The collapse of the Bangladeshi Rana Plaza factory killed 1,100 people (Photo: Reuters)
The collapse of the Bangladeshi Rana Plaza factory killed 1,100 people (Photo: Reuters)

US and European retailers have agreed on a new set of fire and safety standards for up to 2,000 Bangladeshi factories in a bid to avoid another Rana Plaza disaster.

However, the latest agreement shows that while global retailers have forged a pact, there is still a dispute over how to pay for the fire safety upgrades.

The North American group, Alliance for Bangladesh Worker Safety, says it is willing to stump up $100m in loans to factory owners to finance safety upgrades.

"It's up to the factory owner to decide if they want to remediate. We can't force them to make these changes," said Jeffrey Krilla, president of the American-led alliance.

Meanwhile, European retailers agreed to finance fire and safety reforms for buildings that do not meet requirements.

"The reason garment factories continue to be unsafe is not for a lack of common standards," said Theresa Haas, a spokeswoman for the Worker Rights Consortium, a labor rights group that is a member of the European-led Accord on Fire and Building Safety in Bangladesh.

"It is because the monitoring visits carried out by brands were not conducted by competent engineers, not done in manner that is transparent, and did not include any commitment by brands and retailer to finance repairs."

In July, a raft of 70 retailers signed a legally binding pact to conduct safety inspections at factories in Bangladesh after the Rana Plaza disaster pressurised companies to improve standards.

Retail giants, including the biggest buyer of Bangladeshi-made clothes Sweden's H&M and Benetton, have agreed to provide details of the factories they source goods from, which will be inspected within the next nine months.

Other retailers in the group that signed the pact include Inditex, Metro, Carrefour, Marks and Spencer, Tesco, Esprit and Abercrombie & Fitch. Switzerland-based trade unions IndustriALL and UNI Global Union, which coordinated the agreement, also pledged allegiance to the deal.

Under the new pact, individual retailers can still voluntarily pull out of factories that do not meet safety requirements.

The Rana Plaza Disaster

The harsh and unsafe working conditions in Bangladesh's garment factories came to limelight after the collapse of the eight-storey Rana Plaza building on 24 April this year, killing more than 1,100 people.

In addition, the sector suffered from numerous fires, including a November 2012 blaze that killed 112 workers.

Following the accidents, authorities in Bangladesh and clothing companies, especially in the US and Europe, have pledged to improve safety standards at the country's factories. Europe and the US account for 60% and 23% of clothes export from Bangladesh, respectively.

In September this year, thousands of garment factory workers in Bangladesh protested over low wage rates, resulting in the closure of many factories.

Bangladeshi workers currently get a minimum wage of $38 per month, which they raised to $100.

Meanwhile, factory owners are unwilling to increase wages beyond $45 per month, saying they are also hurt by rising production costs.