Discussion: ILO and the Liability of Buyers
11 September 2012 a large fire at a garment factory in Pakistan killed 259 workers, and other 55 were injured. Just weeks before the fire, the company had received a SA8000 certificate declaring the factory safe.
The German company which bought most of that factory's production, was willing to help despite they considered they had no responsibility.
In this 36 min podcast
the executive director at the Pakistan Institute of Labour Education and Research describes how the cooperated with the Clean Clothes Campaign to form a coalition with German politicians, trade union movements, and civil society to seek victim compensation.
A written agreement was reached with the German company by which:
1. USD 1 m was to be distributed among the victims
2. Long term compensation to be determined by a mutually agreed mechanism
3. USD 0.5 m was to be provided to a mechanism to improve safety conditions in the garment industry in Pakistan
At the same time, the Pakistani company that had been subcontracted by an Italian auditing company to carry out the audit for the SA8000 certificate recognized that they had recommended the issuing of the certificate without visiting the factory.
The ILO was involved and after additional inquires established liability of the buyer and the German company was condemn to pay an additional USD 5.51 m. The penalty was based on the living wage and not on the minimum wage in Pakistan.
What are the consequences of this case for supply chains regarding liability of buyers? How will the role of the ILO and other international agencies change?