Governance of Labor Standards in Australian and German Garment Supply Chains: The Impact of Rana Plaza

Abstract

This article analyzes the impact of the 2013 Rana Plaza building collapse on garment lead firms’ labor standards policies in the light of new governance approaches, particularly the pathbreaking Accord on Fire and Building Safety in Bangladesh. Based on a sample of 20 Australian and German garment firms, the authors find that firms with low prior baseline standards revised their supply chain and sourcing policies and signed the Accord. Firms with medium and high baseline standards responded variously, from making no changes to revising their policies and signing the Accord. Firm response variation can be explained by stakeholder pressure occurring in different national industrial and institutional contexts following the Rana Plaza incident, which served as a focusing event. Results suggest the wider applicability of the focusing event framework for industrial relations scholarship and highlight some of the mechanisms driving changes in industrial relations institutions.

Enforcing higher labor standards within developing country value chains: Consequences for MNEs and informal actors in a dual economy

“…Although this was neither an isolated incident nor an unusual occurrence (in Bangladesh or elsewhere in the developing world), it drew global attention to the poor working conditions within apparel global value chains (GVCs), many of which are controlled by multinational enterprises (MNEs). It acted as a 'focusing event', or a 'shock' that mobilised external and internal stakeholders across the spectrum to push for institutional and organisational change across an entire industry, and forced a series of significant policy innovations (Schuessler, Frenkel & Wright, 2019), not just in Bangladesh, but globally.…”

“…The aftermath of the Rana Plaza Disaster saw a variety of multilateral, bilateral, public and private initiatives across the world to improve labour standards in the apparel industry (see Sinkovics, Hoque & Sinkovics, 2016;Schuessler et al 2019;Fontana & Egels-Zandén 2018). Although there is some variation between countries, most public regulatory efforts have ultimately been limited in nature.…”

Firm participation in voluntary regulatory initiatives: The Accord, Alliance, and US garment importers from Bangladesh

“…But the government's willingness to overlook sweatshop 9 conditions and repress workers' collective rights also has played an important role in attracting orders from demanding multinational customers (Berliner et al 2015b, Fransen andBurgoon 2014). Activists hoped that, like the 1911 Triangle Shirtwaist factory fire in New York, Rana Plaza might serve as a "focusing event," leading to improvements in working conditions in the garment sector (Bair et al 2017, Lohmeyer and Schuesser 2018, Schuessler, et al 2019. But rights activists also worried that the private governance tools of the 1990s and early 2000s were not adequate to protect RMG workers in Bangladesh.…”

“…We therefore expect that firms strong brand identities, which typically occupy higher-tier segments of consumer markets, will have the strongest material incentives to commit to private regulations (Arora and Cason 1996 European countries anticipate a greater role for organized labor and a more equitable division of profits between workers and management. These cultures often reflect national laws and institutions (Auld et al 2008, Fransen and Burgoon 2014, Schuessler, et al 2019. Although some European firms may hope to flee from these higher standards when sourcing product abroad, European shareholders, consumers and regulators are inclined to hold their firms to higher standards (Nikolaeva andBicho 2011, Rathert 2016).…”

“…But seeSchuessler, et al 2019 for an investigation of why Australian and German firms participate in the Bangladesh Accord.…”