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Related VideoNearly three weeks after a factory collapse killed more than 1,100 people, the world’s biggest clothing companies are committing to safety standards that could play a key role in policing the country’s main industry.
Several weeks into clean-up efforts at the site of the collapsed factory in Bangladesh, many were still searching for missing family members. The high death toll from the collapse of Rana Plaza calls for a unified clearinghouse that can collect payments from brands and maintain a transparent database of injured and dead workers, said Tessel Pauli of the Amsterdam-based Clean Clothes Campaign, which is among the groups working to create the fund.
The fund will also aid with efforts by the government and the Bangladesh Garment Manufacturers and Exporters Association to identify the bodies of the deceased, many of which will require DNA testing because they have been crushed beyond recognition, she said.
Some retailers whose branded products were found in the rubble have already agreed to compensate victims directly but activists say creating an industrywide fund administered by a third party will hold retailers` feet to the fire and "make sure the brands pay the workers even after the public attention wanes," Ms. Pauli said in an interview. Clean Clothes Campaign is expected to unveil more details about the fund on Monday.
Loblaw Cos. of Canada and El Corte Ingles SA of Spain said the companies are meeting with fund organizers in Bangladesh to hash out a relief plan but declined to provide specifics. Benetton Group SpA said it would "either contribute to an industry fund or constitute one of our own."
A spokeswoman for Mango MNG Holding SL said the company hasn`t made a decision yet about victim compensation. Primark, a European budget fashion chain owned by Associated British Foods, ABF.LN +0.25% didn`t respond to requests for comment.
Retailers that used factories in the collapsed Rana Plaza in the past year are also being asked to contribute to the fund in order to cover medical treatment and lost wages for workers and their families. Activists say the money will also go to orphaned children whose parents died in the collapse.
Among the organizations working on creating the fund are the Clean Clothes Campaign in the Netherlands, the Ethical Trading Initiative in the U.K., the Worker Rights Consortium in Washington and IndustriALL Global Union, a Geneva-based consortium of labor unions that has overseen past disaster compensation schemes in Bangladesh, including one still being worked out for the victims of last year`s fire at the Tazreen Fashions Ltd. factory where more than 100 workers died.
The Bangladesh government and the Bangladesh manufacturers` association are also issuing payments to victims and their families.
Bangladesh is one of the world`s largest producers of clothing. With monthly wages shy of $40—about a fourth of worker`s wages in China—the country`s garment industry provides major U.S. and European retailers with a flood of cheap clothing.
In recent years, dozens of fires and other disasters at Bangladesh garment factories have killed hundreds of workers and prompted continuing protests from labor groups lobbying for better working conditions, safety inspections and higher pay. But last month`s tragedy ramped up the pressure on foreign brands to not only pay compensation to victims but to also improve fire and building safety in the country for the long-term.
Collecting compensation from retailers after disasters can be difficult, particularly because of the many layers between brands and the workers that produce their clothing, said activists.
It is common for brands to distance themselves from workers through a complex system of production orders placed with multinational middlemen, which are then subcontracted to factories that can be three or four steps removed from the retailers.
After the fire at the Tazreen Fashions factory last year, a split arose over which retailers would pay victim compensation. Negotiations are still continuing six months after the fire, labor groups say.
Wal-Mart, WMT -0.49% whose Faded Glory shorts were found in the factory`s ashes in what it said was an unauthorized production run, has failed to pay compensation. However, its longtime business partner Li & Fung, 0494.HK +0.99% a retail middleman based in Hong Kong, has agreed to compensate victims of the fire.
Wal-Mart declined to comment on victim compensation. The retail giant, which has maintained a Bangladesh buying office for at least a decade, said it is focused on proactive steps to improve safety conditions in Bangladesh.
Walt Disney Co., DIS +0.18% whose goods were also found in the fire, denied that licensees were manufacturing Disney branded product at the Tazreen factory.
A Disney spokeswoman said that the licensee, Wal-Mart Canada, confirmed its products were being stored at the Tazreen factory without authorization but weren`t manufactured there. Wal-Mart declined to comment further.
Disney recently banned its licensees from any further production in Bangladesh.
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