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Blood on their hands?

On April 24, Rana Plaza in Dhaka, the capital of Bangladesh, collapsed and more than 1000 garment workers lost their lives.

This has been widely reported, including on ABC’s 4 Corners this week when Sarah Ferguson did her usual good job in covering this and other related matters.

If you missed it, you’ll find it on the web here or tomorrow, Saturday June 29, it will be replayed on the ABC.

It is compulsory viewing.However, the issues become a little blurred, and it is worthwhile to separate them.

Apart from the building collapse, certain retailers were targeted as the cause of the pitiful wages that are paid to workers by demanding lower and lower prices.

The working conditions were also highlighted. Retailers named include Forever New, Rivers, Target, Kmart, Coles, Big W, Benetton, and Cotton On.Lets have a look at each issue.

Firstly, the building collapse.This has nothing whatsoever to do with Australian retailers or retailers from any other country. One can hardly expect retailers to require an engineering report on the building for every supplier with whom they deal.

This is entirely an issue for the authorities in Bangladesh.The building was clearly defective and yet it continued to be used.

Standards and regulations are either non existent or were not observed. As in most Asian countries, corruption is rife in Bangladesh and a few taka will get most officials to turn a blind eye.

There have been 43 factory fires in Bangladesh in the last 18 months and most factories have burglar bars. The workers cannot always escape in time.

Secondly, working conditions.Here retailers can play a part, but the conditions that they observe are not the ‘real’ conditions.Workers are subjected to physical and verbal abuse – obviously not when customers are visiting. On occasion they are forced to work as late as 3:30am.

They are simply locked in and cannot get out. Some of these issues apply to both compliant and non-compliant factories.It is not clear what constitutes a compliant factory, but generally they seem to be a cut above the non-compliant ones and therefore charge more to manufacture garments.The retailers named above are being shamed for dealing with non-compliant factories in order to get the lowest possible price.

That is fair enough. Let all retailers buy from only compliant factories – until one retailer breaks rank and has an unfair advantage. Who will regulate this? What will happen in a month or two when this furore dies down?

Thirdly, wages.Workers are paid as little as $1.90 a day and those earning $4 a day are the lucky ones. Again, retailers are copping the blame and it is being suggested that Australians would be prepared to pay more for garments to improve the lot of the workers. This is patently nonsensical. How could it possibly be made to happen?

There is clearly a responsibility on the part of retailers to purchase from companies that have fair work conditions and fair wages within the context of the country concerned.But we have ignored the root cause of the problem.Garment retailers are being forced to negotiate so that they can achieve input margins of about 85 per cent.

A garment needs to land here at say $15 to retail at $100. How many retailers regardless of what margin they are achieving and no matter from where they are sourcing their goods, are achieving obscene profits? The answer is none.

So why are they being forced to drive such hard bargains with their suppliers?We know the answer. The root cause of the problem is that retailers need these margins in order to survive.

To survive they need to pay high rents and high wages.The real people who have blood on their hands are the landlords, the unions, and the government.

When retailers are paying, say, 40 per cent of sales for rent and wages, there is something seriously wrong.The landlords flitting about in their private jets, the union officials rorting their credit cards, and the government determined to win votes by allowing unrealistic wages and penalty rates – these are the people with blood on their hands.The retailers are merely pawns in the game.

* Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702

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