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With Inflation Painfully High, Fashion’s Garment Workers Pay the Price

Labour groups are warning of a new crisis on the horizon, as brands cancel orders ahead of the holiday season and living costs rise.
Ready-made garment workers in a factory in Dhaka, Bangladesh on February 27, 2022.
High inflation is threatening already precarious livelihoods for garment workers in countries like Bangladesh. (Kazi Salahuddin Razu/NurPhoto via Getty Images)
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Key insights

  • A toxic cocktail of painfully high inflation and softening demand for lower-priced fashion is threatening a renewed humanitarian crisis in fashion’s supply chain.
  • Many garment workers are already in a precarious position, since the pandemic caused widespread layoffs and an increase in incidents of wage theft, union busting and mounting debt levels.
  • Political upheavals and the climate crisis are creating additional pressure points in many garment manufacturing hubs.

Every month, Ayesha Barenblat coordinates a call between organisations on the front line of efforts to secure better pay and safer working conditions for the garment makers who power the fashion industry.

Lately, the mood has been getting grimmer.

Barenblat’s LA-based organisation, Remake, is one of a number of labour-advocacy groups that have successfully campaigned to secure greater worker protections and tackle wage theft in the wake of the pandemic.

But fragile victories are now coming under renewed pressure from a toxic cocktail of painfully high inflation and softening demand for lower-priced fashion.

The war in Ukraine has sent energy and food prices soaring, exacerbating price fluctuations already hitting global markets as a result of the pandemic’s supply-chain snarls and straining the economies of garment-producing hubs like Bangladesh, Sri Lanka and Pakistan — troubles amplified by a range of political and environmental challenges. Now consumers in the West are beginning to slow their spending on fashion, putting renewed pressure on the already precarious livelihoods of garment workers.

“We could be entering a pretty significant crisis,” said Mark Anner, director of Pennsylvania State University’s Centre for Global Workers’ Rights.

The Makings of a New Crisis

The new pressures are coming to bear on an industry already teetering on a knife edge.

Even before the pandemic, most garment workers lived on subsistence wages and few had savings to fall back on when the crisis hit. Over the last two years, the squeeze on livelihoods has become more intense, with widespread layoffs and rising reports of wage theft, union busting and mounting debt levels among workers.

“People lost all their savings, there is nothing to [fall back on] now,” said Nandita Shivakumar, campaign and communications manager at the trade union and labour-rights coalition the Asia Floor Wage Alliance. “It’s just real poverty.”

An increase in demand as pandemic concerns eased in key Western markets has helped paper over the structural cracks in the system over the last 12 months. But even as orders in countries like Bangladesh climbed to record levels, manufacturers still faced pressure from brands to keep prices steady year on year, according to early analysis for Better Buying Institute’s annual purchasing practices index, president and co-founder Marsha Dickson said in an email.

“In Bangladesh last year there were a lot of orders, but the price was less,” said Nazma Akter, founder and executive director of Bangladesh-based labour group Awaj Foundation.

Now, that strut supporting a fragile system could be swept away. Walmart and Target, bellwethers for the US retail sector, have cancelled billions of dollars in orders as shoppers cut spending on clothes. And the same inflation that is driving down demand in consumer markets is causing the price of necessities to soar in major manufacturing hubs.

Garment workers in key manufacturing hubs were already being paid on average roughly half of what would be required to achieve a decent standard of living in 2021, according to a study published by multi-stakeholder advocacy group The Industry We Want in February. But this summer, inflation reached 7 percent in Bangladesh and India, two of the world’s largest clothing exporters. Things are even worse elsewhere: inflation hit nearly 25 percent in Pakistan in July, while tipping above 60 percent in Sri Lanka and approaching 80 percent in Turkey.

“I have seen workers getting loans to pay utility bills because they cannot afford electricity, they are getting loans for food items,” said Khalid Mahmood, director at Pakistan-based nonprofit Labour Education Foundation. “This is a terrible situation for workers.”

Climate change is a cruel wild card in this already volatile mix. Pakistan is now battling the aftermath of devastating floods that have claimed the lives of more than 1,000 people and washed away swathes of the country’s cotton crop.

Reset the System

Labour groups say the industry is ill-prepared for a new crisis.

A move to establish better social protections for garment workers in the wake of the pandemic that was backed by many major brands and spearheaded by the UN’s International Labour Organisation has largely gone nowhere, advocacy groups say.

Though some funds did make it to workers, many initiatives got bogged down in bureaucracy and never moved beyond basic relief, according to the initiative’s latest update published last June. The ILO did not provide an update on the initiative but said it works to encourage social dialogue at a national level to address industry-wide economic challenges.

Though brands mostly don’t own the factories that manufacture their clothes, long-standing and high-profile commitments to protect workers’ rights and pay decent wages remain in conflict with demand for low-cost fast fashion and thirst for profits.

The dramatic impact of cancelled orders in March of 2020, resulting in mass layoffs and billions of dollars in lost wages, prompted vocal calls to reform the relationship between buyers and suppliers with more secure contract terms, but little has changed in practice, manufacturers say.

Meanwhile, price fluctuations for raw materials like cotton and an uncertain demand outlook are making life riskier for factory owners, who typically pay for materials upfront but don’t get paid until they deliver orders.

“We are currently living in a very, very volatile market condition,” said Ebru Debbag, global sales and marketing director at Pakistan-based denim manufacturer Soorty. “It’s manufacturers who are taking the bigger risk when an order comes in.”

Regulation could soon lend support to efforts to change these practices. California passed a law to make brands responsible for garment workers’ wages last year. A similar bill has now been proposed at the federal level.

“There’s an awakening in the human-rights community that we have to make companies jointly liable for wages as a path forward,” said Barenblat. “This would be a fundamental reset of the business model.”

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