In the wake of a building collapse in Bangladesh that killed at
least 1,127 garment workers, a group of Western retailers on Monday
pledged to avoid substandard factories and the government opened
the door to easier formation of unions.
The question is whether companies and government officials will
pay more than lip service to improving standards in Bangladesh,
where clothing exports have been booming.
A handful of major apparel companies committed to a
ground-breaking five-year accord on safety standards in Bangladeshi
factories on Monday. Hennes & Mauritz AB (HM-B.SK), Inditex
(ITX.MC), Tesco PLC (TSCO.LN), C&A, Calvin Klein parent PVH
Corp. (PVH), German retailer Tchibo and Primark, a European budget
fashion chain owned by Associated British Foods (ABF.LN), all said
they signed the legally binding agreement, which prohibits
retailers from manufacturing at factories that fail to meet safety
standards and commits them to pay for necessary repairs and
renovations.
In addition, Italian retailer Benetton, whose order forms were
found in the rubble of the collapsed Rana Plaza factory, is
strongly considering signing the agreement, according to a person
close to the company. However, Mango, which was also producing
clothes at Rana Plaza, hasn't yet signed it.
The accord calls for the appointment of a safety chief to
inspect Bangladesh's 5,000 garment factories and establishes
fire-safety training for workers.
Separately, activists are pressing some Western retailers to
contribute more than $70 million to a fund that would compensate
victims of the factory collapse.
Meanwhile, Bangladesh said its garment workers would be allowed
to form unions without seeking permission from factory owners, a
decision welcomed by rights groups as a change that could save
lives--if backed up by rigorous enforcement.
The collapse on April 24 of the eight-story Rana Plaza, one of
the world's worst industrial accidents, has put pressure on Prime
Minister Sheikh Hasina's government to address concerns about
working conditions in Bangladesh, whose garment industry has grown
rapidly, thanks to low wages. Ms. Hasina's administration said on
Sunday that it planned to soon raise the minimum wage in the sector
from $38 per month, a quarter of China's wage. It closed 18 garment
factories for safety violations last week, including three
belonging to the country's top garment manufacturer, and is
planning broad inspections of other facilities in a country with
some 5,000 garment factories.
The salvage operation at the disaster site wound down on Monday,
the first day in which workers didn't find a corpse. For most of
the previous week, army personnel leading the cleanup found around
100 dead bodies each day.
The companies signing the binding agreement were among about 20
retailers, working with workers-rights groups, labor unions,
nongovernment organizations and the International Labor
Organization, involved in drafting the accord in Germany two weeks
ago, following the Rana Plaza factory collapse outside Dhaka. The
meeting set Tuesday as the deadline to sign the pact. More
retailers could announce their participation in the accord this
week, the organizations said.
The agreement is intended to become the cornerstone of a
plethora of efforts to improve working conditions in Bangladesh's
$20 billion garment industry.
The participation of H&M, C&A, Primark and Inditex, the
Spanish parent company of Zara, is intended to increase pressure on
other retailers to sign.
"In order to make an impact and be sustainable it would need a
broad coalition of brands," H&M said in a statement. Some of
the world's biggest retailers, including Wal-Mart Stores Inc.
(WMT), which was represented at the meeting in Germany, haven't yet
given their positions on the accord.
Labor groups say that Wal-Mart, which has operated a sourcing
office in Bangladesh for at least a decade and is one of its
largest customers, has long resisted the legally binding
agreement.
The retail giant has preferred to implement its own safety
programs in the country, such as a recent $1.6 million donation to
an American NGO to launch an environmental health and safety
academy there.
A spokesman for Wal-Mart said the company had nothing to
announce right now on the industry-wide agreement.
He said Wal-Mart would continue to work with industry groups,
suppliers and the Bangladesh government "to come to an appropriate
resolution on this matter and develop broad-based solutions for the
industry."
Another large American retailer, Sears Holdings Corp. (SHLD),
said it is still evaluating the accord.
Bangladesh is one of the world's largest clothing exporters, but
workers' rights groups say factories cut corners on everything from
safety to wages to keep costs down in order to attract orders.
"It is now time for companies to move beyond vague promises,
business-as-usual self-regulatory schemes and rhetoric," said Ineke
Zeldenrust, director of Clean Clothes Campaign, a garment
workers-rights group that helped hammer out the accord.
--Tripti Lahiri and Shelly Banjo contributed to this
article.
Write to Christina Passariello at christina.passariello@wsj.com
and Syed Zain Al-Mahmood at zain.syed@dowjones.com