Walmart has been criticised for offering a paltry amount to victims of the RanaPlaza factory collapse in Bangladesh after joining other US-owned retailers including Asda, Gap and The Children’s Place to donate $2.2m (£1.32m) to a compensation fund.
Of 28 retailers linked to the building in Dhaka, where more than 1,100 people died and at least a further 1,000 were injured nearly a year ago, just 16 have been confirmed as donors to a formal compensation fund co-ordinated by the UN agency the International Labour Organisation (ILO). So far there is just $7m in the pot, well short of its $40m target.
“The paltry amount of compensation money paid by the clothing giants can only be a start,” said Jyrki Raina, general secretary of the international trade union IndustriALL. “Between them, Gap and Walmart, together with The Children’s Place and Walmart’s UK division Asda, will contribute £1,330,000. That equals around £300 per family. This is pathetic.
“These dead and injured workers contributed to huge profits of the companies, created in dangerous conditions that finally proved fatal for these young women and men.”
Retailers, including Benetton and Matalan, that had used suppliers within RanaPlaza either at the time of its collapse or in the recent past are also under pressure to pay into the compensation fund. So far they have chosen to donate money to other schemes to assist victims, but these efforts have been criticised for falling short of full compensation.
Asda and Gap have not been linked to RanaPlaza, but have chosen to make donations alongside Walmart and The Children’s Place. The four retailers and other unnamed companies have paid more than $5m to a humanitarian fund operated by BRAC, a Bangladeshi anti-poverty organisation. It, in turn, is paying $2.2m to the ILO-backed compensation fund and using the rest of the money for counselling and rehabilitation for garment workers involved in the RanaPlaza incident and for a “social safety net” for those affected by other workplace disasters such as the Tazreen factory fire of 2012.
Sam Maher, a campaigner at workers’ rights group Labour Behind the Label said: “This is the first time that Walmart has contributed to compensation for the survivors and the families of those killed in a garment industry accident. As such we welcome the decision of both The Children’s Place and Walmart to finally pay contributions for compensation into the Rana Plaza Trust Fund. However their contributions are grossly inadequate. As one of the largest retailers in the world Walmart can and should be contributing a significant amount to the Fund.”
Maher added that The Children’s Place has been called upon to pay $8m into the fund, a figure that represents less than half the annual salary of its chief executive.
The sums put forward by the US retailers are dwarfed by the efforts of the British retailer Primark, which has paid $1m into the ILO-backed fund and is handing out a further $9m in formal compensation approved by the ILO to 580 people working for its supplier New Wave Bottoms, which was on the second floor of RanaPlaza.
The disaster has increased pressure on retailers to improve conditions in Bangladeshi clothing factories, where thousands have been injured or killed in building collapses, fires and other catastrophes.
There has also been pressure on the Bangladeshi government to increase the minimum wage for garment workers, which last year led to a 77% increase to 5,300 taka a month – about £41 – after several years of stagnation.
The Swedish retailer H&M admitted on Thursday that increased wages in Bangladesh, Cambodia and China could put pressure on profits. “Wage increases in Bangladesh, Cambodia and China have a negative effect because we are not charging our customers higher prices,” said Karl-Johan Persson, the chief executive. “That will affect gross margins negatively, all else equal, ahead.”
The company said it had been pushing governments to increase minimum salaries for “sustainable reasons” and was happy to see this happening.
However, this week Danish research group DanWatch reported that workers at WellTex, a Bangladeshi factory that supplied H&M, had suffered violence and discrimination if pregnant or in a union.
H&M said it had terminated its contract with WellTex in January this year. It said: “H&M does not accept disciplinary or discriminatory actions from the employer against employees. We have therefore terminated our relationship with WellTex.”
Shares in H&M dropped 4% on the Swedish stock exchange yesterday, with analysts disappointed at the company’s performance in the three months to the end of February. Sales rose 12% in local currencies to 32.14bn Swedish kronor (£3bn), while gross profits rose nearly 9% to 3.48bn kronor as the company opened nearly 50 H&M stores around the world and continued to expand its Cos and Monki labels.