Week of 30 March 2020
Supplier associations in Bangladesh, Cambodia and India issue urgent pleas asking buyers to pay for goods produced, as millions of workers face unemployment without wages, severance and an adequate safety net; H&M steps up and other companies follow suit
- The Bangladesh Garment Manufacturers and Exporters Association’s (BGMEA) president, Rubana Huq, issued an urgent appeal asking buyers to accept and pay for goods produced by suppliers that are ready to be shipped — or at least compensate factories for sunk costs of in-process manufacturing. Bangladesh’s ready-made garment (RMG) industry is the backbone of the country’s economy, accounting for over 80% of the country’s exports. It is also home to 4.1 million workers, a large number of which are women on low wages (approx. $96 monthly wage) without savings or a safety net.
- The Center for Global Workers’ Rights conducted a survey of 319 garment factory owners in Bangladesh (between March 21 and 25) and found that over half of the factories (58%) had to shut down following order cancellations and lack of payment. Of the suppliers who lost buyer contracts without payment, close to three-quarters (72.4%) said they were unable to provide their workers with income when furloughed, and a higher number (80.4%) were unable to provide severance pay. The survey found that around three-quarters of buyers (72%) refused to pay for raw materials already purchased by the supplier, and the vast majority (91%) refused to pay for the production cost of the supplier.
- In Cambodia, the Garment Manufacturers Association in Cambodia (GMAC) issued a statement asking buyers to fulfill their “existing contractual obligations by taking delivery of goods already produced and goods currently in production and pay under the normal term.” This would allow suppliers to pay their workers. (March 3 figures are that 18,000 workers have been suspended following factory shutdowns).
- In India, the Apparel Export Promotion Council (AEPC) has asked buyers to “shar[e] the responsibility that this sector has to the people engaged in the supply chain”, and offers flexibility such as extending payment terms to help protect workers “who are directly or indirectly dependent on this industry and earning wages between $120 and $200.” Other countries impacted include Vietnam, Sri Lanka and Myanmar.
- A recent report by the Worker Rights Consortium concludes that we will have “millions of workers suspended or terminated with little or no compensation and others forced to go to work in unsafe factories because it is the only way to avoid destitution.” They call on brands to “take a more equitable approach to sharing the financial burden of the crisis, rather than sloughing all costs onto suppliers and, in turn, workers.” They also call for “a collective response by international financial institutions, intergovernmental bodies, and/or governments of wealthier nations to maintain workers’ income during the crisis.”
- I wrote about it this week with John Sherman. We highlight H&M’s decision to take delivery of already produced garments in Bangladesh, as well as goods in production, and to pay for goods under previously agreed prices and payment terms. A number of brands have since announced that they too would pay for goods already produced, including Inditex, Marks & Spencer, KIABI, PVH and Target.