The moral obligation of the global supply chains during the pandemic

The garment industry of Bangladesh crossed a long river between 1970 and 2020. This prominent sector has faced many challenges nationally and internationally. It has also given rise to controversial debates at the national and international levels.

However, due to some inevitable reasons, the industry is still embroiled in controversial debates over low wages and its working conditions, exposing the unethical business practices of locals and internationals.

Representational Image. Picture: Mumit M/TBS

A critical analysis of RMG sustainability and ethical business has existed both academically and publicly for years. Consumers from national and international markets and advocacy groups and the ILO have expressed grave concern over its working conditions and other issues such as minimum wages and labour rights.

Yet, one thing that has always remained unaddressed is that despite so many problems, how does the Global Supply Chains (GSCs) continue to provide moral support to RMG sector in Bangladesh?

From the pioneer shipment of 10,000 pieces of men's shirts to a Paris based company in 1978 to an almost $50 billion market- the industry has not only been the number one export earning sector in the country, but has also created millions of jobs. The industry offers 80 percent of local women employment while it secured the country's place as the second-largest RMG producer in the world.

Nevertheless, being a peripheral industry following the US/World Bank hegemonic model, initially, the start of an employment-oriented industry like the RMG was not entirely well-planned. The sector was also considered an exploitative  industry for its inadequate Occupational Health and Safety (OHS) practice and control.

However, the Rana Plaza tragedy was the turning point for revolutionary changes as factory inspections through the joint initiatives of the global apparel retailers, consumers associations, local and international trade unions were introduced.

However, due to some unavoidable circumstances, the Accord and the Alliance had to leave the country at a time when the vast sector still needs to be adequately inspected to avoid another catastrophe like Rana Plaza. The question now is whether the local monitoring agency, DIFE, can critically monitor the industry.

When Bangladesh opened the doors to foreign investment in the early 1980s, in most cases, the government and the proto-capitalists failed to assess the whole situation more carefully. As such, they have not been able to adopt proper business and economic policies for the past few decades, which have hampered the overall development of the nation, or more particularly the RMG sector. 

Globalisation was strictly a global political agenda where GSCs primarily benefited. What happened was that this neo-liberal dogmatism targeted low-regulated countries where trade unionism was not active, most importantly for low wages. As such, most of the multinationals migrated to Asian countries and Bangladesh was their favourite destination as China shifted their small-scale business to high-profiled business.

Another issue was that most Asian countries, including China, Vietnam, have invested enough capital in developing the human index. Thus, China has become the most expensive place for GSCs. However, Bangladesh still provides the world's lowest minimum wage to global garment companies, securing the country as the most popular destination for GSCs.

When considering the Global Supply Chain and its Production Network, the literature shows some degree of power asymmetry in the supply chain. This imbalance is probably the most noticeable among buyer-driven GSCs, where retailers and brands ('buyer' or 'lead companies') integrate their strengths through mergers, acquisitions and market densities.

At the same time, clothing suppliers have spread dramatically across developing countries. As such, dispersed suppliers give buyers an advantage when setting up the price and other terms of the production contract.

International organisations and the mainstream media are coming to the conclusion that global apparel buyers possess extreme bargaining power in the competitive market. The International Labour Organisation (ILO) observes, "The perfect amount of it grants buyers enough bargaining power in an asymmetrical market relationship where the buyer can negotiate with the price and specify what, how, where and by whom the products are sold and purchased."

Another reason is that most developing countries, mainly Bangladesh, in garment contracts, tend to lose the ability to bargain with buyers. As such, local suppliers offer buyers an advantage when determining prices and other terms of the production contract. Such incidents make foreign apparel buyers more interested in investing in Bangladeshi RMG production. 

In the last 40 years, RMG workers have made a tremendous contribution to the national economy so that Bangladesh is in a stable position today. Not only that, RMG employers have also benefited immensely from their efforts in this sector as most of the RMG employers are now occupying prominent political and government positions. 

A multinational company like Walmart has made billions of dollars at the cost of high exploitation of Bangladeshi workers. In return, very little was done for their real socio-economic livelihood development. It is time for GSCs to think more seriously about RMG stability as they have been doing business in Bangladesh for a long time and exploiting poor workers.

GSCs have never been responsible for investigating where they are sourcing from and what the actual working conditions are and how any RMG worker survives in Bangladesh. An RMG worker lives in a dark place where their primary concerns are the inadequate facilities. The question is, what has been done for them over the last 40 years or more?

Scholars, including advocacy groups, and the international and national media are calling for the development of effective strategies towards RMG sustainability. More importantly, workers should be given the highest priority by raising the minimum wage with GSCs bearing the burden, because they pay very handsome salaries to workers in their own country. Also, RMG workers need health and life insurance that local factory owners and global RMG buyers must ensure.

Thus, RMG employers, global apparel brands and state governments need to adopt potential recovery strategies in the aftermath of the Covid-19 pandemic. Due to pandemic, millions of people have already lost their jobs in the world. Major RMG buyers come from the United States and other Western and European countries where unemployment is a severe concern for states and governments right now.

Customers may lose purchasing power in the future, or at least for some time. So an exclusive agreement with the RMG buyers through a proper business plan and a productive strategy can save the industry in the post-Covid-19 situation.

For the GSCs, the cancellation of any previous order placed to a Bangladesh RMG company by global brands would be unethical due to the Covid-19 impact. Mostly, employers and global brands should exercise ethical business practices and social support to avoid any adverse catastrophe in the sector. 

However, it should not be forgotten that local factory owners and GSCs should be allowed to rationalize costs now, or at least for some time, as the world is experiencing an unprecedented event. It is more important to survive in the market with less profit, than losing customers in the long run. 

The best way is to continue trading at a low-profit margin or breakeven point. All RMG stakeholders must understand that this challenging time will come to an end and only a concerted strategy can save millions of workers and the industry as well.

ASM Anamullah is an Australian academic.