The Financial Express

Untamed transitions: The RMG case

| Updated: April 12, 2018 17:45:13

Untamed transitions: The RMG case

Jon Emont recently noted in the Wall Street Journal   how five years after the Rana Plaza tragedy, "aren't ready to go it alone to ensure safety standards . . . ." (March 29, 2018, at www.wsj.com/articles/five-years-after-tragedy-bangaldesh-factories-remain-unsafe-1522324800?reflink=djem_Frontiers) As both the Accord and Alliance, created by West European and North American retailers to supervise the necessary reforms, end their original mandate this year, it is useful to ask why not.

At least three factors impede any successful reform completion, not just across Bangladesh, but also globally. One is a set of local circumstances, mostly traditional patron-client relations; a second the increasingly intense global competition, loosely defined as neo-liberalism, but much more untamed given the far different neo-liberal springboards we find today; and a third, secular, technological challenge that threatens to institutionalise 'low-wage' manufacture.

Local circumstances include a variety of factors from the obvious reluctance of rank-and-file manufacturers who have reaped the most profits, literally out of virtually zero-labour considerations (and at relatively zero-costs), to the snail-paced bureaucracy where enabling or supervisory administrative rules must originate and be constantly monitored. True, more than a majority of manufacturers have complied with the reform requirements, instituting, even if reluctantly, some of the most urgent reforms, such as installing fire-escapes.

According to Accord and Alliance estimates, up to Tk 200 million (20 crore) may have been spent on remedial work by the factory-owners; but that this represents only 80 per cent of all factories after five years of relentless and uphill efforts must be discouraging. The 17-retailer platform, Alliance, for example, will close shop on May 31, 2018, while the 200-brand representative, Accord, is set to follow suit this year.

An obvious reason why is the embedded opposition of local manufacturers, who prioritise profits over reforms. Some ignored the Accord/Alliance, which also faced administrative implementation delays. Although they will be replaced by the Remediation Coordination Cell, managed no less by governmental agencies/ministries, garment manufacturers will be under fewer pressures, thus more likely to ignore reforms. With their long-established policy-making influence, some even serving as past or present parliamentarians, we can understand why this reform niggardliness.

Yet, since instituting those reforms aligns with the very 'middle-income' or 'developing' country identity Bangladesh has long sought and just acquired, no less due to the successes of their very own garment-manufacturing boom, Bangladesh continues to look like a hotchpotch of an abysmally mixed impoverished country with upscale enclaves by subordinating them so pervasively.

It is in the country's better interest to look more like the latter than the former, not just because that streamlines the country's aspirations and accomplishments better, but also because the bulging middle-class will want nothing less. This creeping sociological demand and necessity is supported by other Bangladeshi accomplishments: migration and remittances.

Migration has become a powerful upward-mobility factor. Those who go regardless of what income-group s/he belongs to, usually return with more consumer products and material expectations; and since these are supported by a greater purchasing-power capacity, the automatic desire to live better than in the previous station follows.

If they are able to remit money before returning a final time, they unleash another agent: more resources designed to improve past material possessions or claims, such as a better (or even the first) car, clothing upgrade, furnishing improvement, house, and so forth. Distancing from a 'low-wage' association becomes a natural outcome.

Against these 'local' dynamics, the international imperative towards off-shore production, given the facilitative neo-liberal setting, more or less guarantees competition to acquire a 'low-wage' beneficiary role for many still impoverished countries (by producing at lower costs). Just by moving into the middle-income strand, Bangladesh faces obvious competition from those countries still at the low-income level, such as across Africa, but more stiffly from those in similar ranks as Bangladesh, like Cambodia, Myanmar, even India and Thailand.

Retailers carry the advantage of shifting anywhere they see profits more than reforms or even protection. Since they make long-term commitments, once they leave, subsidiary firms face the danger of financial survival. In a nutshell, local producers, who become pawns of foreign retailers, compensate by freezing local policy-responses through their influences.

If that is not scary enough for upstart manufacturers, there is the threat of mechanised workers revitalising industrialised countries where the garment industry was once centred. Robots need no lubrication expenses; and they can replace the human workers who have either migrated to higher-income jobs or simply refuse low-wage positions. Should garment importing countries shift in this direction given the deep nationalistic tone today's economic atmosphere is taking, exporters may themselves have to shelve human workers and turn to robots themselves, if that is what keeps the profits flowing.

Against these forces, given the non-negotiable need to keep the economy buoyant, Bangladesh producers and the government might find both the Accord and Alliance more of an increasing constraint than the glove that fits not only its enhanced middle-income/developing status, but also the reform it must adopt to enhance its labour standards. Transitions require trade-offs. Bereft of them, expected outcomes can only fall short to the point that they become meaningless. Whether that is a political malaise or economic, the eventual sociological consequences, in turn, deeply cut policy-making legitimacy and profit-reaping circumstances.

Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.

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