News: compensation paid to Rana Plaza victims, but…?

Primark on the rack 2013 (part 4): compensation
Last year we added to this blog a newspaper report of a demonstration in Dhaka, Bangladesh in which ‘500-600 survivors and family members of victims of the Rana plaza collapse gathered in front of the collapse site remembering coworkers, family members or relatives on Thursday, six months from the day of the tragedy’ (link).

In this post, we show how the compensation process has unfolded, who is working together to make this happen, which companies are and are not taking part, and the difficulties in delivering compensation when some but not other companies have paid up. What’s perhaps most curious in this story is the role of UK High Street Retailer Primark, who have – until the Rana Plaza collapse – had a reputation for aggressively combating accusations of unethical practices in its supply chains. One key question for us is, therefore, why the turnaround?

12 September 2013: almost 6 months after the Rana Plaza Collapse

… Eleven of the brands and retailers sourcing from the factories involved in the Tazreen and Rana Plaza disasters joined high-level compensation meetings, facilitated by the ILO as a neutral chair, on 11-12 September in Geneva. Many other major companies failed to attend, showing total contempt for the 1,900 workers who were injured and the families of over 1,200 workers who were killed making their products’ … Immediately after the meeting Primark committed to providing a further three months salary to all affected families as emergency relief. Unfortunately, none of the other brands or retailers present at the meeting committed to provide such emergency relief …

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The same day

… “It is difficult to understand why some brands are using any excuse to try to avoid responsibility. The workers are waiting for money and medical assistance,” Monika Kemperle, assistant general secretary of IndustriALL, told Reuters. The Primark discount chain owned by Associated British Foods …, present at the meeting, also expressed frustration. “The company remains concerned about the length of time it is taking to agree a framework for long-term compensation. As a result the company will now pay a second tranche of emergency aid, lasting three months,” Primark said in a statement. It added it had created the first comprehensive database of most of those in Rana Plaza at the time of the disaster, registering details of 3,333 workers as part of its aid plan …

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16 March 2014: almost a year after the Rana Plaza collapse

Primark is to pay out a further $10m (£6m) in compensation to victims of the Rana Plaza factory collapse in Bangladesh weeks before the anniversary of the disaster in which more than 1,100 garment workers lost their lives. The British retailer has agreed to pay $9m to the 581 workers, or their families, from New Wave Bottoms, Primark’s supplier, which was based on the second floor of the building in Dhaka. A further $1m will go into a communal compensation pot to be shared among all the 3,600 workers who suffered when the eight-floor Rana Plaza complex collapsed in April last year. Both payments should be made under the auspices of a compensation scheme backed by UN agency the International Labour Organisation (ILO), under a deal agreed over the weekend. …

Primark’s desire to make its payments as soon as possible is being weighed against the ILO’s battle to ensure that compensation to all those affected by the disaster comes via the communal process so that no victims are short-changed. There are concerns that variations in the timing or amount of payments to different groups of victims might lead to unrest in Bangladesh, which has already seen widespread protests over treatment of workers. However, before Primark’s donation, the communal pot contained less than $5m of the total $40m thought to be needed to compensate all the Rana Plaza victims, potentially affecting its ability to pay out to those in need. Gilbert Houngbo, deputy director general of the ILO, said: “We hope that Primark’s payment will bring the debate out so that people will ask other brands ‘What are you doing?’ We urge other retailers to show good faith and make a donation.” Paul Lister, company secretary of Primark’s owner, ABF, said: “With the first anniversary of Rana Plaza fast approaching, we are determined to meet this responsibility to workers in our supply chain. We are therefore pleased to be in a position to now press ahead with payments. “We support the ILO in urging other retailers sourcing from Rana Plaza to donate to the trust fund, so that it can pay out in full to the remaining victims.” Primark is only the eighth brand to publicly confirm it has paid into the ILO-backed scheme and its support will considerably boost efforts to raise $40m to help injured factory workers and the families of those who died. Donations from Bonmarché, El Corte Inglés, Inditex, Mango, Mascot, Premier Clothing and Loblaw have been publicly confirmed, but make up less than a quarter of the total needed.

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3 days later

A first instalment of compensation totalling up to £1.2m will be made to victims of the Rana Plaza clothing factory collapse in Bangladesh before the anniversary of the disaster next month after a deal between Primark, workers’ rights groups and the Bangladeshi government. Fifty thousand Bangladeshi taka (£390) will be paid to the families of more than 1,100 people killed and to at least another 1,000 garment workers who were seriously injured on 24 April last year. The payments will be the first tranche of up to £24m in long-term compensation payments planned by brands producing clothing within Rana Plaza. Primark has agreed to pay workers at New Wave Bottoms, its supplier which was based on the second floor of the Dhaka building, about a fifth of its planned total compensation package on 28 March with follow-up payments made over the next few weeks by a communal compensation fund backed by other brands. …

The British retailer’s commitment dwarfs that by other brands whose clothes were being made in Rana Plaza which together are understood to have donated only about £4.2m so far, less than a quarter of the target. While 28 brands have been linked to the factory complex, only seven are listed as donors on the ILO website: Bonmarché, El Corte Inglés, Inditex, Mango, Mascot, Premier Clothing and Loblaw. This week the French brand Camaieu said it had also contributed to the fund, alongside C&A, KiK, and Cropp, a Polish brand, which said this week that it had made payments. None of these donations have been confirmed by the ILO. The deal with Primark increases the pressure on those brands which have not contributed to the fund, or have only made a token payment, to pay up. …

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