From the TUC

Rana Plaza compensation: market failure means DFID must act

04 Aug 2014, by in International

Last week, a massive 38 Degrees email campaign involving over 100,000 people forced clothing company Matalan into making a late contribution to the tripartite compensation fund for the victims (and their families) of the Rana Plaza factory collapse. Shadow International Development Secretary Jim Murphy and shadow minister Alison McGovern had also pressed for action. However, while Matalan’s decision is welcome, we still don’t know how much they have given, and the company came under further pressure at the weekend from protestors. There will be justifiable outrage if it turns out that Matalan have given peanuts.

To ensure that corporate legal departments don’t hold up payments into the fund, it was set up on a no-fault basis by the Bangladeshi government, employers and unions (with support from international unions and NGOs, and management by the ILO, although it’s not an ILO fund per se.) But corporates – both those actually sourcing from Rana Plaza and those sourcing from Bangladesh generally – have been appallingly reluctant to contribute even though no blame would attach to their payments (even the TUC has contributed, using money union members donated to help the victims.) Primark eventually led the way (and it wasn’t easy getting them on board!) with a contribution that equates to about £6m, but the overall total needed is £24m, and the fund is still short £13m.

So the market failure that led to the Rana Plaza disaster in the first place is now compounded by a market failure to raise the funds needed for adequate compensation.

It’s time for Governments to do more. After months of pressure, DFID Ministers did eventually join the call for corporates to make donations, and then junior Minister Alan Duncan MP – before he left the Government – joined six other Ministers from countries around Europe in issuing a strong call for action.

Corporates clearly aren’t listening, so the TUC has formally urged International Development Secretary Justine Greening to top up the corporate contributions with money from her overseas aid budget, in the same way that DFID match-funds public donations to specific NGO appeals.

This wouldn’t let off the government of Bangladesh, or employers. As Frances O’Grady writes in the letter:

“This would both encourage more companies to pay into the Fund and demonstrate to the government of Bangladesh the important role that governments need to play in providing support for victims of industrial harm.”

But it would go some way to making sure the victims and families got the compensation they deserve so they can get on with their lives.