The free trade regime was good for Bangladesh with its exports rapidly growing amidst economic recessions happening around the world during 2008 to 2009, eventually becoming the second largest textile exporter in the world. This is due to the country’s cheap labor costs, with its minimum wage, which is the world’s lowest wage in 2013 due to investments by textile manufacturers in productivity-boosting technology. Moreover, because of lax regulations, costs remain abysmally low, which was ideal to foreign companies who are looking for low cost garments that would garner higher profits as well. Moreover, since Western companies are distancing themselves from China, Bangladesh became the next best viable option.
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The winners of this situation are the retailers in USA and in the EU with their well-oiled supply chain since they were able to leverage lower costs and turn these into higher profits. They also become more competitive with their lower prices and can satisfy consumer with inexpensive clothing. The country is also a winner in case since the textile industry is in high demand, employing a large number of people which resulted to a large flow of revenues through the years, amassing a massive 20 Billion US Dollars of exports in 2012. Moreover, they are getting more business since several countries do not want to rely too heavily on China, as this can create adverse negative spillovers in time of economic crises. With this, the country’s unemployment rate goes down and its economy continues to grow.
Unfortunately, the losers in this case are the workers who are subjected to unethical working conditions, wherein they were underpaid, physically abused and overworked, and subjected to unsafe working conditions due to the many cracks and unstable foundation of the factory. Another loser in this case are textile manufacturers in different countries who lose business to Bangladesh. This goes to show that the gains do not outweigh the losses. Lax regulations led to the demise of 1,134 factory workers who faced numerous unethical conditions which is inhumane and degrading since there is an immeasurable value in regard to human life, but the workers are instead treated like animals. In addition, millions of dollars were allotted to safety plans from foreign retailers, which ironically deducts profits in their search of cheap labor.
The main causes of weak safety record of Bangladesh’s factories are due to lax safety regulations, corruption of factory owners or officials and aggressive competition in obtaining business. Moreover, the Bangladesh government as well Western companies play a role in the workplace incidents as well since the government continues to have lax rules which undermines the safety and rights of factory workers and foreign companies continue to garner a high demand of textiles with a low cost, respectively.
Several steps to prevent workers being abused have taken place to change working conditions in Bangladesh. The Accord on Fire and Building Safety in Bangladesh, a legally binding agreement signed by H&M, Zara, Tesco and the like help finance safety improvements which started the conversation in improving working conditions as well as implement better safety measures in the factories for the next five years, making unethical conditions unacceptable and intolerable to foreign companies. With this agreement, the governing board which includes representatives from the retailers, laborers and a chairperson by the UN International Labor Organization will supervise working conditions as well as safety standards of thousands of textile factories and publicize their findings. If this agreement is violated, penalties will follow towards local as well foreign bodies. Moreover, Walt Disney removed Bangladesh as one of its producers of its merchandise, abhorring the mistreatment of workers and not tolerating the abuse despite its economic benefit for the company. By doing this, Walt Disney took a stand against unsafe and unethical working conditions, prompting the government to make changes to this situation. Additionally, Walmart stated that it would hire an outside auditor to inspect the factories it works with and to publicize their findings online. If there are issues identified, they will require factory owners to make respective changes or be at the risk of being removed as one of its suppliers. It would also set up an independent call center wherein workers could voice their complaints about their working conditions.
Despite these efforts, I think more affirmative action can be made since these are all short-term solutions to a long-term problem. Moreover, I think Walmart should also be a signatory to the agreement and to set up a legitimate safety inspection office within factories to better address issues. Because of this accident, an increase of worker unions were formed, individuals were charged, families of victims were compensated, roughly 90 percent of safety issues were addressed and the Bangladesh government was pressured to raise their minimum wage to 65 US Dollars per month.
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