Effects of the post-Rana Plaza responses on garment sector workers in Bangladesh Laurent Bossavie 1 Yoongyoung Cho 1 Rachel Heath 2 1 World Bank 2 World Bank 3 University of Washington May 12, 2018 The views expressed in this presentation are entirely those of the authors; they do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations or those of the Executive Directors of the World Bank or the governments they represent. Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
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Effects of the post-Rana Plaza responses ongarment sector workers in Bangladesh
Laurent Bossavie1 Yoongyoung Cho1 Rachel Heath2
1World Bank
2World Bank
3University of Washington
May 12, 2018
The views expressed in this presentation are entirely those of the authors; they do notnecessarily represent the views of the International Bank for Reconstruction andDevelopment/World Bank and its affiliated organizations or those of the ExecutiveDirectors of the World Bank or the governments they represent.
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Rana Plaza in April 2013
Over 1000 dead; worst garment sector disaster ever and worstindustrial disaster since 1984 (Reuters 2017)
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Rebuilding and reforming
Key question: did these responses help workers?
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Buyer pressure in export manufacturing worldwide
I Context: many countries with large factories also haveweak enforcement capacity
I Anti-sweatshop campaigns and attention to fair laborproducts in many countries
I Harrison and Scorce (2010) found that anti-sweatshopcampaigns raised wages in textile factories in Indonesia inthe early 1990’s
I Similar effects in an increasingly competitive globalmarketplace?
I Effects on non-wage aspect of jobs?
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
This paper
I Use five rounds of Bangladesh Labor Force Survey, from2003 to 2015
I Difference-in-difference compares garment/textile sector toother light manufacturing
I Preliminary resultsI Wages up on average 7.6%, but...I Some concern that women’s wages dropped by 2015I Hours of work up in the short run, but then back to baselineI No clear evidence of increase in non-wage benefits
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Outline
Post-Rana Plaza Reforms
Data and Empirical Strategy
Difference-in-difference estimates
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Setting the stage, pre-Rana Plaza
I Employment growth fueled byinternal migration
I Workers, especially migrantsmay not have completeinformation about workingconditions upon beginningwork (Boudreau et al 2017)
I Had been some smallertragedies and resultingprotests (e.g. Tazreen fire in2012), but limited governmentor buyer response
01
23
4m
illio
ns o
f wor
kers
1985 1990 1995 2000 2005 2010 2015Year
Source: Bangladesh Garment Manufacturers’ Export Association (BGMEA)
Nation−wide Employment in the Garment Industry
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Minimum wage increase in December 2013
I Garment sector one of few sectors with a statutoryminimum wage
I Had been at BDT 3000 (USD 38) per month since 2010
I Workers and allies lobbied for a “living wage” of BDT 9500(USD 120)
I Eventually compromised at BDT 5300 (USD 68)
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Binding, but not strongly so
05
1015
2025
Per
cent
030
0060
0090
00
1200
0
1500
0
1800
0
2100
0
2400
0+
Monthly wage (Taka)
Monthly earnings of garment workers in 2015
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Push towards better conditions
I Primarily prompted by buyersI Audits and pushes to rectify problems in principal factories
(with whom they deal directly)I Less of a “blind eye” to subcontracting into smaller factories
where (anecdotally) conditions were often worse
I Buyers created Accord (European buyers) and Alliance(American buyers) in 2013
I Voluntary participation by firms and limited (formal)enforcement capacity
I Some help with remediation financing, but most of costborne by factory
I In response to cost of compliance, some factories reducedoutput, or closed
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Potential channels for impacts on workers
I Extensive margin: fewer jobs. Harder to identify but willpresent suggestive evidence from single-difference.
I Intensive marginI Wages
I ⇑ through minimum wage increase or pressure to raisewages
I ⇓ through potential reduced profit-sharingI Hours
I ⇑ through reduced subcontracting (for a fixed demand fromretailers)
I ⇓ if lower demand from retailers (but minimal reductions onextensive margin)
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Outline
Post-Rana Plaza Reforms
Data and Empirical Strategy
Difference-in-difference estimates
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Data
Labor Force SurveysPre-Treatment Time Periods 2003, 2005, 2010, 2013 Q1Drop 2013 Q2Post-Treatment Time Periods 2013 Q3 and Q4, 2015
I Large sample size: over 100,000 adults in each survey;over 300,000 in 2015
I Each taken over the course of a year (mitigates concernsabout seasonality)
I Wages and hours each round; working conditionsmeasures primarily in 2010 onwards
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Identification strategy
For outcome Y for worker i in division j at time t:
Notes: Sample includes individuals in garments/textiles or light manufacturing (ISIC-3codes 1000-1300, 1500-1600, and 3100-3200). Sampling weights included. Standard
errors clustered at the primary sampling unit: *** p<0.01, ** p<0.05, * p<0.1Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Marginal effects on wages
-.3
-.2
-.1
0.1
.2
Male Female
Overall
-.3
-.2
-.1
0.1
.2
Male Female Male Female
2013 2015
By year
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Diff-in-diff treatment effects: HoursDependent Variable = Weekly Hours of Work
Notes: Sample includes individuals in garments/textiles or light manufacturing (ISIC-3codes 1000-1300, 1500-1600, and 3100-3200). Sampling weights included. Standard
errors clustered at the primary sampling unit: *** p<0.01, ** p<0.05, * p<0.1
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Marginal effects on hours
-4-2
02
Male Female
Overall
-50
5
Male Female Male Female
2013 2015
By year
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Notes: Sample includes individuals in garments/textiles or light manufacturing (ISIC-3codes 1000-1300, 1500-1600, and 3100-3200). Sampling weights included. Standard
errors clustered at the primary sampling unit: *** p<0.01, ** p<0.05, * p<0.1
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Notes: Sample includes individuals in garments/textiles or light manufacturing (ISIC-3codes 1000-1300, 1500-1600, and 3100-3200). Sampling weights included. Standard
errors clustered at the primary sampling unit: *** p<0.01, ** p<0.05, * p<0.1
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]
Preliminary conclusions
I Effects vary considerably by genderI On average, wage gainsI But women appear to be hurt by 2015I Males worked increased hours in the short run
I No clear evidence of increased non-wage benefits
I Next stepsI Confirm estimates similar with synthetic controlI Suggestive evidence on injury reports (only 2013
onwards)?I Just received 2016 LFS
Heath Rana Plaza responses in the garment sector in Bangladesh [email protected]