Eight months after the Rana Plaza factory building collapsed in Bangladesh, killing more than 1,100 workers and leaving hundreds of families bereft and financially adrift, several prominent retailers and labor groups have joined with the Bangladesh government to create an estimated $40 million compensation fund to aid the victims' families.
So far, four retailers — Bon Marché, El Corte Inglés, Loblaw and Primark — have pledged to contribute to the fund, which is intended to compensate the families of those who died April 24 in what was the deadliest disaster in garment industry history. The new fund is considered a landmark in compensating families of garment industry victims, in terms of both the amount to be paid and the sophistication of the arrangements. No United States-based retailers have signed on.
Several officials involved in negotiations to establish the fund said in interviews that the families of the dead would receive, on average, more than $25,000 each, while hundreds of workers who were injured or maimed would also receive compensation. Per capita income in Bangladesh is about $1,900 a year.
The fund's members said they hoped to begin making payments in February, although they have yet to decide how much each company will contribute, which depends in part on whether governments donate.
The money is to be paid in installments to ensure that the families have a steady source of income for years to come.
"We think the agreement is a really good result," said Ineke Zeldenrust, international coordinator of the Clean Clothes Campaign, a European antisweatshop group that has pressed retailers to do far more to help the families of the disaster's victims. "The agreement will deliver to all the victims and the families of the Rana Plaza disaster full and fair compensation in a credible manner. What we need now is for other companies to agree to pay into the fund."
Families of the victims have already received several months of short-term emergency aid from the Bangladesh government as well as from Primark, an Anglo-Irish retailer. But these families have been pressing for long-term compensation.
In some families, with the mother dead, children have quit school and gone to work. In other cases, workers who were seriously injured and work are desperate for income.
Talks to establish the fund, coordinated by the International Labor Organization, began in September but stalled over such issues as how to collect information on claims, how to determine which claims were legitimate and who should administer the fund. The amount to be paid will be based on the anticipated wage loss of each worker killed, tied to the number of children, or, if the beneficiary is a parent, to the life expectancy of an adult.
With 1,800 workers having died in garment industry disasters in Bangladesh in the past decade, Dan Rees, program director for the Better Work organization, an affiliate of the International Labor Organization, said, "If you look at the history of compensation efforts in the Bangladesh garment industry, it's not a good one. But this is a potential breakthrough."
Among the groups that signed the agreement to create the compensation were the Bangladesh Garment Manufacturers and Exporters Association, IndustriAll Global Union, the Bangladesh Employers Federation and the main Bangladesh coalition of labor unions.
Some retailers and labor rights groups have expressed dismay that no U.S. retailers have agreed to join the compensation effort.
"Following the collapse, we came very quickly to the conclusion that compensation was not only a necessity for the survivors and their families, but a responsibility for the many retailers sourcing from Rana Plaza," said Robert Chant, senior vice president for corporate affairs at Loblaw, a Canadian company. "We are still hopeful that other retailers will join us in meeting the obligation, but we've already made public our disappointment in the failure of others to step forward."
Loblaw owns the Joe Fresh apparel chain, with apparel from one of Rana Plaza's factories.