|Bengali factory deaths: what can you do?
How shocking it must have been for the seamstresses and seamsters plugging away at their sewing machines at a furious pace, in deafening noise and hot muggy air when cracks started to appear in the walls of Rana Plaza. The jolt they must have received pulling them out of their repetitious, high-paced work. How much more shocking that once safely evacuated they were cleared, some reports say forced, to go back into the eight-floor building housing five separate factories by the next day?
On 24th April 2013, Rana Plaza collapsed where it stood in Savar, 30 km from Dhaka, Bangladesh. Along with it went 1,100 seamsters and seamstresses. The scale of the disaster has caused outrage like none of the incremental tragedies since 2005 that together took about as many lives, many of which in fires in factories with locked exits.
Civil society went straight after the clothing brands. "These are billion dollar companies. They have a huge amount of power to change the way that building safety is accepted here," Gareth Price-Jones, Oxfam's country director for Bangladesh, told Reuters. Five European and American brands had clothes made in Rana Plaza: Primark, Matalan, El Corte, Joe Fresh and Bonmarche.
Many of the big brands have now signed a safety accord, pledging a minimum safety standard in factories they contract with. Many have not. Some are party to other work conditions initiatives. And economists are on hand to remind us that there really is no problem at all. Matthew Yglesias, economics blogger at Slate drew fire from internauts when he blogged on the day of the disaster itself a post that can be found online under the various titles 'Different Places Have Different Safety Rules and That's OK' and 'Foreign Factories Should Be More Dangerous':
"The current system of letting different countries have different rules is working fine. American jobs have gotten much safer over the past 20 years, and Bangladesh has gotten a lot richer."
Would he have been so confident if he knew the final death toll? It was 87 when he blogged.
Bangladesh is in a tricky situation. Can it increase safety standards without driving companies away? Likely. The negative publicity surrounding leaving probably evens out the costs and benefits.
So, Muhammad Yunus, economist, founder of Grameen bank, Nobel Prize Laureate (2006) and proud Bengali, has called for an international minimum wage for the industry, but how would this work for Bangladesh in the long-term when the growth in its apparel industry is based on its comparatively low wages as Chinese wages rise? Apparel represents 80% of Bengali exports and it is the second apparel exporting country after China.
A minimum wage would inevitably increase labour costs. It would have to be funded. Would a small price increase scare consumers off? Unfortunately, probably yes, as Bloomberg found out from a young shopper in London.
"Even small price increases in the name of better worker safety would be enough to turn away some shoppers, like American exchange student Shannon Atwell. The 21-year-old spent 12 pounds on a dress, sunglasses and a fake-leather handbag at Primark last week. "I didnít buy a 13-pound dress because I thought it was too much," she said. "If prices went up I wouldnít buy from here." "
Not to make to much of an anecdote, the point remains a large part of economics is about what we want, just as a large part of morality is about what we think should happen in given situations. However, a larger part of economics is about the choices we actually make with our money, regardless of what we say we want. This is studied in a way our moral indignations aren't.
Morality in business can be expensive. Are we proving our moral indignation by rewarding companies that do well by our moral standards? In other words are we willing to pay a premium for what we think should happen? That's the bottom line.
Itís easier to motivate action after a disaster like this. How do we move companies before disaster strikes? As both major consumers and shareholders in the economy (through pension funds and retail investment, for example) we must decide if we would pay for what we think should happen. Part of the solution is socially responsible investment that can guide companies through financial price signals and incentives in a way reputation cannot.
Buying from those companies that have upheld our standards when in the moment of tragedy we ask 'why didnít someone do something?' or 'how did this happen?' and encouraging them to uphold our standards by investing in them for precisely that reason is the only game in town.