Primark, Loblaw pay out to Bangladesh factory victims

DHAKA Thu Oct 24, 2013 9:49pm IST

A shopper passes demonstrators outside clothing retailer Primark in central London April 27, 2013. REUTERS/Suzanne Plunkett/Files

A shopper passes demonstrators outside clothing retailer Primark in central London April 27, 2013.

Credit: Reuters/Suzanne Plunkett/Files

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DHAKA (Reuters) - British clothes retailer Primark and Canadian grocer Loblaw laid out plans on Thursday to pay more compensation for the collapse of a Bangladeshi factory that killed almost 1,130 people, as protesters demanded other brands follow suit.

The disaster on April 24 has galvanised most of the clothing industry's big names to try to improve safety standards but they have failed to agree on a compensation fund for victims despite months of wrangling.

It was the world's most deadly industrial accident since the 1984 Bhopal disaster in India and turned a spotlight on working conditions of those making clothes for global household names for a fraction of what they cost in the West.

Children carried placards reading "Please come forward, our parents were killed while working for you. Compensate us", during a rally on Thursday of hundreds of survivors and victims' families at the site of the collapsed Rana Plaza complex.

Primark, the only retailer to pay compensation so far, said it would pay another three months of wages to workers and their families of its Rana Plaza supplier, a pledge matched by Loblaw Cos Ltd (L.TO) for those who produced garments for its Joe Fresh brand.

Both called on other brands to follow suit, but said if they do not, they will together make sure the all those affected, including from other brands, are paid for three more months.

With many workers making as little as $38 a month, there is anger that little progress has been made on a broader scheme to set up a long-term fund for the families of the dead and hundreds more injured who will need years of support.

"Survivors and victims' families at Rana Plaza today remembered their loved ones and all ask the same question: When will we finally receive compensation for our loss?" two global trade unions involved in the process said in a statement.

ROCK BOTTOM WAGES

About 3.6 million of Bangladesh's 155 million people work in the clothing industry, making it the world's second-largest garments exporter behind China. Around 60 percent of garment exports go to Europe and 23 percent to the United States.

A factory fire on the outskirts of the city on October 8, in which seven people died, has raised concerns that standards have not changed significantly since the April collapse and the International Labour Organisation (ILO) launched a $24 million project this week to improve safety in the industry.

But while workers say that better safety standards are essential, many of them are equally worried about their low wages. A wave of pay strikes last month hit nearly a fifth of the country's garment workshops and looks set to force a rise of between 50 and 80 percent in minimum wages.

Rock bottom wages and trade deals have made Bangladesh's garments sector a $22 billion industry that accounts for four-fifths of exports, supplying retailers such as Wal-Mart Stores Inc (WMT.N), and Hennes & Mauritz AB (HMb.ST).

The ILO has been trying to get an agreement on setting up long-term funds for Rana Plaza workers and for victims of a fire at the Tazreen factory in November 2012, which killed 112 workers - but progress has been slow.

$2,300 PROPOSED PER FAMILY

Some of the 28 brands supplied from Rana Plaza say they will not contribute as their production was outsourced to the factory without their knowledge, or ended some time ago, while others say they prefer to pursue their own compensation plans.

Primark, whose low prices have helped it expand to more than 250 stores in Britain and Europe, has already paid six months salary to all 3,621 workers affected by the collapse and their families, committing some $2 million in short-term financial support and food distribution.

The company, owned by Associated British Foods (ABF.L), said it would press ahead with long-term compensation in the New Year despite the lack of a sector agreement. Unions and families have proposed 1.8 million thaka per family of the deceased.

Loblaw, whose Joe Fresh affordable casual clothing line is a key part of its growth strategy, also said it would start providing long-term, direct compensation for workers and dependents of its New Wave Style factory in Rana Plaza in 2014.

"Loblaw joins Primark in encouraging all brands that have been involved in production at Rana Plaza to participate in the provision of compensation to the victims of this tragedy," said Bob Chant, Loblaw senior vice president for corporate affairs.

Advocacy group the Clean Clothes Campaign (CCC) noted that Italian retailer Benetton and Spanish chain El Corte Ingles were participating in attempts to establish a fund, while Zara-owner Inditex (ITX.MC), Britain's Bonmarche and Mascot of Denmark had signalled their intent to contribute.

"It is time that all brands linked to the tragedies step up and ... pay into the fund, and thereby take financial responsibility for a disaster that they failed to prevent," said Ineke Zeldenrust of the CCC. (Additional reporting by Solarina Ho; Writing by Emma Thomasson; Editing by Patrick Graham and Alison Williams)

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