LONDON, United Kingdom — Since the Rana Plaza building collapse left a Bangladeshi garment factory in ruins, much attention has been focused on working conditions at apparel factories and the standards enforced upon brands doing business there.
In the fashion industry, there is heightened concern for the wellbeing of workers. Much of this comes from companies’ fear of bad press or loss of business, but regardless of the motive, conditions in Bangladesh have improved on some level. Retailers and brands have banded together to form agreements to improve working conditions and protect workers’ rights, like the Alliance for Bangladesh Worker Safety and the Accord on Fire and Building Safety in Bangladesh. Inspections conducted by these groups have resulted in more emergency exits, fire extinguishers and evacuation plans at factories. Some brands have set up hotlines garment workers can call to report unsatisfactory conditions. Structural improvements have become a priority, with some structurally unsound factories shuttered and moved to new locations entirely.
But are the workers really better off?
Following the tragedy, the minimum wage for ready-made garment industry workers in Bangladesh increased from just over $38 per month to $68, an increase of 77 percent. But a 2013 study published by the Bangladesh Institute of Labor Studies concluded that to cover basic necessities, workers needed to earn at least $100 a month.
This raises the issue of a “living wage” — simply, one that covers the basic costs of living. Companies and organisations have been working to figure out exactly how much this would be. And while there isn’t a hard and fast answer, the bottom line is that the amount is much more than what workers are currently earning. For workers’ lives to improve, they simply need to earn more.
Companies may have taken steps to improve compliance standards and conduct stricter investigations of their factories. Some have publicly disclosed which factories they work with. But the fact remains that the lives of workers have not been vastly improved.
Like most things, actually improving the lives of those who make our clothes is an issue that comes down to dollars and cents. Indeed, the simple answer to the problem seems to be that factories need to pay their workers more. But brands have pushed so hard for lower factory costs that these facilities are now working on razor thin margins — if they are making any profit at all. Add to that the fact that many of these factories have invested in upgrading their facilities to comply with safety or environmental standards, without a guarantee of future orders. They have also experienced energy cost increases and some have raised their workers’ wages — but they still can’t raise the cost of their goods, due to pressure from big brands with big orders.
The next logical place to look for money is from brands and retailers. The problem here is that their operating costs are increasing, but their margins are being eroded, as consumers want to pay less and less for products — they buy cheap fast fashion, or they hold out for 40 percent-off bargains.
Sure, there are the success stories, like Inditex, whose founder Amancio Ortega Gaona was named the world’s fourth richest man by Forbes in March. But we continue to see other fashion retailers, such as Wet Seal and Delia*s, close or file for bankruptcy.
In many respects, the problem begins at the consumer level. If customers are willing to spend a little more on clothing, it will put retailers in a steadier financial position. This could then trickle down to the factory and, eventually, the garment worker.
But I am still skeptical about whether fashion companies would be willing to give up a little profit to improve things for their factory workers. Greed and stock performance continue to drive our culture.
Maybe change would come if more board members and CEOs visited countries like Bangladesh and understood the conditions and poverty first-hand. These leaders must also look beyond lowering production costs as the only way of increasing margins — and consider improving the buying process and creating a more efficient supply chain that would lead to less discounted, unsold stock.
Until executives start to look at factory workers as their own internal employees, and truly care about the culture of their business in all its global operations, we won’t see any real change.
We know the apparel business needs an upgrade. The model is archaic and the problems that led to Rana Plaza haven’t really been solved. I just hope it doesn’t take another building to collapse or catch fire for the next iteration of change to take place.
Edward Hertzman is the founder of Sourcing Journal, a trade journal covering the apparel and textile industry supply chain.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.
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