Brands abandon Asian workers amid pandemic
(London) – Clothing brands’ business practices in response to COVID-19 worsen the economic situation of millions of garment workers in AsiaHuman Rights Watch said today. Dozens of clothing brands and retailers canceled orders without taking financial responsibility, even when workers had finished making their products.
These brand actions that increase worker job losses through layoffs and temporary layoffs run counter to the human rights responsibilities of brands outlined in the United Nations Guiding Principles on Business and Human Rights and due diligence of the Organization for Economic Co-operation and Development (OECD) Advice for responsible supply chains in the clothing and footwear industry. Many supplier factories in Asia are strapped for cash and unable to pay workers’ wages and other compensation due to brand actions.
“These are extraordinarily tough times, but clothing brands facing tough business decisions to overcome the COVID-19 crisis should not abandon factory workers who make their branded products,” said Aruna kashyap, senior advisor in the women’s rights division of Human Rights Watch. “Brands should take action to minimize the devastating economic consequences for garment workers in their global supply chains and for their families who depend on that income to survive. “
Human Rights Watch interviewed 11 manufacturers and industry experts, including representatives from brands, about the impact of the COVID-19 crisis on factories in Bangladesh, Myanmar, Cambodia, and other Asian countries ; reviewed email communications from brand representatives to their global suppliers; and interviewed workers’ rights groups.
The COVID-19 pandemic has caused sales of clothing brands and retailers to plummet. Many have closed their retail stores to control the spread of the virus. While navigating this crisis, some brands and retailers have taken advantage of unfair purchasing practices, which Human Rights Watch noted in its April 2019 report, “Pay a bus ticket and expect to fly», Which feed the abuses of work.
In March 2020, manufacturers in various countries told Human Rights Watch that very few brands take business risk when placing orders. The former manager of a garment factory in Cambodia said that in their experience, brands usually impose all payment terms with no room for negotiation. Big brands and retailers did not make prepayments and had longer payment windows after goods were shipped.
In contrast, the small and medium brands with which the factory had dealt negotiated better terms, paying up to 30% of the order price when purchasing raw materials and clearing the remaining payments within the week. or 10 days after delivery or completion of the order.
Advance payment and shorter payment windows allow suppliers to maintain better cash flow, which affects their ability to pay salaries on time. But the vast majority of brands and retailers do not offer such payment terms – the Better Buying Purchasing Practices Index report by end of 2018 showed that 73 percent of suppliers who responded to the survey said the brands and retailers they did business with either did not offer advance payments or did not have favorable payment terms.
During the COVID-19 crisis, many global brands and retailers made the following demands, asking suppliers to be “flexible” and “understandable”:
- Cancellation of orders for goods that workers had already placed.
- Cancellation of orders for goods the workers were making.
- Demanding discounts on products already shipped, dating back to January.
- Assuming no financial responsibility or specifying when payments would take place, even in cases where orders have already been placed or were in progress.
March 27 study by the Center for Global Workers’ Rights and Worker Rights Consortium on the Impact of the COVID-19 Crisis in Bangladesh reported that of the 316 Bangladeshi vendors who responded to the survey, vendors said more than 95 for percent of brands and retailers have refused to contribute to the cost of partial wages for temporarily suspended workers or severance pay for those made redundant.
According to the United Nations Guiding Principles, as well as the OECD Garment Due Diligence Guidance, brands should undertake human rights due diligence to identify and mitigate risks that may cause or contribute to human rights issues in their supply chains. This includes “assessing” the actual and potential impacts on human rights, “integrating and acting on the results”, “monitoring responses”, “communicating how impacts are being addressed” and engaging externally to “know and show “that they are taking effective action.
So far the H&M Group, Inditex (Zara and other brands) and Target USA have taken steps in the right direction. These companies and possibly others have undertaken to take delivery of goods already produced or in production and to pay for them as previously agreed.
More brands should take similar steps to ensure fair treatment of workers, including payment of wages and other compensation, and minimize job losses, Human Rights Watch said. Nearly 200 institutional investors have urged companies to maintain relationships with suppliers as much as possible and to make prompt and timely payments to suppliers.
Some global brands are reorienting their supply chains to produce personal protective equipment, including gloves and masks, for medical purposes. Brands and governments should continue to support workers producing essential medical supplies by ensuring that they also receive adequate personal protective equipment and follow the occupational health and safety guidelines issued by the World Health Organization.
However, the production of personal protective equipment will not generate enough alternative jobs for all workers. In Bangladesh, it is estimated a million workers have already been made redundant or temporarily suspended – the majority of whom have not received wages and other payments owed to them under local laws. In Burma, 20,000 workers have already lost their jobs and an industry expert has estimated that up to 70,000 garment workers could lose their jobs within a week. In Cambodia, an estimate projected that 200,000 garment workers could lose their jobs.
These governments lack the financial capacity to provide economic relief programs like those announced by Western governments. Donors and international financial institutions should focus on developing and implementing plans to immediately alleviate the economic and social distress of workers, and implement longer-term measures to provide social protection to workers, Human Rights Watch said.
“Global clothing brands, donors and international financial institutions should join forces and urgently undertake efforts with labor rights groups to help low-income workers during the COVID-19 crisis,” Kashyap said. “But longer-term measures are also needed – this pandemic has highlighted that social protection regimes for workers and effective mandatory regulations to tackle unfair trading practices of brands in their supply chains are long overdue. . “