British firms face ethical dilemmas in Bangladesh

Laura Kuenssberg

Former Business Editor

A typical worker makes the equivalent of forty basic t-shirts a day. Credit: ITV News

During Dhaka’s morning rush hour we saw thousands of workers streaming past on the way to their factories. The buildings line the roads all around the city, a place that is growing fast, already with a population of more than 10 million. At factory gates guards watch as employees arrive for their shifts. Their hours are long and their work is hard. But now that the factory collapse at Rana Plaza has brought an intense focus to this trade, where is the balance in this business between the risk and the rewards?

On the outskirts of the city, in an area called Gazipur, packed with garment factories, for the first time the UK ‘s biggest chain Tesco opened the door to their vast operation in Bangladesh. We were the first team of UK journalists to be given access to a major British retailers supply chain in this country.

And Tesco's presence here is massive, their custom supports 100,000 jobs. The company is proud of its record here – but since the factory disaster they have been checking and checking again.

A typical worker makes the equivalent of forty basic t-shirts a day. Credit: ITV News

Giles Bolton, the firm's ethical trade director told us they have been reviewing all of the nearly 100 factories they use here, carrying out fire safety checks, and building checks on top of their existing inspections. The company is well embedded in Bangladesh already, not just making checks on the standards at their suppliers, but also spending money on training and skills to improve the level of expertise among factory workers and managers here. Together with the government trade agency, the Department for International Development (DFID), they fund a skills foundation where workers are given classes to teach them better ways of working.

A simple garment it takes about 16 minutes to make. Credit: ITV News

But is it possible to do business in the country where labour costs are among the cheapest in the world? UK businesses are here in the first place because it allows them to do business and make clothes more cheaply than anywhere else.

If you buy clothes in Tesco, or M&S, or Sainsbury's or Next for that matter there’s a high chance they’ll have been made on the factory floor we visited today. Tesco buys a staggering forty million items from Bangladesh a year.

They told us the typical worker makes the equivalent of forty basic t-shirts a day. For a simple garment it takes about 16 minutes to make each one. With average pay at around £2.20 a day, that means roughly, workers receive the equivalent of around six pence per simple garment.

The price for you? As little as £5 for two. Today Tesco is offering two basic t-shirts for £5. So is the way in which Tesco is operating really fair? The business vows they want it to be ethical, but can it ever be ethical to offer clothes at such a price?

Average pay is at around £2.20. Credit: ITV News

Bolton says: "What is ethical is making sure that people work and they are paid well' - he cites the huge progress made in Bangladesh, bringing millions out of poverty since the garment factory. But can that be the case when wages are so low? Of course living costs are much lower in this place than in the UK. Rent for a small room in a very poor area of Dhaka might be just forty dollars a month. Bolton says the average worker in the factory we visited is double the minimum wage - it is still a tiny amount, but perhaps it is better than no work at all.

Firms like Tesco believe that while the situation is difficult it is possible to provide clothes cheaply and be fair to workers. They say it is not a contradiction to do business in a country where labour costs are so low, and keep standards high. Yet there is no escaping the fact that operating here is a conundrum for firms who care about price as well as principle, all the more so in a country like Bangladesh where there is limited respect for the rules.

Sustainability expert Rodney Reed, who has been working in industry in Dhaka for seven years, told me he believes most Western firms are genuinely trying to improve standards. The best factories here, he says, are as good as any in the rest of the world. But he stresses that Bangladeshi authorities must be more stringent, and enforce rules, particularly on the quality of buildings, much more forcefully.

The country's enormous garment industry supplies our high streets and provides an almost endless supply of clothes at prices that would have seemed impossible some years ago. It is worth noting that while prices of almost everything else have risen, energy, food or housing for example, the real costs of the clothes on our backs has fallen further and further. The trade benefits us as it gives access to what the consumer demands. Yet in this country where it provides a vital source of employment it can harm as well as help.