Fashion brands accused of exploiting personnel at risk of layoffs
Millions of garment employees could lose their jobs as global brands are demanding price cuts and delaying payments to suppliers who are in need of orders to survive the new coronavirus pandemic, US researchers said today.
Suppliers have already been asked to create their prices typically 12 percent cheaper than this past year, research by the guts for Global Workers' Rights (CGWR) at Penn State University found, describing such practices as "leveraging desperation".
In a survey of 75 factories in 15 countries, suppliers said they had to wait typically 77 days for payment, in comparison to 43 days before the pandemic, raising fears of further factory closures in an industry employing 60 million persons worldwide.
"We are seeing a dramatic squeeze down of price, reduced orders, and late payment," said Mark Anner, writer of the report and director of the CGWR.
"This worries me for the wellbeing of the suppliers and the workers. This will affect the tiny and medium suppliers first."
Fashion companies canceled orders worth billions of dollars earlier this season as Covid-19 shuttered stores worldwide, resulting in wage losses as high as $5.8 billion, according to pressure group Clean Clothes Campaign.
Suppliers in countries including Cambodia, Ethiopia, Guatemala, India, Mexico, Peru, and Vietnam told CGWR that they had already laid off ten percent of their staff and would have to cut another 35 percent of their labour force if order reductions continued.
"If this figure holds true for the entire industry globally, an incredible number of garment workers could be out of work," CGWR said.
SECOND CRISIS
Manufacturers and labour rights groups said some orders which were cancelled or suspended earlier in the entire year were being restored, along with new orders, however, they were less than the number of organizations jostling for contracts.
"Buyers are taking benefit of this," said Anner, dubbing it an "emerging second crisis" for suppliers following the billons lost in cancelled and unpaid orders earlier in the entire year.
"It's a little hard to see straight away the gravity of the (second) crisis for the reason that new order volume has been blended with the pay up of old orders which were stored. It's hiding the brand new crisis, which may be the decline to be able value."
More than half of manufacturers surveyed said they might need to close down if the "sourcing squeeze" continued.
The Thomson Reuters Foundation spoke to five garment manufacturers in Bangladesh - which hosts more than half of the 75 suppliers mixed up in study - who said they had been forced to cut their prices by five percent to 15 percent.
Iqbal Hamid Quraishi, a factory owner and a director at the Bangladesh Garment Manufacturers and Exporters Association, said order volumes had risen since September but prices had fallen.
"There is not much room to negotiate with brands. They tell us that if we don't consent to their price, they can head to other suppliers," said Quraishi, adding that the industry could recover if the second wave of Covid-19 did not hit sales.
The Geneva-based International Organisation of Employers (IOE), a worldwide business network, said brands and suppliers were looking for solutions in "extremely difficult circumstances".
"Brands ... have demonstrated responsibility by engaging in the joint Proactive approach in the Garment Industry, which aims to aid manufacturers to survive monetary disruption ... and also to protect garment workers," said IOE spokeswoman Jean Milligan.
THE DECISION to Action, written in April by the IOE and global unions, seeks to safeguard workers' incomes and support manufacturers through the Covid-19 crisis by lobbying for loans, social protection schemes, and unemployment programs.
The British-based Ethical Trading Initiative, whose members include H&M and Primark, said that the pandemic had not been an excuse to row back on human rights and that it had been in everyone's best interest to make sure a sustainable and robust supply chain.
