Rana Plaza compensation would cost retailers little

Two companies that buy garments from Bangladesh challenge their competitors to join efforts to compensate victims of the Rana Plaza disaster.

Primark, Loblaw call on competitors to step up for Bangladesh garment workers

Grim day of remembrance

9 years ago
Duration 2:49
Exactly half a year after a factory collapse in Bangladesh killed more than a thousand people, Canadian company Loblaw signalled its plans to help

A challenge has been made to garment retailers to compensate the workers of Bangladesh's former Rana Plaza who made their clothes.

The call came on the six-month anniversary of the collapse of the eight-storey building that killed 1,132 and injured about 2,500. Another 332 workers are still missing.

"To other retailers who sourced out of Rana Plaza, it's time to step up" and contribute short-term compensation, Paul Lister, head of corporate governance at Associated British Foods, said on the BBC Thursday.

ABF is owned by Canada's Weston family and ABF's clothing subsidiary, Primark, sourced garments from New Wave Bottom Ltd. at Rana Plaza.

Concerned about the delay in getting an overall compensation program in place, Primark announced Thursday it will make "a third short-term financial payment to the New Wave Bottom workers, or their dependants." 

Primark also said "if the other 27 brands who sourced in Rana Plaza fail to make this contribution, Primark is pledging today that it will consider paying another three months' wages to all the workers concerned." The two previous compensation payments were also for the equivalent of three months' wages. 

Loblaw joins Primark push

Another Weston family property, Loblaw, joined Primark's call and said it will pay three months' wages to the workers at New Wave Style, the company that produced apparel in Rana Plaza for Loblaw's Joe Fresh brand.

Loblaw also said it will join Primark's effort to make payments to all 3,600 or so workers, or their families, regardless of which label was produced in their workplace.

Aruti was on the sixth floor of Rana Plaza when it collapsed. She says it happened about an hour after she and other workers were forced to return to work. (the fifth estate)

One of the workers at New Wave Style, a young woman named Aruti, was featured in the fifth estate documentary that first aired Oct. 11 on CBC-TV. Aruti lost a leg in the disaster and her mother, who also worked at Rana Plaza, was killed. (CBC News is using only her first name, due to privacy issues because of her age.)

Contacted today by the fifth estate, Aruti said her base salary was the equivalent of about $56 per month. That puts it within the range stated in a new report, which says Rana Plaza workers earned $40 to $107 per month.

New Wave Style's owner Bazlus Samad Adnan says he employed 1,700 workers at Rana Plaza, although official statistics put that number at 1,165.

If Aruti's pay was the average for those workers, Loblaw's payment of three months' wages to 1,700 workers would cost the company about $287,000.

Loblaw declined to provide CBC News with an estimate of the average monthly wages or the total compensation payment.

In the quarter during which Rana Plaza collapsed, Loblaw's net earnings worked out to almost $2 million per day.

Aruti is now looking for another job in a garment factory while still hoping to receive compensation from Loblaw.

Minimum wage: $38 per month

Low wages are the reason the global garment industry gets clothes from Bangladesh, about $22 billion worth last year.

But it also means a compensation program based on those low wages won't cost that much.

Bangladeshi garment workers shout slogans during a protest in Dhaka, Bangladesh, Sept. 13. Hundreds of protesters participated in the demonstration demanding a minimum monthly salary of 8000 takas (C$109) and compensation for the victims and injured of the Rana Plaza building collapse. (A.M. Ahad/Associated Press)

While even labour rights activists say the industry has been good for Bangladesh — and especially for the 80 per cent of the garment workers who are women, because of the economic independence they've gained — they argue it's inexcusable that the conditions and the wages at many factories are so appalling.

Even Lister told the BBC that his company "would welcome increases in the minimum wage."

Bangladesh garment workers staged widespread protests in September, demanding an increase in the minimum wage from $40 per month — one of the planet’s lowest — to $109. The protests forced at least 400 garment factories to close temporarily, according to the International Labor Rights Forum.

The workers' demand is based on the average cost of living, which is at least $109 per month, according to the Bangladesh Institute of Labour Studies. Factory owners have offered a 20 per cent increase, with the government expected to announce a figure next month.

Several factory bosses told Reuters they anticipate Bangladesh's official wage board will propose setting the minimum wage at between $60 and $74.

While in Bangladesh​ the fifth estate met up with workers who were demonstrating just to receive their paycheques. The workers said they had been attacked by thugs hired by the factory, which made clothes for Canadians until last year.

Making a good profit while paying $100 per month

At Lakhsma Sweaters Ltd., Canadian owner Subir Dey recently told the Toronto Star he pays his 4,000 Bangladeshi garment workers an average salary of over $100 per month.

Relatives of the victims of the April 24 Rana Plaza building collapse hold lit candles as they gather to pay tributes at the venue in Dhaka, Bangladesh, Oct. 24. Thursday marked six months since the garment factory building collapsed killing at least 1,132 people. (Suvra Kanti Das/Associated Press)

Retailers buy the sweaters from Lakhsma for $5.50 and sell them for $40 in Canada. Dey's profit is 27 cents on each sweater, he told the Star on Oct. 19. That may not sound like much but what The Star didn't include is that Dey's profit on those sweaters adds up to over $1.1 million per year.

In other words, Dey is making that much while paying an average salary close to the minimum wage demanded by Bangladesh's garment workers.

While the Primark and, now, Loblaw compensation payments have won praise from advocacy groups like the Clean Clothes Campaign, most other retailers, including Walmart, which sold clothes that had been made at Rana Plaza, have, according to the CCC, "so far refused even to discuss the provision of full and fair compensation to the Rana Plaza victims."

The CCC recommends that "all brands linked to the Rana Plaza factories should sign up to the arrangement being established by the Rana Plaza Compensation Coordination Committee."

The committee meets again on Oct. 29.


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