Senior Fellow Kimberly Ann Elliott is featured in Washington Post Wonkblog interview on how companies in the developing world can inexpensively improve work conditions.
In light of the tragic collapse of a factory in Bangladesh, killing at least 87 people, and the ensuing debate about labor standards in developing countries, we spoke on the phone Thursday. A lightly edited transcript follows.
Dylan Matthews: Just to start off, what’s the state of labor standards in most developing countries doing these kind of export-based sectors? Are the laws there, are they enforced, etc.?
Kimberly Ann Elliott: A lot of developing countries have laws on the books that are up to international standards but enforcement is a problem. In this particular case, apparently it was so bad that inspectors had gone in and said, “This building is dangerous, you need to evacuate.” Several other businesses in the building heard that and did, but the garment factory owners there said, “Oh, it’s fine, you need to go to work.” So they had both the laws and the enforcement, which at least was there in theory, but these guys ignored it with very tragic results.
Dylan Matthews: I’d imagine in a lot of countries you don’t even have that level of inspection, whether or not it’s ignored.
Kimberly Ann Elliott: Again, I don’t know the exact details of the inspection capability in Bangladesh. But look at our country, right? Take this fertilizer plant outside Waco. It’s storing a known dangerous product, and it had barely been inspected. When things had been found wrong, it got very small fines and went along its merry way. And that’s in a very rich country.
It’s a combination of capacity, which is very low in a country like Bangladesh, and incentives to not inspect. A lot of things do slide through due to a lack of will because Bangladesh has its whole export economy riding on apparel, and it’s clearly a strategy of the Bangladeshi government to succeed on low wage exports.
Dylan Matthews: How expensive would it be to adopt basic improvements? The main argument against requiring them, of course, is that it’d make production too expensive and drive businesses out of the country.
Kimberly Ann Elliott: In health and safety, just focusing on that area for a moment, there’s a wide range of things that affect health and safety, and a lot of them would be really very cheap to fix. On the one hand, doing a building right is probably pretty expensive, but also pretty important. There are some costs you have to find a way to bear. But there are a lot of things that aren’t like that. When these international inspectors go in, a lot of it is, “Is there a fire extinguisher and does it work?” Or the locking of doors. I don’t know the numbers of how bad theft is in these factories, but unlocking the door isn’t exactly expensive. There’s a lot that can be done that doesn’t add that much to costs.
Dylan Matthews: So why don’t companies do it, if it’s so cheap?
Kimberly Ann Elliott: I think, at that level, the competition is so fierce that there is a collective action problem where the owners aren’t willing to bear even the smallest costs. There’s also a collective action problem on the other side, with the buyers, who are looking for the cheapest possible price for the product and aren’t willing to raise that price a bit if their competitors aren’t. It feeds into a vicious cycle. That’s why I think you need some kind of external intervention in terms of unions, technical assistance for a stronger inspectorate, a stronger ILO, as, on their own, the companies aren’t going to be able to overcome that competitive collective action problem.