What price for the life of a Bangladeshi garment worker?

Javier Chércoles is a high flyer. His LinkedIn profile takes up three pages in English, detailing his experience at top companies such as Inditex, PricewaterhouseCoopers, and the Esade business school in Madrid.

He now works for Irish low-cost retailer Primark as a crisis advisor and is based in Bangladesh, where much of the company’s manufacturing is done. He spends his mornings “working out what the life of a worker killed or injured on the job is worth;” in the afternoons he teaches at the University of Dhaka’s Disaster Management Institute; and in the evenings he volunteers as a medic at a clinic run by nuns from the same order as Mother Teresa of Calcutta.

At the end of March, Primark began paying compensation to the victims and families of some of the men and women who died in the Rana Plaza factory collapse, which took place in the Bangladeshi capital of Dhaka on April 24 last year. The disaster claimed the lives of 1,134 people and injured a further 2,500. Other companies, among them Spain’s Corte Inglés, Mango, and the Inditex group, have teamed up to pay collective compensation from a joint fund that is still far from reaching its target.

Chércoles became involved in improving working conditions in Bangladesh in 2005, after the collapse of the Spectrum Sweater Factory, which made clothes for Inditex, killing 64 people and injuring around 100 more. At the time, he was corporate social responsibility manager at the Spanish company. As a result of the disaster, he met Neil Kearney, head of the International Garment and Leather Workers’ Federation (ITGLWF). Kearney publicly accused Inditex of being “merchants of death.” The accusation hit home, and Inditex tasked Chércoles with checking on all the workshops that supplied it worldwide. Chércoles and Kearney became close friends as a result, until the latter died from a heart attack at the age of 59 in 2009.

He convinced Inditex to respect international labor law along the whole of its production chain

Kearney and Chércoles agreed that the Spectrum workers and their families must be compensated. The problem was that no internationally recognized system had been established for ascertaining the worth of a worker’s life or injury. Kearney and Chércoles set about devising such a system whereby compensation payments are calculated using the same mechanisms and barometers as in developed countries. Chércoles wants to see the multinationals take out private accident insurance for workers carrying out subcontracted work in the developing world. He says the system of policies he has designed “place value for the first time on the life of a garment worker, on his or her limbs.”

At the same time, he convinced Inditex to set an example by being the first multinational to agree to respect international labor law along the whole of its production chain.

The leading global clothing store chains are moving slowly toward taking a more active role in protecting the rights of workers in factories that supply them in countries such as Bangladesh. Textile exports from Bangladesh to Europe and the United States are worth €15 billion a year. The country is the second-biggest textile manufacturer after China. The Rana Plaza tragedy has forced local employers to increase the daily wage of their workforce from 30 to 50 euros, as well as allowing unions into their factories. Around 150 companies have agreed to allow their workshops to be inspected.

Between 2005 and 2010, nearly 200 garment workers have died at work in Bangladesh while producing clothes for well-known international brands.

Primark will pay €6.5 million in compensation to the 580 people who were producing its clothes in Rana Plaza

Primark has decided to compensate the Rana Plaza workers and their families on its own initiative, and was among the first to admit that it had outsourced production there. All payments are based on the same calculations, but Primark will be paying a total of €6.5 million in compensation to the 580 people who were producing clothes for it. “The Primark fund means that the company has accepted moral responsibility, it is an exercise of co-responsibility toward the workers. The fund set up by the other companies is really just charity, goodwill,” says Chércoles. Despite the fund’s limitations, he accepts that it is a major step forward. “Our idea is to invite other companies to join, to not see things individually: you pay your workers and we’ll pay ours.”

The survivors and families of those killed in the Rana Plaza disaster will be compensated out of a type of fund that has never been seen before, says the International Labor Organization (ILO).

For the first time, the ILO, leading brands, a government (that of Bangladesh), labor unions and employers, along with NGOs, “have agreed payments to compensate the loss of earnings and medical needs caused by an industrial disaster,” says Janelle Diller of the ILO.

But of the €29 million the joint fund requires to compensate the 3,600 victims and their families, including Primark’s 580, so far only €2.3 million has been donated, with €2.7 million agreed. Among the 13 companies that have agreed to contribute to the fund are El Corte Inglés, Mango, Inditex and Walmart, not all of which had goods being made in Rana Plaza at the time of the disaster. The average amount to be paid to each individual is around €8,000.

“The payments are simply a public relations exercise. The truth is that this manufacturing model is not sustainable”

The intention is to pay €474 to each victim or relative before the first anniversary on April 24, with further payments delivered as the fund increases. “The system is in place, the only problem now is raising the money required,” says Eva Kreisler of Clean Clothes, an NGO that campaigns to raise awareness among consumers and retailers about sourcing clothes from factories that respect international labor law.

Getting everybody on board has been difficult, says Janelle Diller of the ILO: “We hope that this deal lays the foundations for managing compensation demands more equitably, transparently, and collaboratively in future; we should remember that there are still many cases being pursued in the courts.”

Josep Maria Galí, a lecturer in marketing at the Esade business school in Madrid, remains skeptical. “These payments are simply a public relations exercise; the reality is that the price war between retailers is so savage that retailers lose control over the production chain: the truth is that this manufacturing model is not sustainable.”

Galí worked for Inditex for a decade, and says that he left after the Spectrum disaster. He prefers not to talk about why he left, but says the only way to protect textile workers in countries such as Bangladesh is through labor unions, not NGOs. He wrote up his experiences at Inditex and the impact of Spectrum as his doctoral thesis, calling on multinationals to “deal with these disasters by taking into account other, non-economic factors.”

Chércoles says that mechanisms are also needed to make sure that in a country like Bangladesh, compensation payments do not end up in the hands of third parties or put the recipients at risk, particularly widows, who he says are extremely vulnerable.