What can we make of transnational industrial democracy after the 2013 Rana Plaza disaster?

The 2013 Rana Plaza disaster led to an unprecedented initiative based on principles of industrial democracy to prevent future factory deaths in the Bangladesh garment sector. Yet, write Juliane Reinecke and Jimmy Donaghey, the success of the initiative depends on whether transnational and local actors cooperate, and whether a market-driven approach to labour rights renders effective in the absence of a disaster

24 April 2023 is the tenth anniversary of the Rana Plaza disaster. This tragedy saw the collapse of a factory complex in Dhaka, Bangladesh, which killed over 1,100 low-paid garment workers. The collapse was just one of a series of such events in Bangladesh, the worlds second-largest garment exporter. At one level, the disaster was the result of poor building infrastructure and uncontrolled industrial development. But the disaster also demonstrated the need for a new paradigm of global labour rights. As we argue in our recently published book, at a deeper level, these rights must have their roots in the principles of transnational industrial democracy.

Transnational governance and the challenge of democratic representation

The global supply chain model has become the dominant mode of value creation in the global economy. But global supply chains are challenging for democracy. As Adrian Bua explains in this series, this is caused by the de-democratisation demand that such supply chains place upon governments and transnational regulatory authorities. Further, cross-national boundaries undermine democratic oversight. They bind state regulation, as well as workplace-level democratic participation.

Similarly, private governance institutions typically show little concern for the democratic representation of those affected. Workers and their representatives are rarely involved in the prevailing model of private labour regulation, which is social auditing against corporate codes of conduct.

At transnational level, union representation is often suppressed. What kind of institutions might promote democratic representation in private governance regimes?

This brings worker representation to the forefront of the debate. Democratic representation is, typically, the legitimating principle of rule-making. At a broad level, democracy is about a system of governance in which those affected by rules participate in the making of those rules.

For proponents of industrial democracy, the answer is thus clear. It means governance of workers by workers for workers, typically through union representation. At the transnational level, however, union representation is often suppressed. So, what kind of institutions might promote democratic representation and participation in private governance regimes?

The Bangladesh Accord as an experiment in transnational industrial democracy

Since 2013, we have tracked the global governance response to the Rana Plaza disaster. Specifically, we have tracked the response to the Bangladesh Accord for Fire and Building Safety. The Bangladesh garment supply chain epitomises the challenges of establishing democratic labour regulation. But it also provides important insights into how the principles of industrial democracy can extend into global supply chains.

The Accord marks a significant shift in global labour governance. Based around principles of industrial democracy, the Accord represents workers' interests independently of the interests of capital. Unlike voluntary and corporate-driven social auditing mechanisms, the Accord is a legally binding agreement for companies.

The Bangladesh Accord represents workers' interests independently of the interests of capital. Unlike corporate-driven auditing mechanisms, it is a legally binding agreement for companies

Central to the Accord is a two-pronged approach to the representation of worker interests. At the transnational level, Global Union Federations and their local affiliates play a key role in its governance. Labour rights NGOs act as witness signatories. At the workplace level, the Accord requires supplier factories to establish a workplace safety and health committee. Worker members are protected from reprisals by their employers. Acting in contravention of freedom of association could lead to factories' exclusion from supplying any of the 200+ company signatories.

The Accord has been successful in terms of both preventing accidents and creating worker voice in the Bangladesh garment sector. Over 2,000 workers died in tragedies between 2003 and 2013. Ten workers have been killed in incidents since 2013 alone. Given these shocking figures, the Accord has achieved its primary goal of improving worker safety. In addition, increasing worker complaints about factory safety to the Accord demonstrate workers growing confidence to voice their concerns.

The imperfections of the Accord

So, the Accord has significantly improved factory safety. But it has also resulted in the emergence of a new model of transnational labour governance. This model recognises the need for the democratic participation of worker representatives. Nevertheless, the Accord is an example of what Dani Rodrik calls 'second-best institutions'. It lacks democratic credentials on two fronts.

While the Accord has improved factory safety, neither the Bangladesh government nor the factory owners were included in its administration. This promoted a series of political and legal challenges

The first democratic deficit concerns the fact that neither the government of Bangladesh nor the factory owners were included in the governance of the Accord, because they were viewed as a potential blockage to improving labour standards. Their exclusion prompted a series of political and legal challenges to the Accord, which culminated in a court ruling. This ruling forced the Accord to hand over its Bangladesh operations to a local institution in 2021.

Second, enforcement was largely carried out by threatening to leverage the market force of transnational buyers, rather than national systems of public government. Hence, multinational power is exerted against parties for responding to the very situation which multinationals have created: outsourcing their production to sites with low labour costs and standards.

Can an International Accord work?

The Accord that emerged from the Rana Plaza disaster is an important case for understanding how to build institutions for transnational industrial democracy in global supply chains. But can the Accord be a model for developing labour rights in other contexts? Can we replicate elsewhere the design which put the representation of worker interests central in its governance structure?

Following termination of the Accord in 2021 in Bangladesh, multinational companies, along with the global union federations, agreed to offer to extend the programme to four other garment producing countries Pakistan, Sri Lanka, India and Morocco. In December 2022, Pakistan became the first country to become a formal signatory to this new International Accord.

Ultimately, the success or failure of the initiative will depend on two important factors. First, the extent to which the transnational and local actors can develop a method of operating jointly. Secondly the extent to which a market-driven approach to enforcing labour rights can exist in the absence of a disaster.

How this evolves will be important for the development of transnational industrial relations in the immediate and medium term.

No.92 in a Loop thread on the science of democracy. Look out for the  to read more in our series

This article presents the views of the author(s) and not necessarily those of the ECPR or the Editors of The Loop.

Contributing Authors

photograph of Juliane Reinecke Juliane Reinecke Professor of Management Studies, Sa簿d Business School, University of Oxford More by this author
photograph of Jimmy Donaghey Jimmy Donaghey Professor of Human Resource Management, University of South Australia More by this author

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