SPECTRUM-SHAHRIYAR UPDATE # 8, October 5, 2005

Six months after the collapse

Dear Friends,

October 11th marks six months since the Spectrum-Shahriyar factory collapsed, leaving 64 workers dead, at least 74 workers wounded and hundreds jobless. To date, emergency relief measures and medical needs have largely been met. Compensation payments to the families of the dead and the injured remains a big issue, thus far the process has been haphazard and the amounts wholly inadequate. Parties are still discussing a first proposal for a compensation trust fund. Fifty workers are still owed overtime payments and none of the workers have received their legally due severance pay.

Several high-level meetings were held involving buyers, international agencies and the Bangladeshi government, and a "National Forum on Social Compliance" was set up by the government, including a number of special task forces. Though this seemed a promising development, it is worrying that the concrete plans and terms of reference for the task forces, due by late August, have not been produced.

Representatives from the CCC visited Bangladesh during the first two weeks of September to speak with some of the workers who had been working at Spectrum-Shahriyar at the time of the collapse and for the purpose of assessing progress and initiatives taken by buyers to meet the demands as outlined by the CCC and Bangladesh partners.

One worker named Mohshin still has problems with his right hand and his head aches all the time. His daughter is now working in a garment factory. She is the sole provider for him, his two sons, three daughters and his wife.

Another woman worker whose husband died in the collapse had a baby three months ago. Even though she received Tk 21000 compensation, this is not enough to support her and her baby for long. Her in-laws received 79000 through the BGMEA, but she has no contact with them.

Worker Nure Alom lost his arm after the collapse and has undergone five operations since then. Most of his medical expenses were covered, and he received the Tk 21,000 (approx. €266) but it is not enough to rebuild his life.

Motaleb has extensive wounds on arms and legs and is missing the fingers on his left hand. He has undergone five operations in all. He wants to start a business such as a grocery shop, but he would need about Tk 300,000 (€ 3,800) to 400,000 (€5,070) to do that.

An injured worker who suffered back injuries is now wearing a back brace and a woman who lost her husband has to support her in-laws, two young brothers-in-law aged 10 and 12 and her own daughter of seven. They all depend on her but she is currently unemployed.

From September 9th through September 11th a third visit to Bangladesh by buyers took place, including representatives of Inditex, Cotton Group and Karstadt/Quelle. Also attending was Neil Kearney of the International Textile, Garment and Leather Workers' Federation (ITGLWF) and a representative of the Gap.

Please find below a more detailed update on the situation following the reports from these visits.

Reportedly, all of the injured workers have received adequate medical treatment. 500 workers have received Tk 2000 (approx. €25) each relief money and there is a list of a further 100 workers who will also receive Tk 2000 each. These costs were covered by the emergency trust fund (including mainly the $ 35,000 given by the Spanish company Inditex) and administered by Oxfam. Inditex also donated two years wages to two severely injured workers, one who was paralyzed from the waist down and the other with serious burns on his arms and legs.

The NGWF and the Bangladesh National Council (BNC) have also provided 21 injured workers with Tk 5000 (approx. €63) each. This money was also made available from the $35,000 from Inditex.

Several other companies indicated that they were willing to contribute financially to the emergency fund, but since most emergency issues are covered, these are called upon instead to contribute to the compensation trust fund.

There is now an official and definitive list of 64 dead Spectrum-Shahriyar workers that has been agreed upon by both the trade unions and the BGMEA. With regard to the number of injured workers, the amounts are between 74 and 78, calculations differ as to the amount of 'severe' and 'non-severely' injured workers (depending on whether only those in the trauma center are counted as severe, or others as well). It will be important to have an independent and qualified assessment of this with regard to the eventual compensation payment determination.

Out of the 64 families of the dead workers, 61 families received Tk 79,000 (€ 1,000) from the BGMEA and it is expected that two more families will receive this amount in compensation shortly. Only 45 of these families have received their additional legally-entitled compensation of Tk 21,000 (€ 266) from the Labor Court. Fifteen are in the process of completing their application for compensation and it is expected they will receive it soon. Part of this money was made available by the Spectrum/Shahriyar owners.

The CCC representative visiting Bangladesh in early September met and spoke with former Spectrum-Shahriyar workers. Workers stated that the compensation received thus far is totally insufficient to help the families of the injured and dead workers in the long term. The Tk 100,000 (€1,266) they've received is not based on any relevant criteria and only meets their short-term needs.

Local trade unions and NGOs have called for compensation to always take into account expected lifetime earnings of the deceased or injured worker and the number of dependents. Legal action has been taken in Bangladesh for the case to be tried under the Bangladesh Fatal Accident Compensation Act-1955, which would use this as its base, on behalf of five of the workers to demand compensation under this act, amounts for which would then be established on a case by case basis and would according to some lawyers go up to at least Tk one million (€ 12,677).

International pressure has already resulted in a initial agreement among some of the parties to establish a compensation trust fund (please see the CCC June 16th update) into which buyers, the factory owner and the BGMEA could contribute money. The international accounting and consultancy firm KPMG was commissioned by Inditex with the support of Karstadt Quelle and Cotton Group to draft a proposal regarding the appropriate amounts, taking into account a worker's expected lifetime earnings, number of dependents and the specific needs of the severely injured. A first proposal based on this actuarial assessment was presented to the trade unions and several buyers in the second week of September, and is presently being considered by the organizations in Bangladesh. An initial review of the proposal suggests that there is scope for significant improvement to obtain a fair and decent settlement package. More advice on the compensation issue is being sought. A survey of the families of the 64 dead workers and the 74+ injured workers has been proposed in order to be able to further assess needs, which would mean contacting almost 140 families scattered all over the country. Unions and other stakeholders should be involved in the survey process, and would have to initially agree on the purpose, methodology, and questions in the questionnaire. Consensus would have to be reached as to the role each party would play in the survey process.

Importantly, thus far only a few buyers have agreed in principle to contribute to the compensation fund. These include Zara, Karstadt/Quelle, Cotton Group, Scapino and Kirsten Mode. Some of them have actually named amounts. The CCC would like to emphasize that once levels of fair compensation are assessed and agreed upon by the parties involved companies will be expected to pay appropriate amounts. Some companies indicated that the money they contribute would be for emergency relief, however the emergency fund set up a few months ago with funds from Inditex is still sufficient, so companies have been asked to contribute to the compensation trust fund instead.

The International Secretariat and the national CCCs are still actively tracking down other companies and brands that sourced at Spectrum-Shahriyar to ensure that they also contribute to the trust fund and take responsibility to help the workers. There are still companies in Germany (New Yorker, Bluhmod), Sweden (Harvest), France (Carrefour, Solo Invest, Windfield CMT) and Belgium (Carrefour) who were confirmed to have been sourcing at Spectrum Shahriyar but who have not yet pledged to contribute to the compensation trust fund.

The CCC calls upon these companies to immediately confirm that they will contribute to the compensation trust fund once the appropriate amount has been determined. For a complete list of buyers at Spectrum-Shahriyar please see http://www.cleanclothes.org/hews/05-07-13.htm.

There are still 50 workers who have not yet received their overtime pay. In May the NGWF sent a memorandum regarding these outstanding wages to the Labor Inspection Department and the Department proceeded to file a case against the owner of Spectrum-Shahriyar. The court ordered that these workers are entitled to their back wages. On some occasions the owner has promised to pay this money soon, but on other occasions he has told people that he is completely bankrupt and/or his assets are frozen, and therefore is not in a position to pay.

Until now, none of the Spectrum-Shahriyar workers have received their legally due severance pay, which would be four months (plus one month for each year worked) since the date of dismissal Since none of the workers have received an official letter from the company terminating their employment, strictly according to the law they are even due salaries (and then severance from the date of dismissal).

The CCC representatives in Bangladesh reported that upon visiting the Spectrum-Shahriyar site, new garment producing machinery was present and the Shahriyar factory was up and running for what was referred to as ‘light production work’ for the Belgian company Cotton Group in addition to packing and labeling for the German company Bluhmod of sweaters produced by Spectrum before the collapse. Cotton Group did a structural audit before agreeing on the continuation of running orders but did not ask for a social audit. CCC representatives visiting the site have raised doubts as to whether present health and safety measures are satisfactorily. Cotton Group states that the payment of the current order will be conditional to the owner paying (part of) the legal dues to the workers.

In the absence of concrete action by the government or the owner, and with nearly six months passed, buyers should take immediate measures to see to it that workers receive their outstanding wages and legally due severance payments. The CCC views waiting for government action or for the owner to act on these outstanding issues as delaying tactics. It is also irrelevant whether workers have a new job or not in this context, an argument often cited by they buyers, the law states clearly that severance needs to be paid regardless.

There are different estimates as to the number of unemployed workers as a result of the Spectrum-Shahriyar factory collapse, and on the percentage that have found new jobs. According to the NGWF, the majority have found other forms of employment somehow. This can be of lower quality though: the BNC reports that though these workers managed to find work, it is usually temporary work and many skilled and experienced workers have had to go back to doing less skilled work. Karmojibi Nari estimates that approximately 60% of these workers have found new jobs. Brands should work with their other suppliers to give hiring preference to former Spectrum-Shahriyar workers for regular jobs at appropriate skill levels, and this should be communicated directly to the local unions and NGOs.

As reported in our earlier update (please see http://www.cleanclothes.org/news/05-08-02.htm#letters) the Bangladeshi government set up a National Forum on Social Compliance. The forum will be led by the Ministry of Commerce and now includes other stakeholders. Until now, the forum has reportedly met twice.

Within the National Forum two task forces have been set up: one for labor and one for CSR. They are supposed to develop concrete plans for short-, middle, and long-term measures and a "monitoring cell" will coordinate and monitor all activities.

Meaningful trade union participation in this task force will be essential if they are serious about social compliance, occupational health and safety, minimum wage, workers' right to organize and any other issues affecting garment workers. Reports indicate this issue is under discussion, but not completely settled.

The June 27-28 MFA forum meeting in Bangladesh, hosted by the UNDP and attended by many international buyers, trade unions and international organizations, provided input and suggestions towards the governance and activities from the Government Forum. The MFA Forum also aims to improve compliance, and continues to organize discussions with the different parties to ensure follow-up. For more background on the MFA Forum and its relation to the Government National Forum, please refer to the website of the Maquila Solidarity Network at (http://www.maquilasolidarity.org/resources/post_mfa/MFA%20Forum/index.htm

The action plan for the forum and the task forces, which was promised for the end of August, is not finished yet. According to Karstadt/Quelle, the minister and coordinator of the monitoring cell claim that the delay is due to a lack of experience in this field.

We repeat that the Spectrum collapse is merely the latest in a series of many incidents where workers died in unsafe buildings in greater Dhaka, and that workers lives continue to be at risk here. Comprehensive health & safety review and follow-up action measures have been called for by the local unions and NGOs since the collapse, and it is distressing that no actual progress has been made. It should have been well underway by now. Waiting for the Government Forum to make progress on its very broad mandate should not become the excuse for not taking direct and immediate action on this specific point. Inditex disclosed its supplier list to the local trade unions, and is actively exploring ways to involve them in workplace assessments and remediation work, including presumably health and safety related measures. Although Karstadt/Quelle indicated in a meeting that they would also provide their supplier list to the local trade unions, they have failed to follow-up on this. Several buyers have reported that they will step up their audit-activities in this area, and include building structural reviews. Depending on the quality of the auditing this can certainly be an improvement, it is however insufficient in the face of this tragedy. Collective and comprehensive action is urgently needed and there really is no viable excuse for any more delay, especially since the MFA forum has opened up the space for such cooperation among the different buyers and interest groups.