Government corruption leads to industrial accidents, not global brands

Corrupt political systems create conditions for industrial tragedies, not the presence of global brands. 

Aseem Prakash
29 May 2013

The Rana Plaza tragedy in Bangladesh reminds us of the poor conditions workers endure in the apparel industry's global supply chains. This incident came shortly after the horrific fire in the Tazreen factory in Dhaka and in the Ali Enterprise factory in Karachi. While the media has focused on how these factories are linked to global supply chains of prominent brands, it fails to recognize that the poor working conditions are pervasive across the economy: in shipyards, in brick kilns, construction, mines, plantations, and the urban service economy, among others. Some sectors are in global supply chains, while others cater to the domestic economy only. Global supply chains did not cause these conditions; in fact, working conditions might actually be better in global supply chains.

Industrial accidents are followed by shrill demands to find culprits, and to extract retribution. If the factories are connected to global supply chains, global brands are declared the culprits. They are the perfect targets: visible, foreign, and rich. They fit the narrative of globalization forces exploiting the poor and the weak in developing countries.

But what if the global supply chains were to leave, as Disney is planning to do? Would the workers be better-off then than they are now? By some estimates, Bangladesh's garment industry accounts for 70% of the country's exports, and employs around 3-4 million of its people. Recognizing the huge economic impact of such an exodus, Bangladesh's government is pleading with the garment industry not to leave, and with the European Union (which has recently granted it trade privileges) not to impose sanctions. This leads to a rather curious situation: while the media portrays global brands as evil, few of those involved want them to pack up and leave. 

Some activists demand new laws to protect workers. But these governments already have laws in place to ensure that workers are treated fairly, and work in humane conditions. What would new laws achieve when governments are not enforcing the existing ones? Hasn't government failure created conditions for these tragic accidents? Yet, nobody draws attention to the rampant corruption as the cause - the global brands are after all far more appealing targets.

Some suggest that governments do not enforce laws because they lack the capacities to do so. We should provide aid and assistance so that governments can enhance their regulatory capacities. This is a dubious argument: government inspectors do not need capacity enhancement to issue citations when they see cracks in buildings, fine firms which block fire exits with heaps of unfinished garments, or cram workers in windowless rooms. A focus on capacity instead of corruption diverts attention from the main issue.

So what might motivate governments to rein in corruption, and enforce their own laws? After all, corruption serves the interests of the political elites. 

Global brands can use their economic leverage with host governments in this regard. My work with political scientists Brian Greenhill and Layna Mosley demonstrates that importing countries can successfully leverage their trade linkages in ways which lead to superior working conditions in exporting countries. Instead of demanding that global brands withdraw from Bangladesh, we must call for increased trade linkages between Bangladesh and the developed economies.

In addition, global brands should strengthen private regulatory programmes in which their suppliers participate. These programmes seek to ensure fair working conditions and wages. To ensure that suppliers comply with programme obligations, factories are monitored by third-party auditors. However, the current auditing system is inadequate: recall external auditors had certified garment factories in Bangladesh and Karachi to be in compliance with well-established private regulatory programmes. Auditing needs to be strengthened in three ways.

First, external auditors must be required to carefully inspect factory sites, not limit their inspections to the review of documents and compliance records at the company’s head office. Secondly, auditors should not be paid by the company which seeks their seal of approval. This creates a conflict of interest. One way might be to follow the US real estate industry, where the assessors are no longer chosen by the lenders, or the property owners. Third, auditors who fail to do their jobs should be debarred.

Corrupt political systems create conditions for industrial tragedies, not the presence of global brands. Scapegoating global brands will not help improve the working conditions of the labour force. Global brands must not leave Bangladesh; they must stay and use their economic leverage to improve working conditions. As our research shows, improvements in export-oriented sectors can eventually spill over to other sectors of the economy.

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