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As fashion sales fall globally, big brands leave Asia’s garment workers in limbo

The livelihoods of millions of Asian garment workers are in jeopardy after cancellations by top fashion brands, with unions, researchers and campaigners warning coronavirus could lead to a rollback of labor rights in an industry often accused of abuse.

With stores globally closed and sales falling, many Western retailers have cancelled 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, according to several fashion industry insiders and watchers.

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 U.S.-based monitoring group found about half of them had made no such commitments to honor their contracts.

Several retailers including ASOS, C&A, Edinburgh Woollen Mill, Gap and Primark told the Thomson Reuters Foundation they had been compelled to pause or cancel some orders but were in contact with suppliers in a bid to mitigate the economic impact.

Yet manufacturers expressed frustration with the inability to negotiate with Western buyers which was causing job losses.

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“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 reversed some cancellations this month after public outcry but have not reinstated all orders, while others have asked for discounts, delayed payments or left suppliers in limbo, said WRC’s assistant research director Penelope Kyritsis.

“Anything shy of committing to fulfil their full orders is irresponsible to suppliers,” she said.

WRC previously estimated orders worth over $24 billion had been cancelled, but said this figure was now likely lower given some brands had backtracked. Garment orders are down nearly a 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 told the Thomson Reuters Foundation.

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 may erode recent gains for workers.

Garments workers shout slogans as they block a road demanding their due wages during the lockdown amid concerns over the COVID-19 outbreak in Dhaka, Bangladesh, April 15. (Photo by Mohammad Ponir Hossain/Reuters)

Reputations at risk

Revenues for the $2.5 trillion garment sector could fall 30 percent in 2020, said a recent report by management consultants McKinsey, warning that fashion firms could be hardest-hit.

Garment brands, unions and employer organizations last week announced a working group, convened by the United Nations, in order 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, according to WRC.

“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,” she said.

“But any bad behavior now could stick on their reputation.”

Companies that are fair and transparent over workers’ rights during the crisis could attract more ethically-minded investors for whom the issue is increasingly important, investment experts told the Thomson Reuters Foundation.

A group of 286 investors representing over $8.2 trillion in assets this month urged firms to maintain supplier relationships as much as possible and protect workers in their supply chains.   

Discounts and cancellations

Two Bangladeshi suppliers, speaking on condition of anonymity, said 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 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 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, but legal experts said 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 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,” said IOE secretary-general Roberto Suárez Santos.

“No-one can have a totally happy situation.”

A 2018 file image of Cambodian garment workers producing clothes in factory. (shutterstock.com)

Rights rollback feared

Laid-off garment workers are likely to turn to exploitative jobs where they risk becoming victims of forced labor, and may put their children to work to cope with the loss of earnings, found a report by risk consultancy Verisk Maplecroft.

In nations such as Myanmar, factories have fired union members, citing a fall in orders, yet kept on non-unionized employees, according to activists who fear that the virus may 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 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 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 U.N.-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 both the plight of garment workers and actions of brands as a result of COVID-19 may not be enough to bring about fairer supply chains, according to Jenny Holdcroft of IndustriALL, a global labor union with 50 million members.

“The history of the garment industry hasn’t shown change to be very likely,” the union’s assistant secretary general 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.”

The Thomson Reuters Foundation is in a partnership with the Laudes Foundation, which is affiliated with the retailer C&A.

Writing by Kieran Guilbert with additional reporting by Elsa Ohlen in Uppsala and Matt Blomberg in Phnom Penh, for the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly.

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