A matter of class
25 May 2015
Informal patronage networks in Bangladesh have hampered the development of collective bargaining.
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Had workers from the various factories in the Rana Plaza complex been unionised they could have refused to take to the factory floor on the fateful morning of 24 April 2013. Why were they not? And why have unions been such a failure in Bangladesh, which is the second largest ready-made garment exporting country in the world?
In the aftermath of the disaster, I met many workers, some of whom had been injured and others who worked in that peri-urban ‘house of cards.’ Ashraful Islam, 30, was one such young man. Slender and withdrawn, his injuries are more psychological than physical. Scarred by the hours he spent entombed, he barely spoke and could no longer taste or smell; one of the more unexpected affects that the Rana Plaza collapse had on many survivors and rescuers alike. The horrific odour of the wreckage resulted in involuntary memory so traumatic and morbid that the sufferer’s sensations simply died.
But Ashraful is fortunate in a way: His wife, Lucky, was able to go out and get a job at a different factory after the collapse. Their landlord meanwhile had given them some reprieve on the rent. The landlord who watched over and interjected during our mid-afternoon discussion, was clearly a magnanimous and generous local figure. He could afford it; he worked in a state-owned bank and unlike his young tenants, was part of a union. The bank in question, Sonali Bank is the largest of Bangladesh’s state-owned commercial banks. It functions like a piggy bank for the well-connected, operating with a non-performing loan ratio currently hovering at an astonishing 35 percent. In other words, over a third of their loans have ceased to be serviced and the loanees are essentially not going to pay them back. Most of the big, errant borrowers are politically well-connected. This is akin to socialism for the rich, capitalism for the poor.
This is in part because of what Professor Mushtaq Khan, from the School of Oriental and African Studies (SOAS) in London, calls the “competitive clientelism” of Bangladeshi society. Bangladeshi society is a complex myriad of patronage networks. Arranged, vertically, it struggles unsuccessfully to organise along class lines, but exists, instead, in extended pyramids of informal patronage where favours are traded. In the upper echelons, business associations collaborate to protect their interests, while down the chain, competition among those seeking social mobility and financial gain is maintained.
However complex, clientelism is named this for a reason. The multifaceted patchwork means that the ‘chain of command’ is unclear. The difficulty of mustering large numbers into functioning bodies, all doing the same thing, necessitates intermediaries to make it all work. A large number of complex relationships exist between patrons and workers, all distinctly aware of their status and how to gain more for themselves. These chains and structures are the essential building blocks of material security. The relationship between say, union head and factory owner or management is, more often than not, powerful enough to prevent the collective bargaining that unions are supposed to enable. Collective bargaining has seldom managed to shake entrenched class dynamics. This is vividly seen in neighbouring West Bengal where successful left parties and movements are for the most part led by Brahmins, occupying the pinnacle of India’s caste hierarchy – a system supposedly as antithetical to doctrinaire leftist philosophy as is possible to imagine. It’s not for want of trying either. Political scientist, Professor Arild Engelsen Ruud, from Oslo University notes that in factories in West Bengal when the union leaders were drawn from amongst the blue collar rather than rather than white collar employees, workers would not adhere to their orders.
The idea of collective bargaining has found resurgence within Bangladesh’s socio-economic landscape, mostly in response to the harrowing images from the Rana Plaza collapse. In May 2013, a largely European pact known as the Accord on Fire and Building Safety put unions front and centre of its plan to ensure compliance in the thousands of factories that supply garments to its 200 signatory brands.
In Chittagong, Bangladesh’s second largest city, a broad agglomeration of Western brands supported the labour union in a case in which the management was seen violently retaliating against workers. Leaked cctv footage from Global Garments Limited factory, owned by the Azim Group, which supplies to Philips Van Heusen (PVH) one of the few American groups party to the Accord, showed management and outside ‘thugs’ attack unarmed, unionised workers. This video enabled what was described by Scott Nova, a labour rights advocate in the US as “the most significant pressure that brands have ever placed on a manufacturer in Bangladesh over union rights,” Some of the world’s largest retail brands, including PVH, VF, Li & Fung, Loblaw and Gap were part of this significant pressure. This group of companies threatened to pull orders from the Azim group – orders worth a considerable portion of the group’s total business. Yet, despite crucial video evidence, none of the management involved were disciplined or held accountable for physically assaulting workers.
According to a source who wishes to remain anonymous, following meetings between the company union, the Bangladesh Independent Garment-workers Union Federation (BIGUF) and the factory management, specific demands made by the union for disciplinary action to be taken against management were removed. The union members backed down for fear of retribution from locals over fears of job loss. Union representatives allegedly complained about their inability to challenge wealthy, ‘high status’ individuals in one of the most powerful companies in the country. Had the law been applied to the managers, it would have set a precedent. With a significant portion of their orders withheld, the demand for punishing the criminal actions of three mid-level managers should have been met, yet the same management continues to work with impunity.
Competitive clientelism, like the classic model of feudalism, requires functionaries down the chain to ‘manage their vassals’. The management seldom needs to take an active approach, relying most often on the hunger of the toiling classes for subservience. The case of BEO Apparel Manufacturing Ltd, provides a window into the precarious hierarchy that governs the factory floor and the peculiar role that mid-level intermediary classes play. In September 2014, workers at the factory, represented by their legally registered union, complained to the management about holiday bonuses and safety features of a boiler in the facility. On 24 September, 48 workers, all of whom were active union members and included the entirety of the factory union’s executive committee, had their jobs terminated.
Akota Garment Worker’s Federation, the union federation to which the factory union is affiliated, complained to the Accord and a meeting was called on 21 October. Two workers, still employed at the factory, sat down with management and the Accord staff to try and encourage the re-instatement of the 48 workers. The management refused to budge. Following the meeting, the two participating workers were harassed and demoted. The Accord warned the factory that punishing workers for raising safety concerns was against the rules of the pact, if not the law, but this had little effect. On 7 December, the union president was accosted and beaten by thugs. Finally, ten days later, the German owner of the factory, Ulrich Bornemann, promised to reinstate the 48 sacked workers and pay back wages.
With reinstatement due to take place on 1 February, the factory’s entire management threatened to quit if Bornemann went ahead with his plans. The owner complained that he could not run his factory without the management, and agreed to delay the reinstatement of the workers by nearly two weeks. During this time however, the owner did not appear to make any effort to change his manager’s opinion or prepare to replace the managers should they follow through with their threat of resignation. On 16 February, representatives of the Accord, the Akota Union federation and the huge German discount super market, Lidl, where the clothes were destined for, went to the factory to meet the management.
During the meeting, when the issue of reinstatement was broached, the management became agitated, apparently with little regard for the fact that their visitors potentially held the future of their employment and the success of the business in their hands. After the meeting, the Accord delegates and the union representative were physically blocked from leaving. The management also tried to drag the union representative back into the factory building. The visiting party somehow managed to get into their vehicle, but was unable to leave because the gates of the premises were locked by the enraged interlocutors.
In the end, given the stubbornness of the management, Bornemann decided to close his factory permanently, rather than reinstate the unionised workers. While all workers and management lost their jobs, Lidl would have no trouble finding exceptionally cheap labour elsewhere to make underwear for their European customers. The inability of the owners of capital to direct it as they see fit, or have a cogent chain of command down to their rank and file worker, remains a major tenet of the system of clientalism: how management or intermediate classes strive for their piece of the pie. Unlike in more horizontally managed contexts, Bornemann essentially packed his bags because his managers rejected his orders; such was their refusal to allow ‘subordinates’ to triumph.
Bornemann’s experiences are by no means new. In the nascent days of industrialisation of the garment industry, around the 1840s, British manufacturers, concerned about their reliance on cotton from the American south, approached the East India Company to introduce American style plantations to India. However, notes Harvard historian Sven Beckert in his book Empire of Cotton, “British efforts to grow cotton on large farms with wage labour failed spectacularly, not least because labour could not be mobilised.” In essence, the Bornemanns of their day found that their labourers would take their pay for the month but not show up to work because they had greater priorities. “Agricultural service is almost unknown,” lamented one British commissioner of Dhaka in 1848. In other words, new methods failed to wrest control out of the network of intermediary classes who had traded cloth and cotton in local feudal economies, the socio-economic depth of which has rested on the dynamism and strength of kinship ties that characterise the Subcontinents’ caste hierarchies.
The current system however is spectacularly successful at doing one particular task extremely cheaply. According to a recent study by Verisk Maplecroft, a global risk and strategic consulting firm, Bangladesh has the second lowest labour cost in the world. The absence of health insurance or contractual obligations such as job security, the very things that unions demand and get beaten up for, are suppressed by this intermediary class.
The problem of course is that this threadbare mode of production is generally only good for low level assembly. It seldom builds skills or engenders innovation which can move the economy up the supply chain to produce more value added items. Bangladesh’s garment factories run on a ‘demographic dividend’. Huge numbers of young people are entering the workforce, with roughly two million new jobs required every year. This allows the managers to pay tiny wages, provide no security or indeed exploit workers. The turnover at Bangladeshi factories is very high, as workers lack incentives to stay. The notion of contracts is nonexistent, even though this is required by law. This is reminiscent again of industrial capitalism’s early days in Europe, when, notes Professor Beckert, serious legal coercion was required to keep workers in factories, such as penalties for leaving work. This resulted in the most disadvantaged groups entering mills first, i.e. destitute children and starving women. Similarly in Bangladesh, writes economist SR Osmani, wage depreciation has been “supported by anti-labour institutional arrangements that have served to curb the powers of trade unions and to permit lax implementation of minimum wage laws.”
Industrialisation leads to greater productivity if workers are engaged and the work builds skills that can enable more valuable goods to be made, but it seems Bangladesh is in some ways divorced from this mode of production. The country’s tax to GDP ratio of around 10 percent is one of the lowest in the world, and this has obvious ramifications: aid dependence to run basic social services such as health care, a woeful lack of infrastructure and severe shortage of combustible energy supplies. Such lax tax policies overwhelmingly favour the garment sector. Of all the raw materials brought into the country for export-oriented industries, only imports for the garment sector are let in duty-free. The government has and is also creating special economic zones, with lenient laws and subsidised gas and electricity connections, for the garment industries. This focus on garments has meant that it has become a principle source of money and by extension power. Khan believes that “the organisational power of [a] faction is then used either directly to capture state power or to force an accommodation in the form of payoffs from the factions who are currently controlling the state. The faction’s access to economic resources either in the form of revenue or in the power to grab valuable economic resources legally or otherwise is then used to benefit faction members all the way down the pyramid, though the payoffs may be very unequal for different levels of the faction.”
Thus the realities of a developing economy such as Bangladesh, is that the ‘weak state’ operates in what Khan terms a ‘neo-patrimonial’ system, where, “all the evidence of democratisation in developing countries show that competition, transparency and electoral contests do very little to undermine the dominance of patron-client politics and of informal networks mediating the exercise of power.” As a result, “incentives favour the construction of pyramidal patron-client factions that compete for the capture of public resources in ways that are relatively unconstrained by economic viability considerations,” he says.
When an industry accounts for 80 percent of exports, worth almost one-fifth of the GDP, in a deeply patronage-oriented society, power will associate with, gravitate towards and feed off it. Attempts to regulate it, or favour others sectors will flounder because those with power need the people with money and the people with money will need the powerful. In any case, more often than not, they are the same people.
As a result of Bangladesh’s buoyant garments exports, the local currency, the Taka, has gradually risen in value; making exports from other sectors less competitive. The former lead industry in this part of the world, jute, is now seeing a decline as people want to work in ‘comfortable’ jobs such as in the garment industry.
One solution to this could be that garment makers upgrade production to create higher value added goods. But there are impediments to this. Without taxation it is hard to provide the necessary infrastructure. Without regulated banking, investment (in capital goods and training etc,) is difficult, as lending rates hover at around 13 percent. So taking a risk by borrowing, or allowing a professional bureaucratic class to decide the merits of investing capital where it can most productively be deployed, does not happen. As a result, the industry is risk averse, and reliant on ‘the capture of public resources’ and the poverty of employees, as opposed to innovation.
All this points to the need for change in industrial relations. However, history provides few answers as to whether this will happen. In one respect Bangladesh’s recent, turbulent history has famously produced dynamic results and distinct successes with respect to human development: Bangladesh has vastly improved literacy among girls; life expectancy for the poor and the rich have risen by ten years between 1990 and 2010; and the poverty rate has come down from over 50 percent in 2000 to just over 30 percent in 2010.
On the other hand, as the tumult of recent history settles, deeply hierarchical chains of patronage replicate caste-based alignments found frequently elsewhere on the Subcontinent. Caste, whilst commonly associated with Hindu cosmology, is also used to organise material relationships. It has adapted and thus evaded many prior attempts at reform, and is maintained in religious communities seemingly hostile to the idea of caste, be they Buddhists, Muslims or Sikhs. This is not to say that Bangladeshis identify themselves as Brahmins or Jats, more that similarly hierarchical relationships continue to exist, which appear insurmountable and are able to subconsciously induce submission of the ‘lowly’ towards those born into an elite.
Additionally, Bangladesh’s growing population means that the supply of cheap labour is and will continue to be plentiful. Meanwhile, productivity is not buoyant and recent political spats have possibly worsened. Christopher Woodruff from Warwick University suggests that productivity is about 30 percent less than that of Vietnam’s. It is particularly difficult to improve productivity within the current political environment where capital is stored offshore because the domestic environment is unstable, and banks and other financial institutions are deeply politicised. Consequently, workers continue to be something of a fluid commodity, in turn, creating an economy more suited to high turnover, untrained, un-unionised workers.
New industrial relations should push for a manufacturing sector which will move beyond the low wage centre. To do so, workers need a new relationship with employers. Away from one where coercion and violence are required to get a shirt sewn. While the Accord has faced huge challenges, its small successes and the groups that signed up to it do offer hope. Not least because, for the first time, serious capital in the form of some of the world’s biggest clothing companies are being held up to basic standards with regards to labour. The pact points the sector to a more formalised direction in that they promote more capital intensive, longer term arrangements. These in turn offer workers a small glimmer of hope, of becoming something other than just a cheap pair of hands that can be dumped if they ask for basic rights. For such an industry, which does not ensure basic rights and benefits but profits off labour, collective bargaining would be a boon.
~ Joseph Allchin is a freelance journalist based in Southeast Asia. Follow him on Twitter @j_allchin.