Organisers of the compensation to be paid to victims of the Rana Plaza factory disaster have said they are facing a shortfall of funds, with governments now putting pressure on retailers to give more money.
To date, $17m (£9.9m) has been contributed by clothing companies to the United Nations-backed Rana Plaza Donor Trust Fund. This is less than half of the amount needed to fully compensate victims, estimated at $40m (£23.4m).
The factory collapse in Bangladesh’s capital Dhaka on April 24 last year killed 1,129 garment workers and injured 2,515. UK retailers including Matalan and Primark had used the factory, and Primark has paid $12m (£6.9m) of the amount that has so far been raised. Other UK retailers including Debenhams and N Brown have made undisclosed contributions.
Matalan has refused to contribute, saying it was not using the factory on the specific day of the collapse, and has instead paid an undisclosed sum to local charity the Bangladesh Rehabilitation Assistance Commission. Walmart and the United Colors of Benetton, among others, have also paid undisclosed sums to other Dhaka charities.
There are around 3,000 claimants accessing the trust fund, including those who were injured and the dependents of those who died. A first tranche of cash – BDT142,000,000 (£1.07m), equivalent to around BDT50,000 (£377) per person – was paid to victims and their families in April this year.
The final amount to be paid varies between claimants. For the injured it is dependent on the degree of injury and their age, while for dependents of the deceased the amount will depend on the last earned salary and age of family members. Final payouts are due to be paid from Monday, 7 July, but fund representative Ineke Zeldenrust told Drapers the team was facing a shortfall.
She said: “[We] will have to decide how to move, given the deficit. One option is to use the money to make equal first instalments [of the final payment] for all claimants, and then pay further instalments once more money is in the fund.”
Organisers will not change the level of the payments agreed with victims, she added: “An award level was set that is at the low end of what is allowed under the International Convention for Workplace Accidents. The remainder of the payments are outstanding and will need to be met.”
The governments of the UK, the Netherlands, France, Germany, Denmark, Italy and Spain issued a joint statement last week calling on companies implicated to “immediately donate generously to the [Rana Plaza Donor] Trust Fund”.
UK minister for international development Alan Duncan wrote to all British businesses associated with Rana Plaza last week calling on them to “make immediate and significant payments” into the fund.
Primark told Drapers that it would not comment beyond what it announced in March on its website – that it had both paid into the fund and had made further, separate payments to those working for Primark in the factory. Matalan did not respond to a request for comment.
In a statement this week (June 26), lobby group Clean Clothes Campaign urged retailers to invest in the fund rather than local charities: “The trust fund is the only legitimate way to ensure all those affected receive adequate compensation for loss of income and medical expenses. Many brands have tried to avoid responsibility by making small and undisclosed contributions to charitable schemes that fail to recognise compensation is a right, not charity.”