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RMG compliance rises amid buyers' pressure: study

Star Business Report
Intervention by Western apparel buyers has significantly improved compliance with the labour law in Bangladesh, found a recent study.
Now, the safety committees meet more frequently, conducts risk assessment of factories and makes recommendations, said Laura Boudreau while presenting findings of the study, 'Multinational enforcement of labour law: Experimental evidence from Bangladesh's apparel' at a session of the Development Economics Conference. International Growth Centre and Brae Institute of Governance and Development (BIGD) organised the event at the Six Seasons Hotel, Dhaka.
Academics from top universities in Europe and the US, London School of Economics, University of Stockholm, Sciences Po, Harvard University, Johns Hopkins University and the University of California Berkeley presented their research on Bangladesh, Rwanda, Liberia, Pakistan, Nigeria and Italy.
The intervention by Alliance's enforcement programme for Bangladesh's Occupational Health and Safety has significantly improved factories' compliance with labour law, said Boudreau, who is completing her doctorate degree from UC Berkeley. Frequency of meetings of safety committees in factories increased from about 1.27 times every three months to 2 times, she said. It also had a small, positive effect on indicators of safety committees' effectiveness, including measures of physical safety and awareness, according to the study, which was conducted on 80 factories.
"There is suggestive evidence that factories with better managerial practices improved compliance, and in particular, safety," she said. At the session, LG RD and Cooperatives Minister M Tajul Islam said buyers are squeezing prices.
"And because of that profit margins of owners have reached such a level that there is no profit margin at all."
If their profitability erodes, garment owners would not be able to: repay their loans, invest to develop facilities for workers and meet buyers' requirements, he added.
Earlier in the day, eminent economist Wahiduddin Mahmud spoke on the importance of policy relevant research. LSE Professor Oriana Bandiera along with IGC's Adnan Khan and Johns Hopkins' Daniel Honig spoke about the importance of autonomy in public sector procurement and how unnecessary rules often lead to unintended consequences, according to a press release.
Findings from the study by Anna Tompsett, assistant professor of economics at Stockholm University, on access to safe drinking water shed new light on what makes 'collective action' fail and what sorts of tweaks in group size can make it succeed.
While there are benefits to operating at scale and larger groups were found to be more successful in installing safe wells and exploiting economies of scale, those same groups achieve insignificant increases in the use of safe drinking water, said the press release.
There is thus lower impact in larger communities.
Senior Advisor of IGC Bangladesh Sultan Hafeez Rahman and IGC Country Director and BIGD Executive Director Imran Matin also spoke at the event.