The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
This article is part of BoF’s special edition, Can Fashion Clean Up Its Act?
LONDON, United Kingdom
, the last month has been a period of mounting anxiety.
The labour-rights activist and founder of the Bangladesh Centre for Worker Solidarity watched with alarm as stores across Europe and North America shut down. She knew what would come next: with nowhere to sell clothes, brands would cancel their orders with suppliers. Even in early March, factories that employed millions of garment workers eking out a hand-to-mouth existence were threatening layoffs and closures.
“I can’t even express how afraid I am when I think that factories could close,” Akter said. “I don’t know if workers don’t get paid what they’ll eat.”
Today, Bangladesh, India, Vietnam, Cambodia and other fashion manufacturing hubs are bracing for a humanitarian crisis. Garment factories in these countries have seen billions of dollars in orders cancelled overnight. Their governments likely won't be able to provide the kind of sweeping aid packages deployed in the US and Europe to carry businesses and the newly unemployed through the crisis.
Equally, there are fears of a health crisis far worse than in the US and Europe if the virus takes hold in densely-populated countries with rickety health systems where few have the means to self isolate.
It will be a disaster. A human disaster.
The number of people at risk within the supply chain is staggering. The Worker Rights Consortium, which monitors labour rights globally, estimates 50 million people are employed in the apparel, textile and footwear sector. Many are women who represent their families' primary wage earner.
"It will be a disaster. A human disaster," said Simone Cipriani, founder and chief executive of the UN's Ethical Fashion Initiative, which connects marginalised artisan communities with international brands.
Over the last two weeks, the fashion industry has been consumed by the fallout from efforts to contain the virus’ spread. Shops have shuttered across US and European markets, forcing an unprecedented plunge in consumer spending with devastating financial consequences.
As brands scrambled to cut costs to match declining sales, they’ve moved swiftly to cancel or postpone orders, even refusing to pay for goods that have already been produced.
Those cancellations were a shock to the garment industry, where manufacturers pay for fabric and labour in anticipation of payment once orders are complete. Suppliers can be crippled when brands back out of contracts. Many were already struggling to stay open after the virus forced Chinese suppliers to shut down earlier in the year.
Their best bet to survive is typically to “shed workers fast and pay those workers as little in compensation as possible,” the Worker Rights Consortium said in a white paper published in March. Factories also have an incentive to keep workers on production lines for their remaining orders, regardless of the health risk, the organisation said.
According to the Bangladesh Garment Manufacturers and Exporters Association, around $2.9 billion worth of exports have been cancelled or suspended, affecting the livelihood of more than 2 million workers. More than 1 million garment workers in the country have already been fired or furloughed as a result of the cancellations, with most sent home without pay, according to a report published last week by Mark Anner, director of Pennsylvania State University's Centre for Global Workers' Rights in association with the Worker Rights Consortium.
Compounding the financial pain are mounting fears that the virus could spread within producing countries. According to the World Health Organisation, as of Monday, India had 1,071 reported infections. Bangladesh had 49, Vietnam 188 and Cambodia 103.
Many fear the pandemic’s human toll could be even more devastating than in western markets, as developing countries have less of a social safety net. India went into lockdown last week, shuttering all textile mills and garment factories alongside the rest of the country. Bangladesh has implemented similar measures, though apparel manufacturers may continue to operate. The BGMEA has recommended factories shut and most have elected to close, the organisation said.
If you say to people, 'stay at home,' but they have no income, what can they do?
While some factories have been swift to adapt new ways of working to ensure social distancing where they remain open, many others continue to operate as normal, with workers in close contact in poorly ventilated rooms.
“In one workplace there are a few thousand working together, using the toilet together, taking food together, or using the bus or truck or transport by car together,” said Ath Thorn, president of the Cambodian Labour Confederation and the Coalition of Cambodian Apparel Workers’ Democratic Union. “This will be easy to spread.”
In many manufacturing countries, a safety net for the newly unemployed exists on paper, but less often in practice. In Cambodia, Thorn said the government and employers should provide workers with a portion of their salary if work is suspended, but whether that money is distributed is another matter. In Tamil Nadu, where many of India’s textile mills are based, most of the workers local nonprofit Community Awareness Research Education Trust, or CARE-T, have spoken with have not been paid for the work they did in March.
Bangladesh and other governments have pledged some state aid, like covering a percentage of workers wages. These efforts will buy time, but many industry watchers fear manufacturing countries’ governments do not have the balance sheet to stave off disaster if the current situation persists for long.
Many will feel they have no choice but to work, despite the risks.
“If you say to people, ‘stay at home,’ but they have no income, what can they do?” said Frank Hoffer, executive director at ACT, an initiative established by a group of brands and IndustriALL Global Union in 2016 to push for better purchasing practises and wages within the supply chain.
The millions of workers who operate in the informal economy or via temporary employment contracts face even greater uncertainty. In India, huge numbers of migrant workers have been left trapped far from home after the government’s sudden lockdown decision last week. Many of the workers in India’s garment factories and textile mills live and eat in factory hostels in close quarters. Some now find themselves homeless. Many are unable to claim state aid in the regions where they work and have struck out for their hometowns on foot.
This is going to be everyone's problem.
“Garment and textile workers are stranded in many places,” said Prithiviraj Sinnathambi, a founding member of workers rights group the Tamil Nadu Alliance and head of CARE-T. “There’s a lot of anxiety, a lot of distrust and a lot of psychological trauma on what to do.”
Workers rights organisations say international brands need to step up. Western fashion labels typically don’t directly employ the workers who make their clothes. But they benefit from cheap overseas labour and, unlike many of their contract manufacturers, are likely to receive financial support from their home governments during the pandemic.
“I’m really asking all the brands to take responsibility,” Akter said. “Otherwise these workers cannot survive.”
Brands can start by honouring their existing contracts, which would allow more manufacturers to continue to pay workers and put protective health measures in place. Zara-owner Inditex and H&M group have both committed to pay in full for existing orders that have already been produced or are currently in production, going further than many others in the industry. But with fashion braced for an extended slowdown, such initiatives are just a stop gap.
“We are well aware that the suppliers, and their employees, are extremely vulnerable in this situation,” H&M group said in a statement. “We are at this instance intensively investigating how we can support countries, societies and individuals from a health and financial perspective.”
There are financial reasons to be generous. If large amounts of manufacturing capacity disappear, or millions of workers are exposed to Covid-19, it will make recovery more difficult.
The fundamental problem is the model.
“Responsibility and leadership in this time also means considering the workers in the extended supply chain,” said Elisa Niemtzow, vice president at nonprofit consultancy BSR. “This is going to be everyone’s problem.”
Longer term, some see an opportunity to fix a broken and unequal system.
The Worker Rights Consortium is calling on brands to exit contracts responsibly and ensure suppliers pay legally mandated benefits to suspended or terminated workers. It’s also looking for commitments to put in place social protection systems for the future.
“The fundamental problem is the model,” said Scott Nova, the group’s executive director. “It’s an inequitable model that privileges the interests of brands to a radical degree over the interests of the workers who make their products.”
But bringing all the necessary stakeholders to the table to implement coordinated and lasting changes — a tricky challenge in the best of times — is now even more complex.
“The challenge is, you’re doing this in a time when a lot of people are preoccupied with saving their own companies and caring for their direct employees in Europe or the US,” said ACT’s Hoffer. “You can’t meet. You can’t bring everyone together to hammer this out. It doesn’t make things easier.”
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