Implementation of the Bangladesh Compact

Monitoring the results in implementation of the Bangladesh Compact commitments for continuous improvements in labour rights and factory safety in the Ready-Made Garment and Knitwear Industry. Context and Objectives: Ready-Made Garment (RMG) is a strategic sector for the Bangladeshi economy, with an estimate of 3,500 export factories in operation, providing a source of employment for over 3.5 million workers, mostly women. The share of garments in total exports increased from 53 percent in FY95 to 79.6 percent in FY13, reaching a historic high of US$21.5 billion in exports, which makes Bangladesh the world's second-largest apparel exporter. 60% of the export contracts of western brands are with European buyers and about 30% with North American buyers. Only 5% of textile factories are owned by foreign investors, with most of the production being controlled by local investors. Despite the significant contribution it has made to the overall Bangladeshi economy, the RMG sector is also known for its poor working conditions, and concerns about labour standards compliance are widespread. While child labour has diminished in recent years due to concerted efforts of the government and international community including the International Labour Organization (ILO), substantial challenges remain with regard to other core International Labour Standards (ILS), as highlighted by the ILO Committee of Experts on the Application of Conventions and Recommendations. Freedom of Association (FOA) and the right to Collective Bargaining (CB), labour relations, social protection standards, and occupational safety and health (OSH), are among the main labour issues that need to be addressed urgently. As a matter of fact, since November 2012, five deadly fire and building collapse incidents, including that of the Rana Plaza collapse in April 2013, the worst industrial disaster in manufacturing worldwide, prompted an intense international debate on the precarious working conditions in the Bangladeshi RMG sector, and placed the sector under serious scrutiny. At national level, these events have also resulted in massive workers’ demonstrations and disruption of work in hundreds of factories. This situation is causing long-term damage to the reputation of the RMG sector and the country as a whole. According to a recent World Bank report , apparel manufacturers are reporting 30-35 percent reductions in orders due to the recent compliance failures. In order to address the situation, a number of initiatives have been launched in the Bangladeshi RMG sector to improve structural building integrity and fire safety, strengthen labour administration, and build awareness about workers’ rights and safety. At national level, this series of tragic events spurred the tripartite partners into the development of a National Tripartite Plan of Action on Fire Safety in the Ready-Made Garment Sector in Bangladesh, as well as the adoption of a Joint Statement containing commitments focusing more on improving structural building integrity and dealing with the aftermath of the Rana Plaza collapse. On July 25, these two documents were merged into the National Tripartite Plan of Action on Fire Safety and Structural Integrity in the Ready-Made Garment Sector (NTPA), which forms the basis for action and coordination with third-parties in improving fire safety and structural integrity in the RMG sector. In addition, the government is attempting to strengthen regulatory oversight by taking steps to upgrade the Department of Factories and Establishments and increase its capacity. Steps have been taken to acquire 532 acres of land to establish a Garments Industrial Park near Dhaka city and to relocate the factories there. A minimum wage board has been formed to reassess the minimum wage set in 2010. Also, the 2006 Bangladesh Labour Act was amended in July 2013 to provide improved protection for the fundamental rights to FoA and CB. An initial review of the legislation by the ILO

Project symbol

BGD/13/10/EEC

Admin unit

CO-Dhaka

Start date

01/01/2014

End date

30/04/2016

Total allocation

160078

Total expenditure

Status

Closed

83515

Development Partners

European Commission, DG Trade

Country/Countries

Bangladesh

Outcomes

Promoting workplace compliance through labour inspection