Impact of the Accord and Alliance on labor productivity of the Bangladesh RMG industry

Abstract

The year 2013 saw one of the most tragic accidents in the readymade garment (RMG) industry, the Rana Plaza accident, which claimed more than 1100 lives of garment workers. This accident drew attention of the world to the failures in ensuring safety in the workplace. In an attempt to make sure such an accident does not occur in future, two transnational governance initiatives were introduced; “Accord on fire and building and safety in Bangladesh” (Accord) and “Alliance for Bangladesh worker safety” (Alliance), and these two initiatives have been guided by the principles of occupational safety and health (OSH). Also, an initiative by Bangladesh government, “National Tripartite Plan of Action” (NTPA) was taken to ensure worker safety in RMG factories. The study aims to find if actions taken by the Accord and Alliance to implement OSH regulations in their affiliated factories could make a strong impact on labor productivity of their member factories, amongst other factors effecting labor productivity at factory level such as; factory size, factory age, wage of skilled labor, management indicators, and export status. Also, the study aimed to compare the findings for the Accord and Alliance affiliated factories with NTPA affiliated factories. The study uses two approaches; quantitative and qualitative. In the quantitative approach, two types of models; ordinary least squares (OLS) estimation and multinomial logistic regression are used to estimate the effect of aforementioned factors on factory level labor productivity. The study argues that, there is no strong positive relationship between factories being affiliated with the Accord and Alliance, and labor productivity, because apart from building safety, other factors also influenced labor productivity. The qualitative study helped to identify possible reasons for changes in labor productivity by analyzing experiences of factory owners/managers (affiliated with the Accord and Alliance) during implementation of remediation works and experiences regarding costs associated with the remediation works. The study identified that the resources required to enhance labor productivity were diverted to expensive remediation work as there was no assistance from the buyer side in terms of funding the remediation work, and the factories were often assigned with expensive remediation works. Policies such as; creation of a common fund by all the stakeholders, providing skill development training and investing in physical capital of factories, ensuring fair pricing and recommending cost effective safety improvements, that are also suitable for local specificities; should be taken to address the identified problems and enhance labor productivity.