Mario Rizzo offers insight into the unintended consequences of forcing clothing manufacturers to incur costs improving worker safety standards in their factories in Bangladesh.
Wal-Mart is refusing to sign on to a plan devised by labor safety groups (many supported by labor unions who simply seek to raise the cost of operating overseas) that other garment manufacturers have already signed that threatens to cease their operations in Bangladesh unless specific worker safety initiatives are taken. Wal-Mart has stated publicly that it will monitor safety conditions in Bangladesh itself, knowing full well that it can do a better job of doing this consistent with the interests of both the workers and its customers. Of course Wal-Mart is being berated for this move.
Why do I trust Wal-Mart on this? First, the overzealous reach of the labor groups will prove detrimental to Bangladeshi workers, the point made by Rizzo.
More importantly, I had a student once who worked at a major cereal manufacturer that will remain nameless to protect her. She told me, and I have no reason to doubt her statement, that their cereal plant was shut down every year by one entity and one entity only, and it wasn't government inspectors. It was Wal-Mart. She said that no matter what they did, and they knew when Wal-Mart was coming, Wal-Mart would inspect their plant ever year and every year the retailer would find something wrong, forcing the company to shut that plant down until Wal-Mart's concerns were rectified. The cereal manufacturer had every reason to comply with Wal-Mart's demands given that it's the world's largest retailer, and Wal-Mart had stricter cleanliness and safety requirements than any other entity inspecting these plants, including government regulators.
Wal-Mart has every incentive to protect both its workers and its customers. Yes, there are shortcuts firms and people make when they believe they are not being watched, but it cannot be said that nobody is watching the factory conditions in Bangladesh. Wal-Mart will spend money guaranteeing worker safety to the point that the last dollar spent improves both its customers' and its workers' interests.
If I really cared about the workers in Bangladesh—and I do—and not just my own selfish interests, I would welcome Wal-Mart's plan to do its own inspections of these plants. Labor groups' overriding interest is to shutter these factories, destroying any opportuntities, no matter how arcane and poor the conditions seem to us in developed countries, in an attempt to protect the jobs of union workers in developed countries. And would anyone really trust government inspectors in Bangladesh to serve and protect the interests of low-skilled workers?