which provides economic opportunity to countries and individuals. Economist Jeffrey Sachs famously stated that: "My concern is not that there are too many sweatshops, but that there are too few." This does not mean, however, that there should not be a moral debate about the conditions in which our shoes, iPhones and plastic Christmas trees are produced. Not everything should be acceptable.

Labour conditions are more visible than ever. No matter how complicated global supply chains are, journalists, NGOs and researchers show us the inside of places like Rana Plaza. This gives us an opportunity to use accidents and abuses as catalysts for change. But who has to take responsibility for abuses in today’s global supply chains? And who defines what abuses are? Of course there is an important role for Bangladesh. But the main problem for developing countries is not the absence of legislation, but the lack of (funds for) enforcement. Governments thus look to the multinational companies that do business in Bangladesh. Arguably they have more funds available, and are therefore better equipped to improve labour conditions. (The gross domestic product of Bangladesh is $153 billion, whereas Walmart has a total revenue of $469 billion.)

The Rana Plaza disaster has led many multinationals, NGOs, global unions and local Bangladeshi unions to conclude an ‘Accord on Fire and Building Safety.’ The Accord is a comprehensive agreement that inter alia guarantees inspections, worker involvement and financial support. Most importantly, it is one of the first CSR agreements that is legally enforceable. The drawback is that the corporate signatories are mostly European. Various American brands like Gap and Walmart have established a competing ‘Alliance for Bangladesh Worker Safety.’ The main reason for this is that they strongly reject the legal enforceability of the Accord. To appease consumers Gap and Walmart have to do something, but only to the extent that they retain control over their CSR commitments. The discord between a ‘European’ and an ‘American’ model is interesting for (legal) researchers, but confusing for consumers and not promising for the Bangladeshi workers who deserve stronger legal protection to improve their jobs.

2 Comments

Suman Verma
Posted by Suman Verma on June 29, 2017 at 09:32

In my opinion, the various ground level employees are the ones that make the supply chain process works so efficiently. There must be better policies for them so that their work can be appreciated in a better way.

Emelia Ingram
Posted by Emelia Ingram on May 26, 2017 at 03:27

Supply chain plays an imporant role and of course conditions must be met in order for businesses to be successful. Supply chain must not be abused because it will lead to failure of a business, i assure you that.


BRI Supply Chain Management Consultants

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