6 years ago

Learning lessons from Rana Plaza collapse, Tazreen fire

Institutionalising universal workplace injury insurance 

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The collapse of Rana Plaza in April 2013 saw over 1,100 workers losing their lives and a large number suffering serious injuries. The tragedy left many workers acutely vulnerable. Injured workers required medical treatment and could not return to work in many cases. Meanwhile, dependents of the deceased found themselves struggling to support children or elderly relatives.

In response, a major effort was launched involving the government, employers, workers' organisations, the civil society, international brands and retailers as well as International Labour Organisation (ILO) to provide compensation to those who deserved it in line with ILO Convention 121 on workplace injury.

By late 2015, over US$ 30 million had been paid out in respect of some 5,000 claims. Yet, while the effort to compensate Rana Plaza victims was a success, it also highlighted the huge challenges and complexities in responding to such an incident as a one-off effort.

Employers in Bangladesh are already required by the labour law to make payments to workers injured at workplace. However, neither the mode of payment nor the benefit levels are adequate. In addition, benefits may not be paid in case of insolvency or bankruptcy of employers.

The Rana Plaza collapse and the Tazreen fire before it highlighted the need for a national scheme to support employees and their families in the event of accidents or injuries at work. 

A universal Employment Injury Insurance (EII) scheme, funded through employer contributions, could pay compensation based on loss of income and also cover healthcare and rehabilitation expenses related to work injuries and occupational diseases.

Had this been in place at the time of the Rana Plaza collapse, it could have paid lifetime benefits quickly to injured workers and eligible dependents of the deceased. Those needing medical treatment would have received it immediately side by side with long-term care and rehabilitation services.

Since the Rana Plaza incident, much headway has been made in improving workplace safety in the Bangladesh garment industry and minimising the chances of any repetition of such a tragic incident. The Government has also worked with the ILO and Germany to look into the feasibility of establishing an EII Scheme. Yet, while some progress has been made, there is still much to be done before this can become a reality.

The establishment of such a national scheme is a complex undertaking. However, the Rana Plaza compensation effort highlighted the clear benefits an EII Scheme would bring for workers and employers alike.

Ensuring sufficient funds as per actuarial estimation to pay benefits to the Rana Plaza workers was a major challenge. International brands, buyers and some charity organisations contributed to the compensation fund, which eventually reached the target of US$ 30 million.  The lengthy process led to payments being made only when sufficient funds were available. As a result, beneficiaries were unsure when exactly they would receive any money.

Funded by employer contributions, an EII scheme would avert the need to seek contributions for paying claims every time an accident occurred. Delays would be avoided and workers would be certain to receive compensation in the event of an accident. Employers' businesses and assets would be protected against the financial consequences of catastrophic accidents through collective risk pooling. The scheme would also enhance the reputation of the industry with foreign buyers, as they would no longer be at risk of having to pay claims if any accident occurred in a factory they source from. 

Many lessons were also learned from the compensation process itself.

A key task was to develop a comprehensive list of workers present in factories on the day of accident. Yet this seemingly straightforward task was itself a major challenge. Many records were lost in the collapse. There was often limited knowledge amongst family members of the deceased about exactly where their loved ones had actually worked, what they were doing or how much they had earned.

In some cases, a worker had used the ID of another, while a few workers who had joined just before the accident were yet to receive any ID. In addition, it was also difficult to verify the exact date of birth for some victims, another key criterion in calculating benefits.

Many family members had to make their way from remote areas to submit claims. In addition to bearing the cost of travel, accommodation and food, lack of understanding about documents they needed to submit compounded their misery and led to further inconveniences and delays.

This experience highlighted the necessity of developing a comprehensive, accurate and up-to-date list of workers and their nominees, which would be integral to the operation of an EII scheme. Such a database needs to be established centrally, which would help ensure adequate and timely protection for injured workers or family members.

A lack of understanding on how compensation amounts were calculated led to confusion and dissatisfaction with compensation awards. The Rana Plaza victims received financial support from a variety of sources, such as the Prime Minister's Fund as well as from individual brands. However, it was not always clear to them that these amounts were considered as part of the overall compensation awards. Rumours swirled that victims would receive thousands, if not tens of thousands, of dollars. Some, depending on their circumstances, did receive large awards, but many did not. This led to resentment and in many cases debt, when victims had borrowed large sums with the expectation that they would receive enough compensation to pay those back.

Should an EII scheme be established, it would be based on clear criteria and include pre-claims counselling as part of its services, so that all claimants know what they are entitled to and why. 

As the Rana Plaza compensation scheme had to complete its tasks within a limited time-frame, the mechanism also had to deviate from making periodic payments as recommended by ILO Convention 121 on workplace injury. Instead, lump-sum payments were made. While receiving a large sum in one go may seem a blessing, the reality is often different. Poor financial literacy and a lack of resource management skills, coupled with pressures from relatives or family members made it difficult for the beneficiaries to properly manage the funds they received.

However, Bangladesh's banking system has developed considerably over the recent years. The experiences of the Rana Plaza Claims Administration in establishing bank accounts for workers and family members as well as in using services such as bKash to make payments were positive indications that the process of periodic payments is an achievable goal.

While all compensation claims had been paid and the Rana Plaza Claims Administration closed its operations in December 2015, complications arising from work-related injuries could continue for months or years and required continuous monitoring and care. A trust to provide ongoing medical care for injured Rana Plaza workers has been established by the Ministry of Labour and Employment, which is now in the process of becoming fully operational. However, delays in the process have led to beneficiaries often having to go without the support they needed. A permanent mechanism under an EII scheme with sustainable funding would ensure continuous support services and greatly benefit the lives of those injured in workplace accidents.

Establishing an EII scheme is no simple task; yet the experiences of Rana Plaza Claims Administration which in such a short period of time put in place a comprehensive system that comprised the intake and review of over 5,000 claims, development of an IT system to manage data, an administration, medical assessments and the development of a one-stop banking service showed what could be done.

Till now, the Ministry of Labour and Employment and the ILO have taken initial steps to design an EII scheme including its administrative structure, costing, financing, healthcare and medical rehabilitation mechanism. Legislative changes might be needed as would an agreement on the level of employers' contribution as a percentage of payrolls. While there are undoubtedly many challenges, what cannot be disputed is that an EII scheme would benefit workers, employers and the nation itself and for this reason it is a goal worth striving for.

Noushin Safinaz Shah is National Programme Coordinator, Developing a National Employment Injury Insurance (EII) Scheme for the Bangladesh Ready-Made Garment Sector Project. Steven James Needham is Senior Communications Officer of International Labour

Organisation (ILO) Bangladesh. [email protected]

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