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Brands Urged to Pay One-Time Relief Contribution to Mitigate Worker Crisis

As the fiscal fallout from canceled orders continues to ravage the garment industry, one labor group is urging Western brands to make a one-time contribution to protect workers from starvation and destitution amid the ongoing COVID-19 crisis.

In a report published Monday, the Asia Floor Wage Alliance (AFWA) called on brands and retailers to help mitigate the loss of worker wages due to suspended production with a one-off “supply-chain relief contribution” of 2 percent of their annual sourcing budget.

Production lines across South and Southeast Asia have all but ground to a halt, the organization said. Current production mostly involves completing orders from before the outbreak, creating samples for the upcoming season and manufacturing personal protection equipment.

“New orders for garments placed by brands have considerably declined, which has led to apprehension about the prospects of work in the near future,” the report’s authors wrote. “Brands cancelling and postponing orders has aggravated the crisis in garment-producing countries, severely affecting many supplier firms that operate on wafer-thin margins.”

While public naming and shaming has prodded companies such as Asos, H&M, Zara owner Inditex, Nike, PVH Corp. and VF Corp. to pay in full for completed and in-production orders, many more, including Arcadia Group, the Edinburgh Woollen Mills Group, Gap and Urban Outfitters continue to drag their feet, according to labor advocates.

In Bangladesh, the world’s second-largest exporter of garments after China, Western brands and retailers have canceled or suspended more than $3 billion in orders, the Bangladesh Garment Manufacturers and Exporters Association estimates.

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Factory closures and mass layoffs as a result of evaporated work have “disproportionately impacted” workers already struggling to meet essential costs including food, rent, debt repayments and school fees for children, the AFWA said. Stimulus and bailout packages have also proven insufficient, and the limited intervention of most governments has forced many workers into debt and predatory interest rates to meet basic needs.

In Cambodia, for instance, suspended workers are only guaranteed a monthly wage of $70, or 37 percent of the minimum wage, with the state paying $40 and the employer responsible for $30. Even this amount is iffy: “There is uncertainty around the full payment of $70 as the government’s share has not been paid yet,” the authors wrote.

In Indonesia, the government has instituted a pre-employment card scheme, entitling laid-off workers to a benefit of 3,550,000 Indonesian rupiah ($239). The catch? The amount will be transferred only if the worker completes certain online training programs.

India has launched a package of 20 lakh crore rupees ($307 billion) to provide free food, loans, credit and cash relief for certain segments of workers and to generate employment for migrants returning to rural areas. But the package offers “no specific support” for garment and textile workers, the AFWA said, and falls short of assuaging the “humanitarian crisis unfolding in the country.”

Unemployed workers in Myanmar, too, have been promised social security benefits amounting to 40 percent of their salaries. But many workers are unaware about the scheme and the money has yet to trickle down, the organization said. There have also been cases of employers withholding a worker’s social security cards or fudging the numbers of registered workers so they can sidestep payment.

“Trade unions worry that the COVID-19 crisis will lead to a spike in child labor, bonded labour and human trafficking, with garment workers moving to other occupations including sex work,” the report noted.

The International Labor Organization says poverty rates are poised to increase from a global average of 26 percent to 59 percent because of the economic strain of the pandemic. Average incomes in the informal economy have already plummeted between 60 percent and 80 percent, throwing large portions of the global workforce into extreme poverty.

The one-time payment by brands and retailers, while a Band-Aid, is vital as a short-term solution, the AFWA said. Looking ahead, the garment industry needs to tackle the greater systemic issues, including predatory purchasing practices and a dearth of buyer accountability, that perpetuate poverty wages.

“In the medium to long term, brands should step forward and commit to a fair price or a premium that ensures payment of a living wage and social security, and safeguard freedom of association,” it added.