Retailers Agree Bangladesh Factory Inspections

(c) Sky News 2013

Leading names in European retail have backed plans for co-ordinated inspections of factories in Bangladesh, in an attempt to prevent a repeat of the building collapse that killed 1,129 people in April.

The collapse of Rana Plaza, a factory built on swampy ground outside Dhaka, ranked among the world's worst industrial accidents and galvanised brands to look more closely at their suppliers.

The new accord led to the creation of a team of inspectors to evaluate fire, electrical, structural and worker safety in factories supplying signatory brands.

In a report published on Monday, the implementation team said the brands now had to provide full details of the Bangladesh factories from which they source goods - the first time such data would be collected or shared in such a comprehensive way.

The world's two biggest fashion retailers, Zara-owner Inditex and H&M, have agreed to accept legal responsibility for safety at their Bangladesh factories.

But a number of US chains, including Asda parent firm Wal-Mart, Gap, Macy's, Sears and JC Penney (NYSE: JCP - news) have shunned the deal, saying that it gives labour unions too much control over ensuring workplace safety and have proposed a non-binding initiative.

Under the accord, every factory will undergo an initial inspection within the next nine months, with repairs initiated where necessary.

"Brand signatories are responsible to ensure that sufficient funds are available to pay for renovations and other safety improvements," the report said.

Tesco (Other OTC: TSCDY - news) , the world's third-largest retailer and one of the accord's backers, said last month that it had stopped sourcing clothes from a Bangladesh site because of safety concerns.

European, Bangladeshi and US officials will meet in Geneva on Monday for talks aimed at improving safety conditions and discussing the country's trade benefits, which the EU has threatened to suspend without greater action from the Bangladesh government.

Bangladesh has pledged to improve safety, but it has not offered new money to relocate dangerous buildings.

An estimated 3.6 million people work in Bangladesh's clothing sector, employing mostly women on wages as little as £30 a month.

Tax concessions offered by Western countries and the low wages paid by the manufacturers have helped to turn Bangladesh's garment exports into a £12.7bn a year industry, with 60% of clothes going to Europe.

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