Build pressure to help poor garments workers

Publish: 5:47 PM, July 2, 2020 | Update: 5:47:PM, July 2, 2020

Bangladesh is one of major garment suppliers in the world which is faced with the crisis of uncertain buyers’ behaviour amid the coronavirus pandemic. Our government as well as producers of garments ought to sensitize the buyers through direct government-to-government contacts, connecting various organizations and platforms worldwide that protect workers’ rights, etc. to this end.

Bangladeshi garments industries have faced an onslaught of order cancellations, reduced order volumes and extended payment terms. Major brandshave cancelled orders from suppliers to avoid payment for goods that have already been produced, with some invoking force majeure clauses in their contracts to do sowhich have left many suppliers having to reduce operations or stop them altogether, unable to bear the financial burden. This has forced many suppliers to lay off or suspend many thousands of workers, often without pay and severance, pushing an already precarious group of workers to greater economic vulnerability.

As it is standard practice for brands not to pay for products until after they are shipped, when an order is put on hold or cancelled, payments are also held or cancelled. Brands are also cancelling upcoming orders and refusing to pay the cost of raw materials already purchased by suppliers, putting suppliers in an even more vulnerable position.

This approach stands in stark contrast to advice from Fiona Reynolds, chief executive of the United Nations Principles for Responsible Investment, who says companies “should be managing for the long-term when assessing how they treat employees, contractors and suppliers, prioritising these needs over immediate returns to shareholders”.Specially the poor workers at the bottom of the pile justifiably deserve such humanitarian conduct from buyers in the midst of the unique situation caused by the corona pandemic.

Even before the Covid-19 crisis, many suppliers have struggled with cashflow and paying workers on time, with 40% of suppliersfacing payment terms of more than 60 days under normal business conditions. The brands’ responses to the crisis have placed an even greater strain on suppliers; the unequal power balance could not be more stark.

Research found more than half of Bangladesh suppliers have had the bulk of their in-process or already completed production cancelled. The same research found that 72% of buyers were refusing to cover the costs of raw materials bought by the supplier, and 91% were refusing to pay the production costs. A great many number of workersin the country have already lost their jobs or been furloughed without pay because of order cancellations worth an estimated $3bn.

Many brands have defended their response to the crisis by citing financial difficulties, and are calling on the governments of garment-producing countries to provide support for workers. However, in many of these countries – where the cheap supply of labour has allowed brands to enjoy profits for decades – very few social protections exist. Without brands taking responsibility, millions of garment workers who produce their clothes will lose in the struggle to support themselves and their families during the crisis.

Civil society organisations and trade unions ought to build pressure on brands to pay 2% of total annual sourcing towards immediate relief for supply chain workers. At a bare minimum, brands need to be asked to not cancel orders, to pay their suppliers what they owe for existing orders in full, and to not extend or delay payments. Payment of wages, severance and arrears for workers are a priority.

Companies should collaborate closely with their suppliers to reduce negative impacts and consider shortening payment times and other measures to ease the financial burden. This has already been seen in other sectors. For example, L’Oréal has said it will shorten its payment times to suppliers who have been most exposed to the crisis and Unilever has committed to financially support its “most vulnerable” suppliers as part of a €500 million relief programme.

The off-loading by many brands of the pandemic’s costs onto vulnerable and poor workers exemplifies the exploitation and abuse that is currently endemic to the industry. The way apparel brands respond to this crisis will not be forgotten by their suppliers or by their supply chain workers. Their actions now will have long-term impacts on their brand, reputation, and social license to operate.