After Bangladesh Garment Factory Deaths, Why Are Major U.S. Retailers Refusing To Join Safety Accord?

By Carmen Comsti posted 07-30-2013 05:54 PM


By Katy Skaggs, The Institute’s Summer 2013 Employee Rights Advocacy Fellow

July 30, 2013

In the wake of a series of tragic mass deaths in Bangladesh’s ready-made garment factories, public outcry prompted two international trade unions, IndustriALL Global Union and UNI Global Union, to take action by engaging major retail brands to negotiate a contractual agreement. The Accord on Fire and Building Safety in Bangladesh (Safety Accord) is intended to make factories safer for garment workers in Bangladesh. The initial deadline for retailers to sign the Safety Accord was May 15, 2013 and an Implementation Team Report negotiated among signatory retailers and the unions was publicly released on July 8, 2013. To date, only a few U.S. retailers have signed on, however. Walmart and Gap Inc., for example, who manufacture goods in Bangladeshi garment factories refuse to commit to the Safety Accord, citing concerns about the binding arbitration provision it contains and touting their own (non-binding) safety inspection plan.

U.S. Retailers Refuse To Submit To Arbitration

These non-signatory retailers strongly object to the “binding, contractual nature” of the Safety Accord, including its arbitration provision. Although the General Secretary of IndustriALL Global Union, Jyrki Raina, confirmed that signatory retailers would exercise great influence in determining the specifics of the Safety Accord and “drive the process” of negotiations, Walmart and Gap Inc. have joined a separate effort that seeks to implement a corporate code of conduct. The Alliance for Bangladesh Worker Safety Initiative (Alliance) would allow companies to police their own practices voluntarily and make it easier for retailers in the Alliance to avoid accountability if they fail to fulfill their promises to improve worker safety.

Forced Arbitration Continues For Workers And Consumers

U.S. retailers’ refusal to submit to the Safety Accord’s arbitration provision is particularly ironic given that many large corporations in the U.S. force their employees or customers into binding, pre-dispute arbitration as a precondition to employment or to a purchase. As corporate use of forced arbitration has grown dramatically over the past 20 years, businesses have turned to U.S. courts only when they want such arbitration clauses enforced (as evidenced by a number of business-friendly Supreme Court decisions regarding forced arbitration). Like these Bangladeshi garment workers, employees and consumers who are subject to forced arbitration in the United States have no opportunity to negotiate over these binding arbitration clauses. It is hypocritical (at best) or cravenly self-interested (at worst) for these retailers to refuse to submit to an arbitration provision they would have the power to negotiate, while simultaneously imposing forced arbitration terms on workers and consumers in America.

A Small Price To Pay For Worker Safety

Binding arbitration clause or not, the Safety Accord’s intended safety program would impose minimal costs relative to the annual profits of global retailers such as Walmart. Major apparel retailers, including those in the U.S. who refused to sign the Safety Accord, typically sell garments for 30-50% more than they cost to manufacture (such an increase may be more familiar to readers as a “markup”). The Workers Rights Consortium, an independent labor rights monitoring organization, estimates that upgrading the approximately 4,500 Bangladesh garment factories to Western health and safety standards would cost a mere 10 cents per garment. Such an increase would be a small price to pay to ensure basic workplace safety in Bangladesh’s garment factories.