$11.85 billion.
That’s how much order cancellations and unilaterally imposed discounts by major apparel brands at the start of the Covid-19 crisis have cost garment workers over the past year of “unimaginable human sorrow,” a new report estimates.
Published by the Clean Clothes Campaign, the garment industry’s largest consortium of workers’ rights groups, the study builds upon previous calculations of income and severance losses—somewhere between $3.19 billion and $5.79 billion—that occurred in the first three months of the pandemic alone.
The finding, based on research in Bangladesh, Cambodia, India, Indonesia, Sri Lanka, Myanmar and Pakistan, is reflective of the “catastrophic” sourcing squeeze that has delivered “horrific impacts” on workers, most of whom were already earning chronically low wages and could not afford additional financial deprivation, the report’s authors wrote. And with resurgent waves of infection continuing to roil these regions, forcing new lockdowns, there is “no indication that this is the final bill.”
Conversely, despite initial blows to their bottom lines, many brands made money during the pandemic. As the contagion ebbs in Western nations with robust vaccination rates and demand for clothing picks up, a number have rebounded to profitability.
“This figure represents an unimaginable and often irreparable human sorrow,” Khalid Mahmood, director of the Labour Education Foundation, a human-rights group in Pakistan, said in a statement. “The report aims to put specific cases that we hear and read about in perspective: this is not happening in just that one factory in Bangladesh or Pakistan, it’s happening throughout the garment industry.”
“We cannot count on brands’ own initiatives or the voluntary programs they hide behind to deliver for workers,” said Ineke Zeldenrust of the Clean Clothes Campaign.
Workers in all researched nations, barring Indonesia, struggled with a wage gap at least double that of their average monthly wage, the Clean Clothes Campaign found. Job losses also became endemic. Roughly 1.6 million garment workers were dismissed in the seven countries in the past year, the report’s authors wrote, yet few received the severance benefits they were legally owed upon termination. Those who were furloughed because of lockdowns or a shortage of orders typically received only a small fraction of their usual wages, resulting in worsening debt, hunger and desperation.
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Even workers who kept their jobs faced an “increasingly hostile” environment that discouraged the right to collectively organize to demand their wages or better safety and hygiene measures, labor-rights campaigners said. In countries such as Bangladesh, Pakistan and Myanmar, protests for unpaid wages were sometimes met with violence. Workers have also accused factories of using the pandemic as an excuse to purge their ranks of union members, thereby undermining their ability to negotiate for higher wages or challenge pay cuts.
“Despite trade unions’ engagement to mitigate the impact of Covid-19 on workers through social dialogue, suppliers in the apparel sector violate local agreements on wages,” said Anton Marcus, joint secretary of the Free Trade Zones and General Service Employees Union in Sri Lanka. “As a result, the vast majority of garment workers are being penalized by cuts in their wages or by losing their jobs.”
Labor groups say the only effective way through this morass is for brands to negotiate and sign a binding agreement on wages, severance and basic human rights that ensures workers receive their due throughout the pandemic. Companies should also contribute to a severance guarantee fund that provides cash relief for laid-off workers, particularly since voluntary initiatives, such as the International Labour Organization’s Call to Action, have proven ineffectual, they add.
“In most of the ‘priority countries,’ workers have received nothing, and it is not evident that brands themselves have contributed anything,” said Ineke Zeldenrust, international coordinator at the Clean Clothes Campaign. “We cannot count on brands’ own initiatives or the voluntary programs they hide behind to deliver for workers. It is urgent that companies negotiate and sign a binding and enforceable agreement with unions to prevent millions of garment workers and their families from being driven even deeper into destitution.”
Pleas falling ‘on deaf ears’
As brands fail to address the problem of wage theft, some labor-rights organizations are taking them to court, not on their home turfs but in the countries where their production is taking place.
The groups say they’re employing the strategy, which invokes joint employer liability, in an effort to close the “glaring gaps” in the largely unregulated governance of global supply chains while holding the industry’s power players legally accountable for what happens under their watch. It’s a last-ditch effort to spur recalcitrant brands to action.
“We’ve tried, throughout the pandemic, starting from last year, [to demand] that brands contribute to the wage loss suffered by garment workers who were already being paid poverty-level minimum wages and who were barely surviving,” Ananya Bhattacharjee, international coordinator for the Asia Floor Wage Alliance (AFWA), a coalition of unions and other advocacy organizations, said at a recent online event. “However, all the demands fell on deaf ears and there has been no response from brands.”
In India, AFWA and its local union partners filed a legal complaint with the Bengaluru labor department to ask that H&M be held jointly liable for alleged abuses that occurred in 2020 at a supplier factory where it wielded “total economic control over the workers’ subsistence, skill and continued employment.” The groups filed a similar complaint with the labor commissioner in Sri Lanka, referring to Asics, Columbia Sporting Company, DKNY, Levi Strauss and Tommy Hilfiger as “shadow employers” at a factory in Katunayake where workers who lost their jobs were told they wouldn’t be receiving their wages and bonuses because of Covid-19-induced cancellations.
A spokesperson for H&M said the brand wants to be a “fair and trusted” business partner to its suppliers and that it has stood by its responsible purchasing practices and contractual agreements through “these unprecedented times.”
“We are fulfilling all payments for delivered goods, at the originally agreed price and on time,” the spokesperson added. “In addition, H&M always excludes the labor cost from price negotiations with suppliers, and we are continuously monitoring wage payments at suppliers to ensure workers are correctly compensated at all times.”
Asics said the complaint came as a surprise, and that it does not recognize the allegations made by the AFWA, while Columbia said it found no evidence of a complaint to the labor office regarding its conduct.
“We are always concerned about the wellbeing of the people who make our products, and we recognize that they are especially vulnerable to economic hardships,” a spokesperson told Sourcing Journal. “We believe that the strategies we enacted were able to reduce the impacts of the global pandemic on our supply chain partners and their employees.”
“We have to change the idea that brands are buyers of garments and not actually the producers of the garments,” said Ashim Roy of the AFWA.
Levi’s referred Sourcing Journal to a statement on its website, last updated in February, that states that the denim giant is taking full responsibility—and is paying in full—for all finished, ready-to-ship and in-progress orders that were outstanding at the onset of the pandemic.
“While we extended our payment terms, we believe our current terms are consistent with industry practice, and we have not asked for any discounts on payments,” Levi’s said. “Our sourcing leads are staying in close conversation with suppliers and we are factoring their circumstances into our decisions.”
Tommy Hilfiger said that it and parent company PVH Corp. are “deeply concerned” about the impact of “this unprecedented pandemic” on workers and that they’re working with industry partners, governments and worker and employer representatives to “find solutions for workers’ immediate needs, and to contribute to long-term plans that can strengthen social protections in key garment-exporting countries”
Neither DKNY nor its operator, G-III Apparel, responded to a request for comment.
Labor-rights campaigners like the AFWA want to reframe the idea of brands as simply “buyers” of garments but rather stakeholders with manufacturing agreements and other attendant responsibilities to uphold, since the items they commission can’t be sold by anyone else.
“We want to show that there is, hidden from view, actually a contracting of production, and it is within this production that employer relationships are embedded, ” said Ashim Roy, international secretariat and senior trade union leader at the AFWA. “We have to change the idea that brands are buyers of garments and not actually the producers of the garments.”