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Introduction Rana Plaza, an eight storey building which housed a garment factory along with some shops, collapsed on April 24 2013 in Savar, Bangladesh. 1,129 were killed, and another 2,500 were injured. The incident made international news, and the attention caught by the disaster soon shifted towards the shockingly poor working conditions of the garment factory workers due to the nature of Bangladesh’s labour institutions. The garment factory was a textile supplier to over 96 different multinational companies (MNCs), among them being H&M, Zara, C&A and Benetton. In the aftermath of the collapse, firms and the local government have been pressured to implement changes in order to improve working conditions. This essay will analyse the changes in detail and answer the following question: What impact has Rana Plaza had on labour market institutions? Labour Institutions in Bangladesh Bangladesh, like many Less Developed Countries (LDCs), is able to attract MNCs which tend to originate from More Developed Countries (MDCs) due to its less-restrictive labour institutions. Bangladesh’s population is 163 million people, 62% of which are of working age and 18% are 15-24 years old . A large supply of labour exerts a downward pressure on wage levels, as there are many people who are competing in order to get a job. Employers, who are profit-maximising in nature, will want to pay workers the lowest wage level possible thus they hire those who are willing to work at the lower wages. A report conducted by ICF International found child labour to be a significant phenomenon in the informal garment industry . This further enlarges the labour pool and increases the downward pressure on wages. These downward pressures in turn affect the legal minimu... ... middle of paper ... ...able and lack protection. In 2012 Aminul Islam, a labour organiser who helped ABC news expose the working conditions of Bangladeshi garment factories, was found tortured and murdered . This lack of protection makes it easier for garment workers to be exploited. Furthermore, in Bangladesh the rules and regulations are not enforced as much as in more developed countries. Rules and regulations often represent a cost, as it takes more time and money to ensure that buildings adhere to them. With a lack of enforcement, buildings can be built more quickly and at a lower cost but to the expense of safety. Rana Plaza was no exception as the four upper floors were illegally constructed without permits. Furthermore, the building’s foundation was found to be substandard. As the garment factories are suppliers and not directly owned by MNCs, they feel less responsible for them.

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