News Release

Bangladesh and Walmart

AP reports: “When the fire alarm went off, workers were told by their bosses to go back to their sewing machines. An exit door was locked. And the fire extinguishers didn’t work and apparently were there just to impress inspectors and customers.”

STEPHANIE LUCE [email]
Associate professor of labor studies at the Murphy Institute at the City University of New York, Luce said today: “The fire is a tragedy, but unfortunately not a surprise. Bangladesh has received a lot of attention in its role as a large garment producer, and as such, has been targeted in some high profile international anti-sweatshop campaigns and labor solidarity efforts. Yet this fire seems to highlight the weaknesses of that strategy to improve working conditions from the outside, particularly when a country depends so heavily on low wages as its comparative advantage in a global export model.

“After several decades of intensive garment production for export, the conditions of Bangladeshi garment factories have barely improved. Average wages are still among the lowest in the world. Working conditions are often extremely dangerous.

“Allowing for the continuation of the low-wage export-driven model contributes to the downward pressure on wages and working conditions in the garment industry, and in similar industries that are highly mobile.

“The low wages of Bangladesh support the ability of multinationals to use the ‘threat effect’ against workers in the U.S. (and elsewhere). Employers in certain industries can make a credible threat to leave that factory and move jobs overseas. Those corporations can also use the ‘threat effect’ against municipal, state and federal governments — demanding lower taxes, no increases to the minimum wage, more lax regulations, etc. — because they can hold up example countries like Bangladesh that pay such low wages.

“At the same time, retailers or brands, such as Walmart or Nike, have inordinate bargaining power over the factories in Bangladesh (and the Bangladeshi government). This can allow the Walmarts and Nikes to increase profits, consolidate their wealth and strength, leading to a high degree of concentration in the industries. This helps develop ‘buyer-driven supply chains’ where the buyer (e.g. Walmart) sets the terms of contracts.

“It is possible that Walmart could then use that excess profit to provide better wages and working conditions in the U.S., but in most cases, it does not. It uses its increased monopoly power in the U.S. as well, growing in size and becoming large enough to set wage levels and keep them low.

“This is no ‘free market’ in any sense: the large retailers have monopoly power over their suppliers, and what we call monopsony power over workers in the U.S. retail market. There is no free-willed negotiation between equal partners, whether that be Walmart and suppliers, or Walmart and retail workers.”

Background: AP also reports that the Tazreen supplier “was given a ‘high risk’ safety rating after a May 16, 2011, audit conducted by an ‘ethical sourcing’ assessor for Walmart, according to a document posted on the Tuba Group’s website. It did not specify what led to the rating.”

The Nation reports: “NGOs are slamming Walmart following a Saturday fire that killed at least 112 workers at a Bangladesh factory supplying apparel to the retail giant. While Walmart says it has not confirmed that it has any relationship to the factory, photos provided to The Nation show piles of clothes made for … Walmart’s exclusive Faded Glory label.”