Human cost of an embargo would be higher than the recent factory collapse, says Tim Harford
‘The EU is considering moves against Bangladesh, including restricting trade access to the European single market, in an attempt to press the country to improve its labour practices after last month’s deadly factory collapse.’
FT.com, May 1
Quite right, too. The Rana Plaza collapse was appalling. Truly shocking.
It was. It is not the only thing that is shocking about Bangladesh, though. For every 1,000 children born there, 46 will die before their fifth birthday. The rate in the UK is five per 1,000, so you could say that Bangladesh’s lack of development is responsible for the other 41. Across Bangladesh, that is 123,000 preventable deaths a year, just of children. That’s one Rana Plaza collapse every weekday.
So you think “don’t touch the precious sweatshops because they’re good for the economy and the economy is good for the little children”?
If the EU does impose some sort of sanction on the country, the human cost is likely to be far higher than that of Rana Plaza. Bangladesh has been a development success story; poverty is high but falling fast. Literacy and life expectancy are improving. That appalling under-five mortality rate of 4.6 per cent used to be far worse – 20 years ago, it was 12 per cent. When we see the pictures of the Rana Plaza wreckage, it’s easy to imagine a backdrop of stagnation, complacency and despair in which nothing ever changes, no matter how awful the tragedy. But the true context is a country making rapid improvements in nutrition, health, education and women’s employment. If the EU’s threat galvanises improvements in wages, working conditions and building standards – all of which Bangladesh can afford – then good. But if the threat were to be carried out, that would be a disaster, albeit one that will not be televised.
But we’re culpable here – western companies bought clothes from the Rana Plaza factories.
Are we now so obsessed with brands that human misery only counts when we can connect it to something we can buy on the high street? The most notorious example was when, in 2010, 10 workers at a Foxconn electronics factory in China killed themselves – a shocking fact that tarnished Foxconn’s most famous customer, Apple, and caused millions of iPhone owners to feel faintly guilty. But the factory employed an astonishing 400,000 people; so the reported suicide rate, rather than being shockingly high, was implausibly low, a sixth of the Chinese average.
I understand that rich-world consumers can frame all these tragedies as part of their own personal drama. That doesn’t mean multinational companies can get away without taking action.
What action do you want them to take? While a few, such as Primark, have said they will take some responsibility, others have distanced themselves from the disaster. There is a record here: Nike’s supply-chain practices have been under the human rights spotlight for many years, and the company has responded by trying to improve working conditions. It has found it difficult because the systems are complex, fluid and messy. Even if a local factory satisfies every demand for decent working conditions, it can easily outsource production to the likes of Rana Plaza. There is a risk that, while lesser brands (or non-branded industries) do as they please without scrutiny, high-profile companies decide it would be easier simply to pull out.
But that risk might persuade the Bangladeshi government to sort out local regulations.
Let’s hope so. And charities, or development agencies such as the World Bank, can add a carrot to that stick through what is known in the jargon as “capacity building” – that is, helping governments draft sensible regulations, put together a bureaucracy capable of enforcing them and so on.
One other thing: poor countries need to allow trade unions to operate – unlike in Bangladesh, where union activists have been harassed and even killed.
It’s not like an economist to back trade unions. I thought you were all Thatcherite?
There have been times and places where unions have been a force for chaos and stagnation. Bangladesh in 2013 isn’t one of them. Ultimately, whatever western consumers demand, what determines whether rules about working conditions are upheld is that workers on the factory floor have a voice and some power.
Also published at ft.com.