A dozen global retailers began two days of meetings in Geneva on
Wednesday to negotiate a $77 million compensation package for the
victims of two Bangladesh garment factory accidents, as labor
unions pressed the companies for payments that would acknowledge
their responsibility for the country's worst facilities.
Companies including Primark, part of Associated British Foods
PLC, Zara parent Inditex SA and German discounter KiK Textilien und
Non-Food GmbH--all of which had clothes that were made at one of
the stricken plants--are attending the meetings at the
International Labour Organization, said the companies and
organizers.
Many other major retailers with manufacturing links to the
factories aren't participating, including Benetton SpA and Mango
MNG Holding SL, organizers said. The most notable absentee was
Wal-Mart Stores Inc., one of the biggest buyers of clothes made in
Bangladesh.
The meeting escalates the debate over who should bear
responsibility for accidents that result from flawed manufacturing
standards.
Some companies are reluctant to make payments to victims of
those accidents that could acknowledge their responsibility--and
open themselves to lawsuits--for events they believe they couldn't
control. Some labor groups counter that apparel companies are
broadly responsible even if they weren't producing in the factories
at the time of the disasters.
More than 1,100 workers died when the Rana Plaza building
collapsed in April, and over 2,000 were injured. In November, over
100 workers died in the Tazreen factory fire.
Wal-Mart acknowledges some of its clothes were at the Tazreen
factory, at the time of the November fire. It also said its clothes
had previously been made in the Rana Plaza building but that it
didn't have production at the time of the disaster. In both cases,
Wal-Mart said, its clothes were at the factories without its
knowledge via unauthorized subcontracting.
The retailer wouldn't say whether it will pay compensation to
the families of the workers who died at Tazreen and declined to
make its sourcing executives available for comment. "We are focused
on investing our resources in proactive programs that will address
fire safety in the garment and textile industry in Bangladesh and
prevent fires before they happen," said Wal-Mart spokesman Kevin
Gardner.
Paying compensation implies greater responsibility than
underwriting building repairs, labor activists say.
"A lot of brands want to be associated with prevention, but not
with reparation," says Ineke Zeldenrust, the lead coordinator at
the Clean Clothes Campaign, a garment workers' rights group.
Li & Fung Ltd., a Hong-Kong-based retail middleman in
Bangladesh that isn't attending the Geneva meeting, has agreed to
compensate victims of the fire. A Li & Fung division had placed
an order at Tazreen Fashions a couple of months before the
fire.
"Every business has to make its own decision on what is right,
but we all have to get up in the morning and look in the mirror,"
Rick Darling, president of Li & Fung USA, said in an interview
in his New York office. "We feel we have a responsibility through
our business and supply chain."
The $77 million payout for both accidents is expected to be one
of the highest ever.
To get to the grand total, labor unions and workers' rights
groups applied a formula that has been used in previous Bangladesh
factory accidents, awarding 25 years of salary plus various bonuses
to the families of the deceased victims. Families could receive
about $33,000 for each victim, according to calculations.
The unions want the brands to share the burden with factory
owners, the Bangladesh government and the garment industry
association even if they were only linked via illegal
subcontractors.
Under the plan proposed by IndustriALL, a global union body that
has spearheaded the compensation and safety meetings, the brands
would pick up the biggest part of the tab, paying 45% of the total.
The meetings in Geneva are meant to determine each brand's
share.
Several retailers disagree with the burden and want
intermediaries to contribute also. Benetton has paid for limb
replacements for several workers injured in the collapse of Rana
Plaza but isn't attending the meeting because of a "lack of clarity
around the objectives," said Chief Executive Biagio Chiarolanza.
Mango representatives didn't respond to requests for comment.
The reason Bangladesh manufacturing is so cheap is in part
because many factories don't comply with safety standards, and
retailers benefit from that, said Peter McAllister, director of the
Ethical Trading Initiative, which has helped coordinate
negotiations among retailers. "It's not the real cost of making
clothes," he added.
The momentum to repair Bangladesh's garment industry began
gaining steam after the Tazreen fire. Retailers sourcing from the
factory agreed to meet to discuss how to make the industry safer
and compensate workers.
But early on, the two topics were separated into different
negotiations, said Philipp Schukat, program director for the German
governmental agency Deutsche Gesellschaft Fur Internationale
Zusammenarbeit, or GIZ, which organized many of the meetings.
A meeting for the end of April had already been planned at GIZ's
headquarters on the outskirts of Frankfurt when the Rana Plaza
disaster occurred. GIZ got a strong turnout to discuss factory
safety, including Wal-Mart and Hennes & Mauritz AB, the two
biggest buyers of Bangladesh-made clothes.
Yet Wal-Mart didn't actively speak up, according to several
people present at the meeting. At the end of the meeting,
IndustriALL general secretary Jyrki Raina said he took the
opportunity to ask Wesley Wilson, Wal-Mart's senior director of
ethical sourcing, to pay victim compensation. "I said, "We need
you,'" Mr. Raina recalled. "He said they took the decision not to
pay for Tazreen because it was not an authorized supplier, and it
wasn't their responsibility."
Mr. Gardner declined to comment on Mr. Raina's allegations. He
said it was important to be at the GIZ meeting as it works toward
"improved worker safety with the Bangladesh government, with
industry groups and with suppliers."
The meetings resulted in two competing safety pacts, one
dominated by European retailers such as H&M and Inditex, and
the other anchored by Wal-Mart and Gap Inc. The American safety
pact, launched in July as the Alliance for Bangladesh Worker
Safety, plans to create a specific worker safety fund that can be
tapped to aid victims in the case of future fires or other garment
factory disasters. The details of the fund haven't been
outlined.
Write to Christina Passariello at christina.passariello@wsj.com
and Shelly Banjo at shelly.banjo@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
