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New Bangladesh Safety Reform Plan by Wal-Mart, Gap Draws Ire from Labor Groups

American retailers presented their own plan of action in Bangladesh yesterday, and it is already drawing serious criticism from labor groups.
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American retailers presented their own plan of action in Bangladesh yesterday, and it is already drawing serious criticism from labor groups.

Called the Alliance for Bangladesh Worker Safety, the New York Times is reporting that this new five-year plan commits $42 million for worker safety improvement, an anonymous hotline for factory workings, and a provision for $100 million in loans and financing to help improve Bangladeshi factories. This agreement has been signed by 17 companies, including Gap, Walmart, Target, Nordstrom, and Macy's.

At first glance, it appears very similar to the plan of action proposed by the European-based Accord on Fire and Building Safety in Bangladesh--but, as its critics argue, there are several key flaws in the North American plan.

The most problematic is that the North American plan places the responsibility of improvement on the factory owner, as opposed to the European plan which demands that companies pay directly for improvements. While a small portion of the money set aside by the 17 companies is pledged for support of the program--$1 million per year, per retailer, according to The Guardian--the additional planned $100 million is actually intended to provide low-interest loans to factory workers; in other words, they leave factory owners with the choice of borrowing money to make the required improvements or losing the American business altogether. And this intended loan pool is voluntary, which means companies have no obligation to help fund it, per the Wall Street Journal.

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The North American plan also promises to be transparent, but USA Today reports that the records that they will make public will be the aggregated reports; in contrast, the European plan ensures that each individual factory inspection report will be made public. Labor groups are also strongly opposed to the fact that there are no workers representatives involved at any level of the plan. The North American plan only provides that each factory have "democratically elected worker participation committees" who are responsible for reporting issues, according to WWD.

Since these US companies rejected the European plan because of its legally binding nature, it's no surprise that their plan is less strict when it comes to commitment. Members can leave the agreement whenever they want--though, if they leave before two years are up, they are still obligated to pay any remaining financial commitment they pledged for the five-year plan. (It is worth noting that the Financial Times reports that member companies can "eject" other members who are "not meeting their obligations.")

Members of the American plan claim that they have the same goals in mind as the European plan, and that improvement efforts in Bangladesh can only be improved by having a second plan; for the sake of factory workers in the impoverished nation, we hope that's true.