While the Black Friday crowds are storming the local stores, a different and more painful drama continues to play out in the nations which supply a lot of the goods we will be buying.
More than 110 workers died on Nov. 25 in Bangladesh as the result of a fire at a textile manufacturer. Bangladesh exports about $18 billion worth of garments and is a big supplier to companies like Walmart, H&M and Tommy Hilfiger. The New York Times reports that "The two-year-old factory employed about 1,500 workers, had sales of $35 million a year and the factory made T-shirts, polo shirts and fleece jackets."
Over the past several years, largely as a result of pressures applied by the labor unions, free trade agreements have in place enforcement mechanisms to ensure fair environmental and labor standards. However, as the New York Times article points out, "Workers in the country's factories are among the lowest-paid in the world with entry-level workers making a government-mandated minimum wage of about $37 a month" while noting that "Bangladesh's garment industry, the second largest exporter of clothing after China, has a notoriously poor record of fire safety."
China also has exhibited a disregard for such standards and it is amply clear that the enforcement mechanisms built into international trade agreements are at best difficult to enforce and not producing the results intended. Factories which could and should be leading its workers and regions to a better standard of living are not only not doing so in the short run but also producing substantial long run social costs.
I have a personal perspective on this matter. I was born and raised in Sicily and was 20 years old when I emigrated to Connecticut in 1970. In the 1950's, the local Sicilian economy was based almost exclusively on agriculture and the population was demanding change. In 1959, the Italian government, aided by the World Bank, decided to fund a local industrial project in the town of Priolo, about 15 miles away from where I lived and only a handful of kilometers from Siracusa. The overall project would include an integrated chemical manufacturing complex; construction of a plant for the production and processing of polyethylene and ethylene oxide and derivatives and construction of a thermal power plant to meet the increasing demands for power.
While no one can dispute the economic benefits as thousands of new jobs were created, the long term negative impact have only recently begun to be measured: extremely high rates of cancer and birth defects; the air contaminated and the polluting of what was a pristine coastline and sea.
I vividly recall my return trips to visit relatives in Sicily and the drive from the airport in Catania to my home town, trip which required us to drive right in front of this plant: we would hold our breath and close all windows and could still smell the "rotten eggs." And to add insult to injury most of those plants have now closed leaving an economic vacuum and enormous unfunded social costs.
Now, 50 years later, much progress has been made in environmental controls and worker safety: we need not take draconian measures to address our concerns. And while I applaud the intent of the labor unions in attempting to level the playing field in international trade by insisting that such agreements contain environmental and worker safety clauses, enforcement of these agreements is slow and difficult to achieve.
Companies like Walmart utilize what they call ethical sourcing officials to inspect the plants of their supplier and insure compliance with safety laws. The Bangladesh plant in question had been reported for "violations and/or conditions which were deemed to be high risk." Unfortunately it takes three such failures to trigger a penalty in the form of a one-year suspension of that firm as a Walmart supplier.
I like this approach better than any government regulation but would make it much more stringent.
When it comes to safety and environment, our companies should enforce a zero tolerance approach: more frequent inspections, say quarterly, followed by a stringent enforcement that suppliers are suspended on the second such instance within a 12-month period. Such a move would provide the economic incentive that overseas companies need to improve safety while continuing to supply reasonably priced goods.
Paul Pirrotta is president of Paul Pirrotta International in Glastonbury. Reach him through paulpirrottainternational.com.