Retailers' reaction to Bangladesh unrest
By Joe Ayling | 6 August 2010
Primark doesn't expect the disruption to materially affect its supply from Bangladesh.
Under normal circumstances an 80% pay rise would be cause for celebration, but garment workers in Bagladesh say BDT3,000 (US$43) per month still represents an inadequate living wage.
Immediately after Bangladeshi officials made the minimum wage announcement last week, rallies and protests continued on the streets of Dhaka for four days.
The unrest caused a combined loss of work worth around US$100m, as well as additional costs of several million dollars to air-freight orders to meet delivery schedules, according to the Bangladesh Garment Manufacturers & Exporters Association (BGMEA).
Apparel makers in the country have been given three months to implement these changes, and strike better deals with retailers to offset the increased production costs.
It remains uncertain who will absorb the lion's share of these increases - factory owners, retailers or shoppers at the till. But with raw material and freight costs from Asia increasing, and a VAT increase on the horizon in the UK, it seems unlikely that suppliers will get retailers to budge all that far.
just-style quizzed the retail chains about this increased wage bill, together with how protests had affected supply and whether they thought the rise was sufficent. Spokespeople for two other value retailers who source from Bangladesh - Tesco and New Look - did not respond with answers.
Primark spokesperson Kate Lehane:
"Bangladesh is a substantial supplier to Primark, just like other high street retailers. The amount sourced varies from year to year.
"Primark is closely monitoring the handful of suppliers located in those areas affected by the recent protests and rallies, although we do not currently expect the disruption to materially affect our supply.
"Primark is pleased that negotiations between Government, workers’ representatives and employers have resulted in an increased minimum wage. However, setting and implementing wage levels is a matter for Government. Primark welcomes progress and supports efforts to ensure workers enjoy a decent and rising standard of living.
"Primark’s ethical trade team is already engaging with its suppliers to help them plan for the increase. Primark’s living wages initiative in Bangladesh directly tackles this issue by working with suppliers to reduce their costs and increase production efficiency so that gains can be passed onto workers in the form of higher wages."
H&M spokesperson Andrea Roos:
"Unrest in Bangladesh is unfortunately not unusual. From H&M's side, we, together with other companies, have tried to influence the government of Bangladesh to raise the minimum wage. A raise to the minimum wage has now been made and is a step in the right direction.
"What is now important is first of all, that the new minimum wage is implemented as soon as possible, and secondly, that in future wages are revised regularly and not as it has been thus far - with long periods in between any increases.
"We understand the frustrations and by being on site we have an opportunity to influence, which we otherwise would not have. We have purchased goods from Bangladesh for over 25 years and we had an office there since 1986, so our presence is long-term. Bangladesh is one of many countries that we buy goods from.
"Increased wages create better working conditions and are only positive. Furthermore, it is competition-neutral and affects all buyers equally. Being responsible for how the production of our products affect people and the environment is of course extremely important. We have long had an extensive CSR program, described in detail in our Sustainability Report on hm.com. It also describes specific actions in Bangladesh."
Asda spokesperson Dominic Burch:
"We currently source products from around 40 factories in Bangladesh, but so far we haven't had any disruption to orders coming into the UK. Our team based on the ground in Bangladesh is keeping us updated at all times and is on hand to liaise directly with factories and factory owners if any issues arise.
"We've already been working on a pilot project in Bangladesh with four of the factories we source from in order to increase productivity, enhance the quality of products produced, and improve factory conditions - this includes increasing worker pay.
"We intend to roll out this innovative pilot to all of the factories we source from and believe this is an important step in right direction to improve the lives of workers who produce garments on our behalf."
Marks and Spencer corporate PR manager Daniel Himsworth:
"At this stage, we do not expect the situation in Bangladesh to have any effect on our supply.
"It’s not for us to comment on government policy, but we support measures that raise wages sustainably in Bangladesh and that’s why we’re rolling out our Ethical Model Factory programme in the country.
"As part of our Plan A commitments we are at forefront of the debate on wages and conditions in the textile industry. We aim to be market leaders in this field and are in the process of rolling out our Ethical Model Factory programme in Bangladesh, which has proven it can raise wages.
"This is one of the key steps in achieving our commitment to pay a living wage in every factory in Bangladesh by 2015."
View next/previous articles
9 Aug 2010 -
9 Aug 2010 -
Currently reading -
Retailers' reaction to Bangladesh unrest
6 Aug 2010 -