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The Financial Express

Brands protect bottom line, but workers face destitution

| Updated: March 15, 2021 15:53:35


FE file photo FE file photo

Leading fashion brands have recorded huge profits despite the Covid-19 pandemic, according to the latest global report.

But the garment workers in the supply chain have been denied full wages for the work already completed due to order cancellations and non-payment, it said.

It said that some 16 leading fashion brands including H&M, Nike, and Levi recorded profit of at least US$10 billion during the second half of 2020.

In a stark contrast to the destitution faced by workers, most of the major fashion brands were once again turning to profits - in some cases unprecedented profits - having already recovered from the initial disruption caused by the pandemic, the report said.

Business and Human Rights Resource Centre (BHRRC) published the report titled 'Wage theft and pandemic profits: the right to a living wage for garment workers' last week.

The report demonstrated the business model of fashion brands and the structure of global garment supply chains?that have created and sustained the poverty wages for the garment workers.

BHRRC investigated eight factories supplying 16 major fashion brands and found that nearly 10,000 workers were fighting for the legally-owed wages and benefits.

At the start of the pandemic, the fashion brands had cancelled their orders with supplier factories and demanded discounts of up to 90 per cent on clothes already made, to protect their bottom line.

"This had a direct impact on suppliers' ability to pay their workers even for work already completed," the report added.

A year on, and the destitution faced by workers who have lost their jobs is worsened by not being paid what they are owed. In many cases workers- the vast majority of women- have been owed wages for several months and are left struggling to support themselves and their families.

According to the report, factories located in Cambodia, Myanmar, the Philippines, Bangladesh and Ethiopia, and supplied to Carter's Inc, Hanesbrands, H&M, Levi Strauss & Co, Lidl, L Brands (Victoria's Secret), Matalan, Mark's Work Wearhouse, Next, New Look, Nike, PVH (Calvin Klein, Tommy Hilfiger), River Island, Sainsbury's, s. Oliver and The Children's Place.

"As stores closed around the world in response to COVID-19 lockdowns in early 2020, fashion brands and retailers sought to minimise their losses, shifting the financial burden of the disruption to the bottom of their supply chain," the report said.

The cancelled orders, delayed payments and demands for huge 'discounts' from suppliers - the practice of paying only a fraction of the agreed amount for clothes ordered - had a catastrophic impact on workers, it added.

It also found that major fashion brands refused to pay overseas suppliers for over $16 billion of goods during the pandemic between April and June in 2020.

Tens of thousands of garment workers had also lost their jobs during the pandemic and one in four had not received legally mandated severance pay.

"These workers face hunger and destitution: more than three-quarters (77 per cent) of garment workers or a member of their household have gone hungry since the beginning of the pandemic as suppliers cut wages and closed factories," the report said.

Many garment producing countries are already using the pandemic as justification to suppress wages.

"In Bangladesh, garment manufacturers are urging the government to suspend a planned 5.0 per cent rise (from approximately $94 to $99 per month) in the minimum wage due to the COVID-19 crisis while in Cambodia the minimum wage for garment workers was increased by only $2 a month as of January 2021, far short of unions' recommendation of $12," it noted.

Citing an example of Bangladesh, the report said 600 workers owed wages, benefits, bonuses and severance pay from Dragon Sweater factory after their jobs were terminated in March 2020 as the factory had suspended operations.

It also said that over 1,100 garment workers continue to demand unpaid wages and benefits from A-One BD Ltd garment factory in the Dhaka Export Processing Zone after it closed in March 2020, reportedly as a result of foreign buyers' cancelling the orders.

Workers staged a series of protests to demand reopening of the factory, and the payment of all arrears, since January 2020 and in early December 2020, protestors were left injured after police violently attacked them with batons, tear gas and water cannons while they were asleep, it highlighted.

Approximately 3,000-4,000 workers in Stylecraft Ltd factory in Gazipur, Bangladesh were affected due to the cancelation of orders and non-payment by the buyers, it added.

Workers of the factory staged demonstration in November 2020 demanding 35 per cent of their wages and arrears for September and October, full pay for November, overtime pay and other owed allowances.

Thulsi Narayanasamy, Senior Labour Rights Lead at BHRRC, said their research exposed an unfair industry rigged to favour brands at the expense of women workers who make our clothes.

A year into the pandemic, with growing profits, and after witnessing the utter destitution of workers, brands don't have an excuse for failing to protect the basic rights of garment workers, Thulsi Narayanasamy said, adding it is not optional to ensure legal wages and benefits are paid in the supply chain.

The business model of fashion brands and the structure of global garment supply chains was built on an extreme inequality of power that creates and sustains poverty wages for garment workers, Narayanasamy said.

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