Written by Liz Umlas 

Tuesday, October 25, 2022

Bangladesh is the second largest garment exporter in the world, after China. The country was the site of one of the world’s worst industrial accidents in 2013, when the collapse of the Rana Plaza factory complex in Dhaka killed over 1,100 garment workers and injured more than 2,500 others. Despite important progress on workplace safety in certain Bangladeshi factories due to legally binding agreements between labor unions and buyer brands since 2013, the country still lacks a comprehensive employment injury insurance system to address occupational safety and health risks. 

This is the backdrop for an investor webinar co-hosted on 18 October by IndustriALL Global Union and the UK Local Authority Pension Fund Forum. The topic of discussion was a newly launched pilot project, the Employment Injury Scheme (EIS) for garment workers in Bangladesh. 

Employment injury insurance is a form of social protection, which in turn encompasses public policies, programs and benefits aimed at shielding people from poverty and vulnerability due to old age, unemployment, pregnancy, sickness, injury or other situations. Social protection is an internationally recognized human right and is also considered crucial to mitigating the risks of supply chain disruption due to workplace injury.

2.78 million workers die yearly from work-related accidents and diseases; the ILO reports that the cost of work accidents to the world’s economy is $2.8 trillion per year.

The EIS pilot in Bangladesh, a concrete example of social protection in action, was launched in recognition of the need for systemic change in the Ready-Made Garment (RMG) sector. The pilot is tripartite in structure (government, worker organizations, employers) and benefits from the technical expertise of the ILO. 

The initiative aims to address the gap in occupational safety and health insurance in the RMG sector but also to lead eventually to employment injury insurance that is fully owned by Bangladesh and that covers not just RMG but all workers in the country. In the pilot, garment and textile brands and retailers contribute voluntarily, and in a time-bound fashion, to top up a government Central Fund that provides lump-sum payments for occupational injury compensations so that the benefits meet international standards. 

At present, seven brands are participating in the EIS; while this is a good start, it is insufficient for long-term viability. For this reason, IndustriALL recently sent a letter to other brands sourcing from Bangladesh, urging them to join the pilot. Because the program covers all RMG workers, not just those working for suppliers of contributing brands, non-participating buyer companies are effectively “free-riding” off the initiative, which is neither sustainable nor just.

Webinar participants learned that the cost of the EIS is just $7.4 million per year, covering four million workers. This represents 0.019 percent of the total value of RMG exports: an affordable and predictable amount, and as the ILO pointed out, much lower than the estimated €30 million collected to cover the Rana Plaza tragedy. 

After the ILO laid out the basics of the pilot, IndustriALL interviewed two participating brands, H&M Group and Primark, about why they had joined the initiative. Their reasons included a long-term commitment to sourcing from Bangladesh, an acknowledgment in the wake of Rana Plaza of the need for systemic change in social protection and the realization that all actors must be engaged – a factor built into the EIS, which rests on the involvement of the government, employers, brands, workers and the ILO. 

H&M and Primark also shared thoughts on the challenges to the pilot, such as capacity building, data collection, the lack of a national framework on employment injury insurance and the fact that the initiative focuses on only one industry. But for brands involved, these are outweighed by the opportunity to contribute to a concrete, collective solution to a systemic problem, and to decent work and a more stable and resilient supply chain.

Finally, webinar participants heard about the role investors can play in relation to the EIS program. To begin with, they must ensure their policies enshrine workers’ fundamental rights and commit to engage companies on the full range of these rights. One of the brands pointed out that shareholders rarely ask the company about social issues, and never about social protection. Investors were invited therefore to learn more about the pilot, to urge their companies to sign on to the initiative to increase its chances of success and to be patient and receptive to course change as the program develops.

The upshot of the discussion was that social protection is possible, it is urgently needed and, though it is a government responsibility, other stakeholders – including brands and investors – have crucial roles to play. The webinar was part of a larger initiative by IndustriALL on social protection for garment workers (more information is available here). 

To learn more about social protection of garment workers see Liz Umlas’ previous Croatan view here.

Liz Umlas is a senior fellow at Croatan Institute and a senior advisor to IndustriALL Global Union.