Impact of Compliance Standards on Firm Productivity in the RMG Industry
After the Rana Plaza building collapse in April 2013, which killed more than 1,100 people, mostly garment workers, North American retailers, including top brands like Walmart and Gap, formed “the Alliance” and the European retailers formed “the Accord” to undertake a five-year plan which set time-frames and accountability for safety inspections and training and workers’ empowerment programs. The Accord has so far conducted initial inspections at 1,600 factories while the Alliance inspected 759 factories. The broader objective of the study is to examine the impact of compliance measures on productivity and performances of RMG firms in Bangladesh. Specifically, the study will focus on different types of compliance measures, their costs and associated impact on investments, employment, revenue, market access, labor productivity, capital deepening etc. More specifically, this study will try to answer the following questions: (i) Can the level of compliance standard explain heterogeneous productivity of RMG firms? (ii) Does compliance (workplace safety standard and labor standards) matter for productive capacity enhancement and network? and (iii) to what extent compliance standard influence productivity and profitability of RMG firms? We aim to use both primary and secondary data for the analysis.
Study Team: Monzur Hossain, Kazi Iqbal and Tahreen Tahrima Chowdhury