At least 24 retailers, including Hennes & Mauritz and Inditex, each have agreed to contribute as much as $2.5 million over five years toward the cost of improving fire
and building safety in Bangladesh, reports Bloomberg.
The companies, also including Marks & Spencer Group, Loblaw and Associated British Foods’ Primark, will pay as much as $500,000 a year over the five-year term of an agreement announced by the IndustriALL global union on Wednesday.
However, trade union leaders in Bangladesh have accused Primark of dragging its feet over agreeing compensation for relatives of those killed or injured in the collapse of Rana Plaza, according to a Telegraph report.
Many of the deceased worked for New Wave clothing
factory, which supplied Primark and Bonmarche, another British retailer.
Both companies had promised compensation and Primark representatives met Bangladeshi trade union leaders in Dhaka on April 27 and 28.
The unions want a package based on a formula devised after another disaster in 2005, calculated according to years of service and lost earnings. If applied to Rana Plaza, this would amount to a payment of about £23,000 for the families of each dead worker, with foreign retailers contributing 45 per cent.
‘They said they would come back soon with a specific proposal, but there are no further developments and I’m disappointed and also angry,’ said Amirul Haque Amin, head of the National Garment Workers’ Federation. ‘It’s been two weeks and I expected after the meeting [to hear from them] within three or four days.’
If half the dead worked for New Wave, the Western retailers would be liable for about £6 million under this formula. Primark made an operating profit of £238 million in the six months to the end of March.
‘We recognise the commitment that these companies are making towards ending the cycle of factory disasters in Bangladesh,’ IndustriALL general secretary Jyrki Raina said in a statement on the union’s website. ‘We call on all other global brands sourcing from Bangladesh to join us in making sure that every garment worker in Bangladesh can work in safety.’
The money from the agreement will fund safety inspections, fire training and remediation programmes, the union said in the statement. A committee of unions and retailers will be formed to oversee disputes, with any arbitration award being enforceable in a court of law, the union said. Inspections will be transparent and public statements will be made on any factory that is not acting ‘expeditiously’ to implement upgrades.
‘The whole issue in terms of safety and other standards could be quite expensive to monitor and generally deliver,’ said Colin McLean, chief executive officer and fund manager at SVM Asset Management in Edinburgh.
Wednesday’s agreement will have a minimal financial impact on the signatories, according to Soeren Loentoft Hansen, an analyst at Sydbank A/S in Stockholm.
‘These investments are relatively small,’ Hansen said. ‘I would be surprised if we saw a big impact on the financials in H&M and other big companies.’
Carrefour, Tesco, J Sainsbury, Next, El Corte Ingles, Mango and Benetton Group are among other retailers that have accepted the agreement.
-With New Age input
