Experts from the Melbourne Business School, Professor of Management (Marketing) Jill Klein and Associate Professor of Economics Andrew John, share their thoughts on Bangladesh.
How can companies benefit from cheap labour in markets such as Bangladesh while improving the quality of lives for workers?
?The fallout from the Bangladeshi factory collapse has reached Australia. Major brands and retailers are now under pressure to account for their involvement in a dangerous industry.
?There are claims that companies should not have been sourcing from Bangladesh in the first place. Yet the garment workers themselves – mostly women on the brink of destitution – are pleading with firms to stay in Bangladesh. Whichever way Australian companies go, there are lives on the line.
? Two decades ago, Nike, adidas and others faced similar problems. Allegations of worker abuses were widespread. In 1999, one of us was writing an MBA teaching case study on this issue, and visited adidas factories in Vietnam to observe a work in progress. Adidas’s factory monitors and factory owners were cooperating to put together a detailed plan for improving working conditions.
A striking first sight was the line – several blocks long – of young women seeking work. Some changes had been mandated by adidas from the beginning, such as how workers were to be treated by supervisors. Equipment changes took longer to implement: half of the sewing machines had safety covers; half still had exposed belts. Adidas had worked with factory owners to agree on realistic timelines to implement such safety improvements, and were willing to remove their business completely if necessary.
In one factory, workers suffered regular injuries to their fingers when feeding fabric into a cutting press. Adidas brought in an engineer who modified the existing machines, replacing a foot pedal with a two-handed system so fingers were not at risk. The changes travelled up the supply chain; machine manufacturers began to produce the safer version.
Change requires commitment Implementing such changes is a long-term commitment: the task of bringing factories up to a brand’s code of conduct – and keeping it there – is never finished. This is a cost of doing business in a country where labour is cheap, government oversight is lacking and factory owners are tempted to cut corners.
Who pays for these improvements in the lives of workers? Multinational firms managing big brands have to pay, and so will their shareholders. But these costs are an investment in brand and reputation. Factory owners will also have to pay: upgrades in equipment cost money. But in return, they can be offered predictable long-term orders; what is more, they frequently discover that healthy, motivated workers are productive workers.
The upgrading and monitoring of factories is not a perfect solution: abuses still occur. Both Nike and adidas recently faced serious issues in Indonesian factories. But withdrawing investment and orders from low-wage countries is also not a good solution. The lives of some of the world’s poorest citizens can be improved by the access to employment that large firms can bring – and this need not come at the expense of human rights or dignity.
Many companies have found ways to benefit from cheaper labour while still improving the quality of lives for their workers. Let us hope Australian companies can do the same.
*This article was first published in the Australian Financial Review.
FUTURE FORWARD: Keeping manufacturing ethical.
