$40mn fund set up for Bangladesh garment factory victims

27 Dec '13

2 min read

An estimated US$ 40 million compensation fund would be set up by international clothing retailers, along with manufacturers and labor unions, for victims of the Bangladesh garment factory Rana Plaza collapse that took place in April 2013.

According to a statement issued by the Rana Plaza Arrangement Organization, an unprecedented coordinated framework has been agreed to compensate the hundreds of victims, both injured workers and dependents of the deceased, of the Rana Plaza garment factory disaster.

With the United Nations agency International Labour Organisation (ILO) acting as a neutral chair, a unique multi-stakeholder ‘Coordination Committee’ has developed a ‘Practical Arrangement’ which provides a single approach for compensation consistent with the ILO international standards, for these victims.

The understanding for this 'Practical Arrangement' has been signed by leading clothing retailers Primark, Loblaw, Bonmarche, and El Corte Ingles, along with the Bangladesh Ministry of Labor, Bangladesh Employers’ Federation (BEF), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), IndustriALL Bangladesh National Council, Bangladesh Institute for Labor Studies (BILS), IndustriALL Global Union and Clean Clothes Campaign, which also integrate the multi- stakeholder Coordination Committee.

The Coordination Committee, with key technical support of ILO and UN experts, will continue to oversee the scheme which will cover income replacement needs and medical costs to all beneficiaries, as per the recently updated wages in Bangladesh.

Disbursements will be made on a case by case basis after a medical assessment determined the level of disability of the injured workers.

Under the arrangement, in order to finance the payments to victims, international brands and retailers would be making voluntary contributions into a humanitarian International Trust Fund, managed by a global bank and open to other international donors. Any local funds will be kept in a local bank, and the local bank will provide payments directly to the beneficiaries’ bank accounts.

The Coordination Committee has also designed the mechanisms to ensure a consistent, transparent and fair scheme management, including through independent commissioners and externally contracted services. A stringent calendar has been established for the first installments to be delivered starting in February 2014, provided that sufficient pledges are received by mid-January.

Fibre2fashion News Desk - India

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