Bangladeshi family members of missing garment workers pay tribute to the victims of a building collapse at a graveyard in Dhaka on May 21. Industrial
Bangladeshi family members of missing garment workers pay tribute to the victims of a building collapse at a graveyard in Dhaka on May 21. Industrial disasters since November have killed at least 1,250 workers, highlighting the appalling safety problems in the plants. (Munir Uz Zaman, AFP/Getty Images)


The workers are paid the minimum monthly wage of about $37, occasionally go unpaid, and protesters are often intimidated. There is no collective bargaining, no unions without the owners' consent. Lack of regulation and poor, badly enforced safety standards combine to create a dangerous workplace.


After the November fire, the Walt Disney Company decided to pull its operations out of Bangladesh. The European Union's trade commissioner warned that if the Bangladeshi government failed to take prompt action to improve labor standards, the EU would consider suspending Bangladesh's duty- and quota-free access to EU markets.


The garment industry is huge in Bangladesh, as many fashion companies and big retailers moved there from China, choosing Bangladesh's highly developed system for manufacturing and shipping large volumes of high-quality garments at a low price. Now second only to China in export volume, Bangladesh's garment production accounts for 80 percent of the country's exports and is worth more than $19 billion, employing almost 4 million workers, mostly women, in 5,000 factories.



Under the agreement, disputes will be settled by binding arbitration, enforceable in the courts of the retailers' home countries. However, the National Retail Federation, which represents many American stores, has criticized this provision as "legally questionable," and "a process that serves only the unions, not the workers they represent."

Gap representatives said because the "litigation landscape is different in the U.S. than in Europe," it would sign the agreement if the legally binding provision is replaced by a provision under which a retailer not complying with the standards would be expelled from the program.


How effective are private, voluntary efforts to address labor and safety issues? Honestly, not very. "Despite many good-faith efforts over the past 15 years, private regulation has had limited impact," says Richard M. Locke, who has spent more than a decade studying the issue. "Child labor, hazardous working conditions, excessive hours, and poor wages continue to plague many workplaces in the developing world, creating scandal and embarrassment for the global companies that source from these factories and farms."


Locke says he found "Nike auditors and compliance staff to be serious, hard-working, and moved by genuine concern for workers and their rights," and was impressed with "Nike's commitment to labor standards."

Nevertheless, he concluded, Nike has been unable to ensure that its high standards have consistently been met. While some factories have complied with the code of conduct, "others have suffered from persistent problems with wages, work hours, and employee health and safety."

Nike isn't alone. "Consider the global brand empires," Locke says. "They want high-quality products delivered as quickly and cheaply as possible. They also fear that harsh working conditions could, if discovered, create scandal and hence risk to their reputation. Yet, because they are competing with one another, they are unwilling to pay extra for improved working conditions, which could lead to price increases that threaten market share."




Market pressure is essential to ensure compliance by suppliers, ethical investing by large institutions, and auditing and certification. The United Nations' Global Compact Initiative and Guiding Principles are laudable. They are based on a three-pillar framework: the state's duty to protect human rights; the corporate responsibility to respect human rights; and the need for greater access to effective remedy for victims of business-related human rights abuse.

In addition, several federal and state statutes have imposed due diligence requirements on corporations with the goal of addressing human rights concerns. A new class of for-profit public benefit corporations are in development. Last month in Colorado, Gov. John Hickenlooper signed the Public Benefit Corporation Act, which states that benefit corporations are "intended to produce a public benefit and to operate in a responsible and sustained manner" while also taking into account shareholder interests.


Benefit corporations and corporate social responsibility norms demonstrate how far we've come. Only the marketplace will demonstrate how far we're willing to go.
