Loblaw Compensating Bangladesh Victims

Canadian grocery chain Loblaw has announced that it will compensate the families of victims of the factory collapse that happened in Bangladesh’s Rana Plaza this past May. The factory housed a number of garment factories, including some that made garments for the Canadian’ retailer’s “Joe Fresh” line of clothing.

Some will worry that this is a case of too little, too late. And certainly the “too late” part is correct. Compensation is always a distant second best when compared to avoiding deaths in the first place. Whether the compensation is “too little” or not is subject to debate. It’s not clear that Loblaw (or any company) bears direct responsibility for the behaviour of the companies it buys services from, though certainly the case is stronger where the buyer is a highly-capable multi-billion dollar company, and when the companies it buys from are smaller, less-capable companies operating in an under-regulated environment.

Either way, it’s hard not to admire the company for stepping up and assuming responsibility. And the money will surely be a godsend to the families of the victims. But the real benefit of the compensation scheme may well lie in its capacity to reassure Canadians (and other westerners) that the company cares, and that things are going to get better in Bangladesh, so that we can all keep buying goods made there. Because that’s what Bangladesh truly needs.

But on the other hand I continue to worry about Bangladeshi exceptionalism — that is, that all the attention being lavished on the garment industry in Bangladesh will mean little attention gets paid to parallel problems in places like Malaysia, Vietnam, Pakistan, China, and a number of African countries. There are surely factories in many, many developing countries that are ‘Rana Plazas’ just waiting to happen. It’s not clear just what is being done about those.

Finally, many will be asking what still needs to change? Two things come to mind. The first is that companies like Loblaw need to keep getting better at vetting the companies they do business with, in order to weed out the bad ones. This, of course, is much harder than it sounds. The second is that Canadians and other Westerner consumers need to change the way they think about the issue. They need to recognize that Bangladesh is not Canada, and doesn’t have the luxury of North American-style labour standards. They will surely get there, but it will be a long, slow climb.

Most important is that this tragic series of events has focused the world’s attention on an important set of issues. But the challenge lies in harnessing that attention and seeking out reasoned discussion, rather than knee-jerk reactions.

4 comments so far

  1. Marvin Edwards on

    The problem is that Bangladesh is operating with a different set of rules. The rules of commerce that we’ve developed and enforced upon our businesses that prohibit things like child labor and unsafe working conditions, are clearly not yet implemented and enforced in Bangladesh.

    On the one hand, this gives them a competitive edge. On the other hand, it puts lives at risk.

    Either we need international rules, or we need to enforce our own rules through import control. Perhaps there could be a “values lost tax” that would be reduced as our trading partners adopted safer factories and abandoned child labor.

    Or, we could let things go until their economies grow to where their workers demand safe working conditions as ours did.

    But I don’t like the idea of the consuming business on our side paying for damages caused by a failure of Bangladesh government to regulate safer working conditions.

    And it smells like Loblaw is buying better public relations without actually changing anything in Bangladesh.

    • Chris MacDonald on

      Thanks for your comment. But I think imposing western standards on places like Bangladesh is liable to hurt people in those places by reducing their employment options.
      Even child labour, which is an entirely regrettable thing, isn’t always wrong. See my argument here:
      http://www.canadianbusiness.com/blogs-and-comment/victorias-secret-and-child-labour/

      • Marvin Edwards on

        I loved it when my dad let me wax the floor in the church sanctuary. Nothing more fun than wielding an electric buffing machine. Gave me a sense of accomplishment to see it shine.

        Ideally, Bangladesh would be making clothing for their own children. They obviously have wealth in the form of labor. But it sounds like it is being used for the benefit of others rather than themselves.

        The challenge for private enterprise is to meet the real needs of the people where they are in addition to meeting the desire for higher profits. That is the true moral dilemma of business ethics in foreign trade.

        If there are no competitors, and it sounds like Victoria’s Secret is a niche market that can command higher prices, then the company is free to raise wages and apply higher standards. And your article suggests they are doing that.

        If there are competitors, and price is the competitive edge, then regulation from some governing authority is required to raise standards while keeping the playing field even for all players. An enforceable rule allows all competitors to recapture the expense of compliance in the price without worrying their competitors will undercut them.

  2. […] also: Loblaw Compensating Bangladesh Victims (from the Business Ethics […]


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