MANAGEMENT ACCEPTS UNION; BUYERS PLEDGE INCREASED

UNCLAS SECTION 01 OF 03 DHAKA 001365

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV BG
SUBJECT: MANAGEMENT ACCEPTS UNION; BUYERS PLEDGE INCREASED
ORDERS

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1. (SBU) Summary: After management fired a newly formed
union's members, corporate social responsibility compliance
agents, trade groups and labor organizers successfully
negotiated the reinstatement of fired workers and union
officers. Shortly after the settlement, buyers tripled the
garment orders for the factory. The American Center for
Labor Solidarity (ACILS) and their local NGO labor partner,
BIGUF, played a vital supporting role in the bargaining
process. End summary.

A UNION FORMS
=============


2. (SBU) In autumn 2004, the workers at the Bangladeshi-owned
Intersoff Clothing factory established a new local level
union: the Interstoff Clothing Limited Workers Union (ISCL),
representing 400 workers at a factory in Gazipur, located 45
kilometers outside of Dhaka. In the Bangladesh garment
industry, where labor is considered plentiful, the
establishment of a labor union outside of the Economic
Processing Zones (EPZ) was newsworthy. However, soon after
the establishment, according to labor organizers, Intersoff
management began to harass workers, and dismiss union
officers and workers who supported the union. Local
Bangladeshi labor organizations, including the American
Center for International Labor Solidarity (ACILS) a.k.a
Solidarity Center, and one of its local partners, the
Bangladeshi Independent Garment Union Federation (BIGUF),
supported the members of ISCL from the beginning.


3. (SBU) By October 2005, as negotiations came to a halt, the
ISCL membership contacted the brands, buyers and the Ethical
Trade Initiative (ETI),a corporate responsibility
association to which the brands, Zara, Mothercare, and Tesco,
belong. Zara is part of the Spanish Inditex group marketing
internationally several brands of fashion clothing;
Mothercare, a UK based company specializing in maternity
clothes selling primarily in the UK, and TESCO a retail chain
based in the UK. According to ACILS, other buyers from
Interstoff owner Shahriar Alam other factories include Marks
and Spencer, and Sears.


4. (SBU) On March 6, after several rounds of negotiations,
management, buyers, and labor came to an agreement which
reinstated the ISCL as the union representing the factory
workers and reinstated the dismissed union officers. Factory
owner Alam told laboff he enjoyed a positive experience, and,
according to those present, in a tearful statement welcomed
back the workers. Solidarity Center Country Representative
Rob Wayss told laboff, that while the threat of buyers
canceling orders was always present, the atmosphere was a
positive one, the buyers concentrated on the prospect of
increased orders.


5. (SBU) Shortly after the settlement, buyers announced they
would increase orders with Intersoff Clothing from $500,000
to $1.5 million, as well as increase orders at the owner's
sister factory Interstoff Apparel, which employs 1500
workers. Buyers eagerly supported the termination of the
dispute, and according to Bhatia, plan to make Interstoff a
key supplier.

DID IT HAVE TO HAPPEN?
======================


6. (SBU) Laboff spoke to one of the mediators Lakshmi Menon
Bhatia, who wears several labor hats: Corporate Social
Responsibility (CSR) Compliance Officer for the GAP, Board
Member of the Multi-Fiber Arrangement Forum, a trade group
aiming to ameliorate potential country job losses due to the
end of MFA quotas, and Executive Committee member of the
Ethical Trade Initiative, a trade group who responded to
ISCL's plea for assistance.


7. (SBU) Initially, Bhatia said the owner/manager of the
factory welcomed the union. Factory owner Alam told laboff
that while he thought the union was not needed, "at the end
of the day, it's the workers' call." Despite this positive
outlook, soon the relationship deteriorated. "There was a
huge divide based in part by the Bangladesh susceptibility to

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conspiracy theories," she said. Deep down inside. many
factory owners believe that the post-MFA changes and union
organizing efforts are part of a foreign conspiracy to
destroy Bangladesh textile industry. In this context, she
said, labor relations and the initial goodwill swiftly "went
downhill."


8. (SBU) The owner, Shahriar Alam, started his garment
business 12 years ago, and opened this factory six years ago.
Alam, a dynamic 35 year-old man, is involved in his
community as President of the Bangladeshi Hockey Association
and other sports associations. He told laboff that he always
tried to do the most for his workers, including establishing
a private retirement, and holding periodic labor-management
meetings. However, when the union first started, a lot of
the demands were "over the top." Bhatia commented that
perhaps the union changed the relationship causing Alam to
feel "betrayed at an emotional level." Alam told laboff that,
"you don't get a lot of experience in the export community on
how to deal with unions."


9. (SBU) Other textile business pressures in the post-MFA era
increased the owner's fears. Bhatia cited demands by buyers
for lower prices, increased quality standards, and more
audits. She said that many owners she speaks to constantly
raise the question, "but what about China?" when buyers ask
for lower prices, increased quality and more CSR audits.


10. (SBU) In that context, management fears increased, she
said, when factory owner Alam heard that buyers and the
brands were concerned about the labor problems, and suspected
a Solidarity Center local labor union, the Bangladesh
Independent Garment Union Federation (BIGUF). The owner
thought that BIGUF helped contact the brands as the "letter
was in almost perfect English." The brands TESCO, INDITEX
and Mothercare sent mediation/representatives from Spain,
Peru, and Scotland, as well as International Textile, Garment
and Leather Workers Federation General Secretary Neil Kearney
to lead the negotiations for an agreement.

THE NEGOTIATIONS
================


11. (SBU) The first round of negotiations started in
mid-February, according to Bhatia, and ended on a sour note.
After the first day of emotional outpourings, when labor and
management accused each other of "rudeness" with a lot of "he
said, she said" exchanges, the second day ended with hardened
and hurt feelings. Bhatia said that discussions started and
broke down several times, and ended when laborers realized
that management was attempting to divide the workers amongst
themselves. Asked if the workers had become emboldened by
their ability to call in international support and therefore
less able to compromise, Bhatia said that the buyers and
Kearney took great pains to instruct the workers that the
negotiations were really a chance for a "new beginning" with
management.


12. (SBU) The second round of negotiations, aimed at
restoring trust between the groups, was conducted using
"separate room diplomacy" with the international team
shuttling between labor and management. After a total of 27
hours of actual contact time, a mutually acceptable proposal
was developed. Among the conditions, accepted by the owner,
was a month-long training program in industrial relations for
workers and managers. According to Bhatia, Alam wanted an
"attitudinal shift" for both labor and managers in their
relationship. He especially wanted "to strengthen
management's ability to conduct industrial relations," she
said.

LESSONS LEARNED
===============


13. (SBU) Asked about the whole experience, Alam said that,
"The negotiations were difficult, but I hope my patience
won't run out next time." I like solving problems, he said,
adding that when the negotiations broke down, "I listened
when ETI offered up the idea of a month-long industrial
relations training that might solve future problems before

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they start."


14. (SBU) "But really, this did not have to happen," Alam
told laboff, "there was really no problem." However, other
labor activists told laboff they disagreed, saying that
labor-management relationships in Bangladesh still need time
to mature. Nonetheless, Bhatia said, the seeds for the
amicable outcome were sown in the 1990's when brands and
buyers developed corporate social responsibility codes of
conducts, hired compliance agents, and instituted social
audits for factories. "When the CSR units were first
started, we would not have been able to talk to the factory
management, but we routinely work together," she said. "It's
all about dealing with change."


15. (SBU) Comment: As labor and management relations become
more important that ever in the post-MFA world, a lack of
industrial relations training capacity in Bangladesh may
become a bottleneck to development. The Bangladesh Export
Processing Zone Authority (BEPZA) Executive Director wanted
to hire 60 trained or experienced industrial relations
specialists this past year. He hired his 60 staff, but
despite offering very competitive salaries, he was forced to
hire people with little or no experience or training in
industrial relations.
CHAMMAS