Retailers agree to set up $40m fund for Bangladesh garment factory victims

Four global retailers, along with manufacturers and labor groups, have agreed to set up a $40 million compensation fund for victims of Bangladesh's Rana Plaza disaster that killed 1,135 people, officials said Tuesday.

Retailers Primark, El Corte Ingles, Loblaw, and Bonmarche have pledged to contribute to the fund following the collapse of the garment factory complex in April, the world's worst industrial tragedy, the officials said.

"A fund has been established to compensate the victims, injured workers and dependents of the deceased, of the Rana Plaza collapse," said Lejo Sibbel from the International Labour Organisation which helped broker the agreement reached last month.

"An estimated $40 million will be required to compensate the victims and their beneficiaries," said Sibbel, who is based in Dhaka.

"To finance the payments to victims, international brands and retailers are making voluntary contributions into the fund, which is also open to contributions from any other international donors," he said.

The agreement comes after talks between owners of clothing brands and labor activist groups on a compensation deal ended in failure in Geneva in September.

The collapse of the nine-story complex on the outskirts of Dhaka, where workers stitched clothes for top Western retailers, highlighted the often appalling conditions and lack of rights for workers at Bangladesh's 4,500 garment factories.

Bangladesh's $22 billion garment industry is the world's second largest after China's and employs four million workers, most of them women.

More than 100 European and U.S. retailers pledged to improve safety in the wake of the tragedy, but a deal on compensation for families of workers and those injured has remained elusive.

Families have received some short-term compensation from Anglo-Irish retailer Primark as well as from the Bangladesh government.

Under the new agreement, families are expected to receive the first payments in February, according to Ineke Zeldenrust of Clean Clothes Campaign, an Amsterdam-based textile rights group which also signed the arrangement.

Although Spanish-based giant El Corte Ingles, Primark, Canadian company Loblaw, and British retailer Bonmarche have signed up, it is not known how much they will contribute.

The four retailers could not be contacted for comment.

Roy Ramesh, head of the Bangladesh chapter of international worker association IndustriALL, hailed the agreement as a landmark step towards ending "decades of injustice" for Bangladeshi garment workers.

But Ramesh said he hoped more retailers whose clothes were made at the Rana Plaza complex would also come on board.

"We hope all 29 brands who have had their clothing made at the five factories at Rana Plaza would contribute to the fund," said Ramesh, whose association has also joined the fund.

"It is the least they could do for the workers and their families who lost everything while making apparel for them."

Families will receive payments for lost wages "on a case by case basis" while compensation for injured victims will depend on the outcome of a medical assessment under the fund to be chaired by the International Labour Organisation.

"The exact amounts that the victims (will get) will differ, as it will depend on the beneficiaries' age and the family composition, and for the injured also on the outcomes of the medical assessment," Zeldenrust said.

Wire services