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NEW YORK – Following the 2013 collapse of the Rana Plaza complex that killed 1,134 people in Bangladesh, a coalition of multinational retail and apparel companies, including Wal-Mart and Target, stepped in to hold their suppliers to higher labor standards. According to new research from Laura Boudreau, Postdoctoral Fellow at the Jerome A. Chazen Institute for Global Business, multinational buyers’ efforts improved workplace safety while not compromising operational efficiency.
Through a randomized controlled trial in 84 factories over a ten-month period, Boudreau measured the Alliance for Bangladesh Worker Safety’s enforcement of a recent amendment to a labor law that mandated worker-manager safety committees, which was passed in response to the Rana Plaza collapse by the Government of Bangladesh. Roughly half the factories were randomly assigned to participate immediately in the enforcement program. The other half was assigned to participate 11 months later. Among the safety committees’ activities were holding regular inspections, developing action plans for correcting infractions, and training workers on safe workplace practices.
The study found that the enforcement program significantly improved suppliers’ compliance with the local labor law. The number of safety committees that had ever conducted a risk assessment rose from about 15 percent to nearly 60 percent. Additionally, indicators of factory safety, such as workers regularly wearing protective gear when performing their tasks, improved. The effectiveness of compliance and safety interventions, however, largely depended on the quality of the management systems in place. Furthermore, this particular study found no evidence of adverse effects on labor productivity, employment, or wages.
The paper, “Multinational enforcement of labor law: Experimental evidence from Bangladesh’s apparel sector,” is authored by Laura Boudreau, Postdoctoral Fellow at the Jerome A. Chazen Institute for Global Business.
For more information, please read the related Chazen Institute research brief (PDF).
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About the Jerome A. Chazen Institute for Global Business
The Jerome A. Chazen Institute for Global Business is the interdisciplinary hub of global business knowledge at Columbia Business School. By injecting a global viewpoint into coursework, supporting research on global business, and sponsoring provocative forums where business leaders and policy-makers engage in vigorous debate, we pool the vast wealth of knowledge that exists within Columbia Business School, distill it for people who operate in the world’s marketplace, and provide a global network for lifelong learning.
About Laura Boudreau
Laura Boudreau is a postdoctoral fellow at the Jerome A. Chazen Institute for Global Business at Columbia Business School. Her research focuses on working conditions, labor market institutions, and firm productivity in developing countries. She is especially interested in how the intersection of global supply chains with local institutions affect firms’ and workers’ outcomes.
Boudreau received her PhD from the University of California, Berkeley.