Why cheap fashion is expensive for those who are making it

Our appetite for low-cost garments jeopardises the campaign for safer factories

When more than 1100 garment workers died in 2013 as a result of the collapse of the Rana Plaza factory in the Bangladeshi capital of Dhaka, the tragedy alerted the world to the shocking plight of workers facing unsafe labour conditions and poor wages.

Amid the despair, there was hope the catastrophe would prompt governments, fashion brands and consumers to insist on genuine workplace reforms in Bangladesh and other developing manufacturing centres such as Cambodia, Vietnam and India.

Six years on, some progress has been made, but more needs to be done, according to Stephen Frenkel, AGSM Scholar and a professor of organisation and employment relations in the school of management at UNSW Business School.

Frenkel is a co-leader of the Garment Supply Chain Governance Project, an international, interdisciplinary project established after the Dhaka disaster to examine changes in factory practices and retailer policies in Bangladesh. In August, the project released its final report: Garment Supply Chains Since Rana Plaza: Governance and Worker Outcomes.

Frenkel says there have been improvements in Bangladeshi factories that will likely flow on to other countries.

With his colleagues Shahidur Rahman, of the BRAC University in Bangladesh, and Kazi Mahmudur Rahman, of the University of Liberal Arts in Bangladesh, Frenkel recently released a paper – After Rana Plaza: Governance Forms, Processes and Labour Outcomes in Bangladesh’s Garment Export Factories – which examined labour standards in typical garment workplaces.

Interviews with senior managers at 152 factories revealed three broad categories of factories in Bangladesh. At one end of the spectrum are the 'sweatshops' where workers face long shifts in unsafe conditions in exchange for wages that are too low to feed their families. 

At the other end they found 'fair work' sites where workers are employed at or above international standards. In the middle, are 'hardship' factories that meet some standards for safety, working conditions and restrictions on child labour, but which often don’t adhere to standards for wages and workers’ rights.

It is this last category that represents the typical situation in Bangladesh, says Frenkel, “and the aim is to move them from ‘hardship’ to ‘fair work’ factories”.

'There is a danger regulation will be relaxed as retailers and factories seek to maintain profitability in a world of intense global competition'

STEPHEN FRENKEL

Below a living wage

Another key research finding was that supplier factories that perform better on some standards (for example, wage rates or hours of work) also score better in other areas, such as job security or safety.

But Bangladesh’s garment industry is not the only flashpoint. In India, at least one factory that supplies well-known brands has been accused of viciously beating workers who joined a union, while workers in Vietnam and Cambodia are often paid so little they cannot adequately feed their families.

There is no doubt the events of 2013 represented a “massive wake-up call” for the world’s garment export industry, says Gershon Nimbalker, a consultant with Stop the Traffik, a non-government organisation (NGO) that seeks to disrupt modern slavery networks.

Nimbalker says it is instructive to examine a fashion label’s knowledge of suppliers and their commitment to the traceability of raw materials. If companies ignore such issues, it casts doubt on their ability to ensure the workers who make their products are not being exploited.

Significantly, since another NGO, Baptist World Aid, began publishing research on ethical fashion in 2013, there has been a 32% increase in the number of companies that trace their input suppliers, and a 31% rise in those that trace their raw material suppliers.

“This is a really exciting change,” says Nimbalker. 

Also, garment workers’ wages have increased substantially in countries such as Bangladesh, Cambodia and Vietnam in recent years. However, Frenkel’s research shows that while Bangladeshi workers are paid relatively well by local standards, their pay still falls below a living wage.

Other developments include changes at government level. Australia, the UK and France have implemented legislation to enforce greater due diligence in supply chains. The Australian Modern Slavery Act (2019), for example, requires large companies to publish annual reports about their suppliers, and to identify the risks of forced labour in their global operations and what they are doing to combat those risks.

'Ultimately, consumers must recognise they need to pay more for fashion'

GERSHON NIMBALKER

Action by retailers

Many leading fashion retailers are now working together to improve building and worker safety in Bangladeshi garment export factories.

Based on their interviews with factory managers conducted in 2016-17, Frenkel and his colleagues found that factory managers are endorsing codes of conduct, with three-quarters agreeing that “compliance is a way to do good for our workforce, improve productivity and increase business”.

The research found that almost all factories had implemented, or were implementing, a detailed Safety Correction Action Plan, and 81% of managers said building safety was the most important change in their factory during the past three years.

Two initiatives have been crucial to the reforms in Bangladesh, says Frenkel. The first is the Accord on Fire and Building Safety, which saw more than 250 multinational companies – including Australian brands Cotton On, Kmart and Woolworths, and global brands Aldi, Adidas, Marks & Spencer and Sainsbury’s – enter a five-year, legally binding agreement to oversee factory inspections and help create a safer work environment.

The second is the Alliance for Bangladesh Worker Safety, a unilateral five-year commitment by 29 North American retailers, including Costco, Walmart and Sears, to improve safety. Both initiatives have completed their term. The Accord’s future is in doubt while a new 21-member venture, Nirapon, has replaced the Alliance.

'Rising tide'

Frenkel believes fashion retailers are now more vigilant in ensuring their codes of conduct for labour standards are effective. But Western consumers still expect low prices for garments, jeopardising the campaign for safer manufacturing in factories.

Stop the Traffik’s Nimbalker says, ultimately, consumers must recognise they need to pay more for fashion.

For all the challenges that remain, Frenkel says there is a “rising tide” of change as prominent fashion retailers promote a sustainable garment manufacturing industry. He says a marked shift towards a fair-work regime must entail more productive factories based on new technology coupled with strong governance systems. 

That means a mix of public regulation in advanced and developing countries; private regulation in the form of codes of conduct that answer to workers as well as to retailers; and collective civil regulation that represent the interests of key stakeholders, including trade unions.

“This is important to emphasise,” says Frenkel, “because there is a danger regulation will be relaxed as retailers and factories seek to maintain profitability in a world of intense global competition.”