Bangladesh Passes Revised Labour Law

18 July 2013

Bangladesh approved a highly-anticipated reform to its national labour law on Monday, as part of a broader effort toward averting future disasters such as the factory collapse in April that killed over 1,100 people. Separately, North American and European retailers that source Bangladeshi textile products have announced two respective plans in recent weeks aimed at improving safety standards for workers in the Asian country.

The factory collapse in Savar was one of the worst industrial disasters in recent memory, and has fuelled questions among the international community over domestic labour conditions in Bangladesh, and what role the country's booming textiles trade has played in the current situation. Bangladesh is the second-largest apparel exporter in the world after China, with a garment industry valued at US$20 billion per year.

Under the labour law revisions agreed on Monday in Dhaka, workers will not need approval from factory owners in order to form unions. Over 80 other sections of the law have also been revised, government officials note, in order to reflect the results of consultations held with factory owners and workers, retailers, development partners, and the International Labour Organization (ILO).

While the government has said that the "landmark legislation" could lead to substantial improvements in worker conditions, some labour rights activists caution that the revisions, while welcome, do not go far enough.

"This would be good news if the new law fully met international standards, but the sad reality is that the government has consciously limited basic workers' rights while exposing workers to continued risks and exploitation," said Phil Robertson, deputy Asia director of Human Rights Watch.

The announcement of the labour law changes comes just one week after the governments of the EU and Bangladesh, with the ILO's support, agreed to a "sustainability compact" aimed at improving the country's working conditions. One of Dhaka's main commitments under the compact was the swift passage of labour law reform. (See Bridges Weekly, 11 July 2013)

The EU had confirmed at the time that it would be keeping Bangladesh in its Everything But Arms (EBA) trade preference scheme - which grants least developed countries duty-free, quota-free access to the EU market for all goods exports, with the exception of arms and ammunition - as Dhaka works to implement its various commitments in the sustainability compact.

However, Brussels has left open the possibility of reconsidering the Asian country's participation in EBA, should it find progress in implementing its sustainability commitments to be too slow.

Washington has already suspended Dhaka from its own trade preference scheme, though the US programme covers a much smaller percentage of Bangladeshi exports and does not include textiles. (See Brides Weekly, 4 July 2013)

European, US retailers outline separate safety plans

The April tragedy, along with prompting responses from both the EU and US governments, had also sparked calls for those foreign companies that source their textile products from Bangladesh to take actions of their own toward fostering better conditions for workers.

In response, a group of over 70 companies - most of them European, and including garment giants like Inditex and H&M - has recently signed onto a binding safety deal with Switzerland-based unions UNI Global and IndustriALL.

Along with involving safety inspections in factories where these companies source their products, the initiative will also require participants to pay US$500,000 per year in order to help maintain safety standards, as well as keep funds in reserve for safety-related renovations to the production hubs. Companies will also be providing detailed information on which Bangladeshi factories they use for their products.

Meanwhile, a group of 17 North American companies, including the GAP, Macy's, Sears, and JC Penney has decided to instead sign a non-binding agreement of their own, which would be in place for a period of five years. Among other provisions, the plan would involve inspections of all factories of the participating retailers and will attempt to establish common safety standards by October of this year.

These North American companies chose not to sign onto the binding version as they do not want to be exposed to "unlimited liabilities," given the differences between the US and EU legal systems, explained Jay Jorgensen, the head of global compliance for Wal-mart.

Labour groups, such as IndustriALL and UNI, have called the North American plan "another toothless corporate auditing programme for Bangladesh factory safety." Along with being non-binding, critics caution that the plan also does not involve any worker representatives or third-party inspections, and there are no legal ramifications if safety standards are not being met.

Activists have urged the participating North American retailers to sign the alternative European accord in order to tackle the safety manufacturing issues in a more comprehensive and binding way. They have also noted that boycotting Bangladesh products will only harm the workers that need the most help, and are instead encouraging consumers to make ethical choices and select products from among the companies who have committed to the binding accords.

ICTSD reporting; "Bangladesh Passes New Labor Law," WALL STREET JOURNAL, 15 July 2013; "Retailers Plan Bangladesh Factory Inspections Under Safety Pact," REUTERS, 8 July 2013; "American retailers' plan for Bangladesh factory safety branded a sham," THE GUARDIAN, 10 July 2013; "U.S. retailers agree to Bangladesh plant safety pact," USA TODAY, 10 July 2013.

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