When working conditions are bad, point the finger at local authoritiesby Jagdish Bhagwati / April 2, 2013 / Leave a comment
Published in April 2013 issue of Prospect Magazine
A clothes factory in Mumbai. Local and national authorities should be blamed for bad working conditions—not global brands. © BBC World Service The horrific consequences of inadequate safety standards and enforcement of provisions such as keeping exit doors open are illustrated, alas, all too well in the fatalities caused by the recent fires in garment factories in Bangladesh and Pakistan. Perhaps what is especially appalling about these deaths is that they could have been so easily avoided. The public outcry against such deplorable working conditions in the 21st century is loud and clear, and rightly so. But strangely, consumer movements and media reports in the west have chosen quite the wrong target for their finger-pointing. Global retailers such as Walmart, which outsourced production that eventually ended up in these factories, are really not the culprits here, nor are the consumers in the west who purchase high-street fashion. There is only one place where the buck can and should stop: local and national authorities responsible for safeguarding the health and safety of their workers. They repeatedly fail to hold greedy and/or careless entrepreneurs throughout their countries to account. Efforts to blame global retailers for local disasters can be both unfair and dangerous. The global high-street and supermarket chains, in these instances, did not own the factories where the tragedies occurred. They were simply outsourcing production. It is not the place of foreign corporations to monitor or dictate how independent local production units are run. Nor can they be held responsible for appalling safety and working conditions in local firms, small and big, from which several other inputs are bought or on whose many products the wages paid by the foreign firms are spent. Had the global companies been direct owners, or operated the production units as their subsidiaries, the matter would have been quite different: failure to comply with national and local standards for labour safety would have rendered the retailers legally culpable for the damage caused. And where local standards are non-existent, it may even be fair to assign blame to foreign firms for not implementing labour standards for safety—eg ensuring that exit doors are always kept unlocked, providing fire extinguishers, or sullying goggles to workers located near blast furnaces and actually checking whether they wear them—that have become a norm of good entrepreneurship in many developed countries. But this was not the case. Wrongful blame allocation is moreover not just unfair; it is potentially dangerous for two reasons. First, the focus on global retailers diverts attention from the root cause of the problem: poor regulatory standards in developing countries like Bangladesh. By misassigning the responsibility for the recent tragedies to global retailers, western media and consumer movements allow the real culprits to get away scot-free and further diminish the likelihood of governance reform in poor countries. Second, by scapegoating the brands, the so-called “ethical consumer” is likely to reinforce an already worrying protectionist impulse in the west that reflects a preference for “locally produced” goods over those imported from abroad, on cultural grounds or even environmental grounds such as that transportation leads to more carbon emissions (an assertion that ignores the fact that higher production costs in inefficient locations can lead to added emissions that outweigh those due to transportation). Misguided consumer activism that demonises global firms engaged in outsourcing will likely harm the attraction of investing in, and buying from, the developing countries and in turn slow down the growth of employment opportunities in these countries, thereby reducing the beneficial impact on the livelihoods of the impoverished. If targeting global retailers in witch-hunts is not the answer, then what is? The first step towards improving workplace conditions in factories in the poor countries is to ensure that government authorities in the particular jurisdictions are legally responsible for them. Rich countries’ long experience with developing and enforcing better safety and related working conditions also means that there is technical expertise in devising suitable legislation, regulation, monitoring and enforcement available, which developing countries can draw on. Ironically, it has become fashionable among anti-reformers and anti-growth critics in countries like India to hold up Bangladesh as a stellar performer on social indicators, though recently these claims have been forcefully undermined by closer scrutiny, as in the just-published book by Bhagwati and Panagariya, India’s Tryst with Destiny. The tragedy of cascading fires makes the claims on behalf of Bangladesh’s social achievements appear particularly hard to swallow. One can only hope that the new dose of reality, and a determination to get on with the task of ensuring that safety and working standards are legislated and pursued with zeal, will liberate similar countries from delusions about their own social achievements and the easy option of scapegoating others for their self-inflicted wounds.