Corporate Governance & Sustainability of the Global Value Chain: Bangladesh Ready-Made Garment Industry Post-Rana Plaza investigation into fairness of value appropriation by global apparel brands, manufacturers and labour
On 24 April 2013 more than 1,100 people died in the Rana Plaza garment factory collapse in Bangladesh. TV cameras focused on the victims of this horror – the garment workers, their unsafe and pitifully low incomes. Improvements were promised, by the factory owners, their international buyer customers, Bangladesh Government and civil society groups. This study sought to examine to what extent these promises had been delivered upon. Bangladesh is the world’s second largest exporter of ready-made garments. The industry has played a central role in the country’s economic development and poverty alleviation. It is widely agreed that labor safety and fair compensation are essential for the long-term sustainability of the industry. A global team of researchers created a framework for evaluating the way value is created and appropriated in the global garment industry, focusing on Bangladesh as the producing countries and the world’s largest global brands. The research team found that in Bangladesh significant value is being created through low production costs but these gains are disproportionately benefiting Bangladeshi manufacturers and Western consumers, rather than Bangladeshi workers. Current Government measures fail to rebalance this inequality, posing a threat to the long-term sustainability of the industry. The study recommends that the Government reviews its policies. It should provide incentives for the manufacturers to shift from low cost production to skill upgrading as part of a long term industrial policy of development and sustained growth. Global apparel brands also have a role to play. They should support the enforcement of unionization rights, prevent union-busting activities and ensure that the factory owners - their suppliers – adhere to international laws and standards.