The unseen victims of fashion's multi-billion dollar order cancellations
By Huw Hughes
Apr 1, 2020
As stores close worldwide in a bid to curb the growth of the Covid-19 pandemic, demand for clothing has inevitably plummeted, resulting in scores of fashion brands cancelling huge orders of clothing, many of which have already been produced by suppliers.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), 1.4 billion dollars worth of orders have been cancelled and another 1.8 billion dollars worth have been put on hold as of Monday due to the pandemic.
Bangladesh is the world's second largest garment exporter behind China, with around four million workers - predominantly women - working in around 4,000 factories.
In a video message published on 23 March, BGMEA president Rubana Huq urged international garment buyers to pay for orders already produced or under production. “We will have 4.1 million workers literally going hungry if we don’t all step up to our commitment to the welfare of the workers. I think this is a call we all promised to take a long time ago,” Huq said.
“One thing is very clear, our foremost responsibility was towards our workers. We are a manufacturing country, our reality and your reality is totally different, but it is not a time to point out differences, it’s a time through which we need to work together.”
Bangladesh garment workers going unpaid
A survey of 319 Bangladesh garment factory owners conducted by the Center for Global Workers’ Rights between 21 and 25 March found that over a million garment workers in Bangladesh have been fired or furloughed due to unprecedented amounts of order cancellations and lack of order payments.
Almost all buyers refused to help pay the cost of those workers, with 72 percent of furloughed workers sent home without pay, and 80 percent of dismissed workers going without severance pay. The study noted that that's despite many of the brands having “responsible exit” policies committing to support factory workers in scenarios such as natural disasters.
Over half of the country’s suppliers have had the bulk of their orders cancelled, with 45.8 percent having either ‘a lot’ or ‘most’ of their in-process or already completed orders cancelled by buyers, and 5.9 percent having all orders cancelled.
Of those cancelled cases, 72 percent of buyers refused to pay for raw materials already purchased by the supplier, while 91 percent refused to pay for the cut-make-trim cost - or production cost - of the supplier. As a result, 58 percent of factories were forced to shut down most or all of their operations.
Mark Anner, director of Pennsylvania State University's Center for Global Workers' Rights, said: “The responsible approach is for brands and retailers to find ways to access lines of credits or other forms of government support to cover their obligations to supplier factories so that they can cover their expenses and pay their workers in order to avoid sending millions of workers home with no ability to put food on the table let alone cover medical expenses.”
And some brands are doing better than others at sticking to their payment commitments. The study found that Irish fast-fashion giant cancelled or delaying the most orders (273 million US dollars), followed by C&A (166 million US dollars) and Inditex/Zara (109 million US dollars).
The study noted that H&M and PVH Corp - both major buyers of Bangladesh garments - were not included in the list after both the fashion giants agreed to pay suppliers for in-production orders.
Anner said: “Going forward it is necessary to re-think how the industry does business. Purchasing practices must be reformed for social and environmental sustainability. This includes stable orders, timely payments, and pricing mechanisms that cover the total cost of sustainable production, from living wages and proper benefits to tax revenues that allow governments to build proper social safety nets. And it includes allowing worker participation to be an integral part of this process through full respect for the right to form unions and bargain collectively.”
Photo credit: Clean Clothes Campaign