The livelihoods of millions of Asian garment workers are in jeopardy after cancelations by top fashion brands, with unions, researchers and campaigners saying that the COVID-19 pandemic could lead to a rollback of labor rights in an industry often accused of abuse.
With stores closed globally and sales falling, many Western retailers have canceled orders or demanded discounts from suppliers in countries including Cambodia and Bangladesh, leading to many workers going without pay or being fired.
An estimated 60 million garment workers could struggle to weather the crisis unless more brands take responsibility, several fashion industry insiders and watchers said.
Illustration: Yusha
Heavyweights such as Adidas, H&M and Zara owner Inditex have promised to pay in full for all orders, whether finished or still in production, said the Worker Rights Consortium (WRC), which analyzed 27 of the world’s leading fashion retailers.
However, the US-based monitoring group found that about half of them had made no commitments to honor their contracts.
Several retailers including ASOS, C&A, Edinburgh Woollen Mill, Gap and Primark told the Thomson Reuters Foundation that they had been compelled to pause or cancel some orders, but were in contact with suppliers in a bid to mitigate the economic impact.
However, manufacturers expressed frustration with the inability to negotiate with Western buyers, which was causing job losses.
“As far as buyers are concerned, there has never been any real room for negotiations,” said a major garment supplier in south India, who declined to be named to protect his business.
Several brands last month reversed some cancellations after public outcry, but have not reinstated all orders, while others have asked for discounts, delayed payments or left suppliers in limbo, WRC assistant research director Penelope Kyritsis said.
“Anything shy of committing to fulfill their full orders is irresponsible to suppliers,” she said.
WRC previously estimated that orders worth more than US$24 billion had been canceled, but said this figure was now likely lower given that some brands had backtracked.
Garment orders are down nearly one-third, the International Textile Manufacturers Federation said.
“Coronavirus, like the Rana Plaza disaster, has exposed how supply chains benefit businesses at the cost of suppliers, and in turn, workers,” Kyritsis said.
The 2013 disaster in Bangladesh that killed 1,135 garment workers sparked global efforts to improve labor conditions and rights, but experts are divided on the pace and scope of reforms.
Some industry watchers believe the attention generated by COVID-19 could provide fresh impetus to clean up supply chains, but others fear the fallout could erode recent gains for workers.
REPUTATIONS AT RISK
Revenues for the US$2.5 trillion garment sector could fall 30 percent this year, management consultants McKinsey said in a recent report, adding that fashion firms could be hardest hit.
Garment brands, unions and employer organizations on April 22 announced a working group, convened by the UN, to help manufacturers pay wages and survive the crisis while ensuring access to healthcare and welfare for workers.
Yet some of the retailers backing the initiative have not met its aim of ensuring their suppliers are paid for all finished and ongoing orders, the WRC said.
“We see brands that are prioritizing public relations wins over actually honoring their contracts,” said Fiona Gooch, senior policy adviser at advocacy group Traidcraft Exchange.
“Retailers are using COVID-19 to dump more risk on suppliers or demand discounts ... some are acting like thugs, but any bad behavior now could stick on their reputation,” she said ahead of International Workers’ Day on Friday.
Companies that are fair and transparent regarding workers’ rights during the crisis could attract more ethically minded investors for whom the issue is increasingly important, investment experts said.
A group of 286 investors representing more than US$8.2 trillion in assets last month urged firms to maintain supplier relationships as much as possible and protect workers in their supply chains.
DISCOUNT DEMANDS
Two Bangladeshi suppliers, speaking on condition of anonymity, said that some retailers, such as Britain-based Edinburgh Woollen Mill (EWM), had demanded discounts of up to 70 percent, a figure that would see the manufacturers make a loss on those orders.
A factory owner in India said that EWM told him it required a 50 percent discount and would only pay once it had sold 70 percent of the goods.
“EWM are being opportunist, unreasonable and unethical,” the owner said, adding that most of his other Western buyers had “acted reasonably” when it came to negotiating over orders.
A spokesman for EWM Group — which also owns brands such as Jane Norman and Peacocks — said that it was negotiating with its suppliers individually to find a solution “that works for them.”
“This is not what we would ever normally wish to do but the current circumstances are such that it is a necessity,” he said.
Many brands have used force majeure clauses in contracts, citing extraordinary and unforeseen circumstances to cancel orders.
However, legal experts said that it was unclear whether the virus, unlike a war or natural disaster, was covered within this remit.
The International Organisation of Employers (IOE) — the world’s largest private sector network — said that brands had generally acted responsibly in negotiations with suppliers.
“All brands and buyers are under pressure ... flexible arrangements have been put in place and are already working to some extent,” IOE secretary-general Roberto Suarez Santos said. “No-one can have a totally happy situation.”
RIGHTS ROLLBACK
Laid-off garment workers are likely to turn to exploitative jobs where they risk becoming victims of forced labor, and might put their children to work to cope with the loss of earnings, a report last week by risk consultancy Verisk Maplecroft found.
In nations such as Myanmar, factories have fired union members, citing a fall in orders, yet kept on non-unionized employees, said activists, who fear that the virus could also spur an erosion of rights that could slip under the radar.
“We must ensure workers’ rights and conditions are not rolled back due to the crisis,” said Aruna Kashyap, senior counsel in the women’s rights division of Human Rights Watch, who also called for the health of workers to be taken into account.
With most factories still running in Cambodia and hundreds reopening in Bangladesh this week, several labor advocates said that they were worried about a lack of social distancing and hygiene.
Cambodian seamstresses said they feared for their health at work, but had families to feed, while a Bangladeshi labor ministry source said that the 500-odd reopened factories would not be able to implement social distancing for workers.
Promoting safe workplaces is one of the aims of the UN-backed working group, which has urged donors, financial institutions and governments to accelerate access to credit, unemployment benefits and income support among other measures.
Activists called for welfare and social security schemes in garment producing nations to be part-funded by brands, and want regulation in Western countries to compel companies to stamp out unfair trade practices, labor exploitation and modern slavery.
Yet the spotlight on the plight of garment workers and actions of brands as a result of COVID-19 might not be enough to bring about fairer supply chains, said Jenny Holdcroft, assistant general secretary of IndustriALL, a global labor union with 50 million members.
“The history of the garment industry hasn’t shown change to be very likely,” Holdcroft said. “The power dynamics of the industry allow brands to get away with self-centered behavior. We need to raise standards across the sector ... and stop the bottom-feeders from doing business.”
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