CPD Policy Brief 14
Are Subcontractee Enterprises Able to Upgrade?
Insights from a Case Study
The subcontractee (Tier 3) enterprises have faced severe criticism for their poor compliance standards particularly after the re disaster in Tazreen Fashions Limited and collapse of Rana Plaza, which caused deaths of thousands of workers. These enterprises produced products for global brands/buyers (Tier 1) under subcontracting arrangements. Various studies show that export-oriented enterprises tend to subcontract or outsource a portion of their orders to the smaller non-compliant enterprises to reduce costs (ILO, 2014; Ethical Corporation, 2013). After the Rana Plaza tragedy, the operation of subcontractee enterprises has come under close scrutiny – Tier 3 enterprises also need to be physically and socially compliant in order to work with brands and buyers. Under this changing circumstance, the question that arises is whether subcontractee enterprises have the capacity to make necessary investment for industrial and social upgrading.
Authors: Khondaker Golam Moazzem and Md. Arfanuzzaman
Publication period: August 2018
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