Fashion brands may be finding a new normal, but garment factory suppliers and workers are slipping backwards in Bangladesh, advocates say.
Factories in the world’s second-largest apparel supplier are running again after earlier Covid-19 restrictions and order cancellations forced them to close, but the orders are smaller and less profitable, according to Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq. Orders are down by 30 per cent and brands are paying 10 per cent less for the orders they do place. Independent research by Penn State University's Center for Global Workers’ Rights has supported that estimate, finding a 12 per cent drop in what brands are paying for the same product this year compared with last. That’s on top of hardships many suppliers were already experiencing, including dealing with the aftermath of order cancellations and other disruptions earlier in the year.
Workers’ rights advocates are calling on brands to provide protections for the workers involved in making their products, even if it means cutting into company profits or shareholder dividends.
“The holiday season is always tough for garment workers, as they bear the brunt of tight delivery deadlines, but there has never been a holiday season for garment workers as tough as 2020,” says Scott Nova, executive director of the Worker Rights Consortium. “In the garment industry, pain flows downhill; when brands intensify financial pressure on suppliers, workers pay the price in lower wages and worse conditions of work. We are seeing this play out now, across the supply chain.”
Smaller orders on their own don’t pose a problem to suppliers, but individual order sizes don’t tell the whole story, says Mark Anner, the Center for Global Workers’ Rights director who conducts supplier surveys regularly and studies how pricing and other global supply chain dynamics impact labour conditions and workers’ rights. Brands are actually splitting up large-volume orders into multiple segments to protect themselves from potentially having to cancel massive orders. “They’re being more careful,” he says.
Supply chain experts say that garment workers, not factory owners, are the hardest hit by decreasing prices.
© Remake/Claudio Montesano Casillas
This creates an unpredictable situation for suppliers, who determine how many workers to hire and supplies to order based on volume. “All that volatility means the factory owner doesn't know how to plan,” Anner says.
Compounding the issue is that suppliers typically operate on thin profit margins and don’t start generating that profit until they’re already well into a production run, Anner says: a factory might still be perfecting production or getting up to speed at 20,000 units, sometimes even operate at a loss during that period, but can make it up during the remainder of the order.
And while there’s been a steady downward trend on price for decades, this year has been more of a cliff. Anner says the average year-on-year decrease over the last 20 years is 2.33 per cent; his research showed that prices this year are down between 12 and 13 per cent from 2019.
But it’s the workers, not the factory owners, who pay the greatest price for these trends, say supply chain experts.
With orders down by 30 per cent, many garment workers are facing layoffs and reduced wages.
© Remake/Claudio Montesano Casillas
In addition to mass layoffs early in the pandemic, a recent Reuters article said workers are being fired and then rehired but on worse terms, citing labour activists and unions. A recent Worker Rights Consortium survey also found that hunger and malnutrition rates among garment workers and their families are soaring.
“In stark contrast to companies that have survived and thrived, the majority of garment workers’ have experienced a staggering loss of income during the pandemic,” says Ayesha Barenblat, founder of the nonprofit Remake.
In a statement, H&M Group said it stands by responsible purchasing practices and contractual agreements, and is paying on time for all delivered goods as well as working with the International Labour Organization to find ways to help countries to build worker support infrastructure. “We are aware the drop in global demand has put the garment workers in an extremely vulnerable situation, and clearly highlights the need for social protection systems in many countries around the world. If you lose your job, there should be a reliable system to protect you — no matter if you work in the garment industry, or elsewhere.”
A trade union protest in Bangladesh.
© Sommilito Garments Sramik Federation/Clean Clothes Campaign
In October, the US Agency for International Development announced a memorandum of understanding with fashion companies and associations to “pursue much-needed relief” for workers in their supply chains in Bangladesh, Cambodia, Sri Lanka and Vietnam. Companies that signed onto the initiative include Gap, Inc., Levi Strauss & Company, Nike, Tapestry and VF Corporation. The announcement set an intent to work together over the coming year to alleviate hardships facing garment workers, but provided no specifics on funding, logistics or conditions for participating companies. USAID did not provide additional details, including whether the effort has any funding behind it.
In a statement, Gap Inc. said it “deeply values the wellbeing of the people who work throughout our supply chain and the communities we touch. We are actively engaged in assessing how best to offer our support during these challenging times, and we are committed to doing more”. The company did not comment on specific plans, but said it is exploring several agency partnerships that provide humanitarian relief in sourcing markets. Levi’s SVP of global product and sourcing Anne Madison said that cost determination with suppliers has not changed and average costs remain comparable to 2019, but did not comment on the effort with USAID.
Tapestry declined to comment, but said in a quarterly report that it’s helped its service providers with cash flow through financing options and general term extensions with suppliers in recent months. Nike, Carter’s and VF Corporation did not respond to requests for comment.
Barenblat is unconvinced that the memorandum of understanding will have much impact, even with brand sign-on. “Signing this MOU is just a way to take cover and is a completely insufficient effort to provide urgent financial relief,” she says. “We want brands to contribute directly towards relief and severance to the people who have helped them make pandemic profits.”
The PayUp coalition, which Barenblat helped to found in the spring to advocate for brands to pay suppliers for their orders, is now pushing for more concerted efforts to support workers.
The #ShareYourProfits campaign calls on brands and retailers to assure that workers are paid their full wages, and to commit to a fund that can provide severance payments to workers whose factories go bankrupt, says Christie Miedema, Clean Clothes Campaign outreach coordinator. “They consciously chose to produce in countries without social protection systems and that allow workers [to be] paid wages that never enabled them to build up buffers,” she says.
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