Pakistan’s industrial 9/11: Survivors to receive US$5 million in compensation from Germany
Baldia factory fire is believed to be the deadliest industrial fire in the country's history. Photo: Asif Hassan/AFP

Pakistan’s industrial 9/11: Survivors to receive US$5 million in compensation from Germany

Landmark compensation arrangement reached on 4th anniversary of deadly Pakistan factory fire

by Sana Jamal

After four years of struggle and suffering the victims of Pakistan’s deadliest industrial accident will receive some financial relief from Germany.

Survivors and families of workers killed in 2012 Ali Enterprises garment factory in Baldia, Karachi, will receive compensation of US$5 million from German retailer KiK, according to the agreement. The payment will fund loss of earnings, medical care, and rehabilitation costs to the injured survivors and dependents of those killed in the disaster.

Previously KiK, Ali Enterprises’ only known buyer, paid US$1 million to a relief fund after signing a Memorandum of Understanding (MoU) with Pakistani labour organization PILER in 2012 in which KiK agreed to fund long-term compensation.

“With our financial contribution, we have taken over responsibility for the victims on a voluntary basis going beyond national requirements. This was truly important to us” said Patrick Zahn, CEO of KiK Textilien und Nonfood GmbH.

Pakistan witnessed its industrial 9/11 on 11 September 2012 when more than 260 workers lost their lives and over 50 were injured in a fire at the Ali Enterprises garment factory in Karachi. Workers burnt to death trapped behind barred windows and locked doors. Others jumped for their lives from the upper floors, sustaining permanent disabilities. Karachi-based ethnic party is accused of deliberately setting fire to the factory after owners refuse to pay extortion money.

The local government failed to address the grievances of the victims. However, international agencies and labour organizations supported the victims’ families to pursue their case against KiK company in a Dortmund court in Germany.

The reimbursement is the result of ILO consultations during a recent mission to Pakistan from 25 July to 5 August on requests of the German Federal Ministry of Economic Cooperation and Development and the Pakistani Ministry of Overseas Pakistanis and Human Resource Development. Joint campaigning by the National Trade Union Federation (NTUF), PILER, IndustriALL Global Union, Clean Clothes Campaign (CCC) and other allies including UNI Global Union helped secure the payment.

The compensation agreement is historic and unprecedented in Pakistan as government was constantly criticized for not neglecting the tragedy.

“This historic agreement is unprecedented in the context of Pakistan’s labour movement. After four years of struggle the victims of this tragedy get justice and their pain and suffering are acknowledged internationally” noted Nasir Mansoor, deputy general secretary of the NTUF.  He acknowledged the role of ILO, IndustriALL and CCC who in “this landmark agreement”, adding “Let it remind us that safety in the workplace is a right, not a privilege.”

“Finally, on the eve of the fourth anniversary of the Ali Enterprises factory fire, the injured survivors and families of those killed in the Ali Enterprises fire can look forward to proper compensation” said Jyrki Raina, general secretary of IndustriALL Global Union.

Periodical payments to victims are expected to begin in early 2017.

Brief of the Compensation Arrangement:

  • The US$5.15 million to be funded by KiK will include a US$250,000 margin for a fluctuation in costs, meaning that US$4.9 million will go to the affected families and survivors.
  • The implementation, administration and governance of the Arrangement will be developed in a process facilitated by the ILO. It will involve close consultation with relevant constituents and stakeholders, as well as a supervisory role for the Sindh High Court.
  • In total, the Arrangement will provide US$6.6 million for the compensation process, with US$5.9 being provided by KiK and US$700,000 being funded by social insurances schemes in Pakistan (SESSI and EOBI) as well as the owners of Ali Enterprises.
  • Claimants will be paid a monthly pension. The amount will differ according to the individual’s financial situation and number of dependents.
  • The pensions will be not at living wage levels, as the international standards for workplace injury are based on actual wages earned. In the Ali Enterprises Arrangement, however the proxy used for the actual earned wages is generous and pensions are indexed to meet the inflation rate.

Comforted by long-awaited compensation, survivors

Saeeda Khatoon, a widow and vice president of Ali Enterprise Factory Fire Affectees Association, lost her only son in the fire. She said: “It is a day of respite for the victims’ families as their cries have been heard. We know that our nearest and dearest will never come back, but we hope that this kind of tragedy will never ever happen again. The government, brands and factory owners must seriously observe labour and safety standards in factories.”

Jyrki Raina, general secretary of IndustriALL, said: “At last, we have a compensation agreement to provide some kind of justice to the survivors and families of the deceased. We commend KiK for taking responsibility and ensuring that victims will receive compensation that meets international standards.

“While the payments will not bring back lost loved ones, we hope that they will ease these families’ financial hardship” stated Karamat Ali, executive director of PILER.

Victims urge for workplace safety

Weeks before the fatal fire, Ali Enterprises received SA 8000 certification from the auditing firm Social Accountability International, meaning it had apparently met international standards including health and safety. The ensuing Baldia fire factory tragedy raises serious concerns about the standard of safety inspections in Pakistan as well as the implementation of labour laws and building safety codes.

Pakistan’s labour unions have asked Pakistan government to declare 11 September as workers’ safety day to raise awareness and improve workplace safety.

“Now it’s high time to start building a safer garment industry in Pakistan, as we are currently doing with the Accord in Bangladesh.” Jyrki Raina advised.

Victims and stakeholders urge for workplace safety and social security schemes in Pakistan

Victims and stakeholders urge for workplace safety and social security schemes in Pakistan

Stakeholders commend the agreement, called for robust social insurance system in Pakistan

Welcoming the compensation agreement by German company, the stakeholders also called for robust social insurance schemes in Pakistan as well as need to improve safety and  inspection procedures to prevent another such tragedy.

Pakistan and Germany textile partnership is making a difference in an entirely new way, said Gerd Müller, German Federal Minister for Economic Cooperation and Development.

“What had not been possible in four years of controversy between the parties has now been achieved through our mediation work and will provide tangible assistance to the victims and bereaved family members of the terrible fire at the Ali Enterprises textile factory in Pakistan. In other words, the environmental and social standards that we have jointly drawn up are not just a piece of paper but are leading to concrete improvements in the living and working conditions of garment workers in factories on the ground.”

Ineke Zeldenrust, International Coordinator of the Clean Clothes Campaign commended the compenstaion. “We welcome this agreement which will now ensure direct payments are made to those who suffered such huge losses as a result of this disaster. We take this opportunity to pay tribute to their bravery and strength in their ongoing fight for justice.”

She also lauded the role of Pakistan’s labour and rights groups who directly and continuedly supported families of those killed and the survivors of the fire.

ILO has been commended by all stakeholders for its thorough fact-finding and its recommendations. The implementation and management of the arrangement will also be facilitated by the ILO.

“It is satisfying that the ILO facilitated resolution to the long-standing discussions on compensation for workers around the fire of the Ali Enterprises is now completed” remarked Gilbert Houngbo, Deputy Director General of the ILO. He, however, added that “significant investment is needed to improve the situation of workers in Pakistan in the garment and other sectors, including the effective access to employment injury benefits.”

Jyrki Raina of IndustriALL Global Union commened KiK for agreeing to fund compensation that meets international standards. “Now we must fight for a safer garment industry in Pakistan so that this terrible tragedy is never repeated” he implored.

About Sana Jamal

Sana Jamal is a journalist from Pakistan who writes for local and international news media. She also manages Islamabad Scene
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