Brands and retailers worldwide have responded to mass lockdowns, slackened consumer demand and a sluggish economy by suspending, decreasing or canceling their garment orders en masse, leaving workers unpaid, with less then their full wages or unemployed, said the Clean Clothes Campaign (CCC), the garment industry’s largest consortium of labor unions and non-governmental organizations.
In several countries, governments allowed factory owners to pay their workers only 50 percent to 60 percent of the “poverty wages” they were receiving before the pandemic struck, the organization said. Many other workers were left without payment or jobs despite official exhortations to keep paying them in full. Protests against wage cuts and dismissals have been in full force since March as workers struggle to choose between the risk of catching Covid-19 and potential starvation. In the case of Cambodia, unions have been rallying to recover lost wages and bonuses from brands sourcing from the nation because, as the key setters of terms and prices, these companies “basically function as principal employers.”
A report published last month by the CCC found that garment workers globally lost up to $5.8 million in wages, legally owed bonuses and other forms of compensation from March to May due to these cost-saving measures.
“Many workers in Indonesia, who already had difficulty surviving on their wages before the Covid-19 outbreak, have seen their wages cut or their jobs disappear without due compensation during the pandemic,” Djoko Heriyono, president of the National Industrial Workers Union Federation, an affiliate of the CCC, said in a statement. “They make clothes and shoes for international brands who have the influence and money to ensure that workers will receive their full wages and benefits. We urge brands to take responsibility for the wages owed during the pandemic and to ensure that workers will never be left with absolutely nothing again.”
Though the CCC’s “Pay Your Workers” campaign homes in on H&M, Primark and Nike—three of the brands it says most frequently appeared in reports from workers about labor violations during the pandemic—the “call to take responsibility” is directed at all brands and retailers with outsourced production.
The group had previously urged all fashion businesses to take responsibility by publicly committing to a “wage assurance” guaranteeing that all workers making and handling clothes in their supply chains receive the full wages they are owed in accordance with labor laws and international standards. More than a dozen brands have committed to ensuring their workers are paid in full during the crisis, including Nile, Kuyichi, Taiyo and Known Supply.
But these are small players. It is “up to bigger companies,” activists say, to “follow suit.”
“This campaign targets some of the wealthiest apparel supply chains in the world. These brands have made profits for decades on the basis of poverty wages and outsourced responsibility without contributing to any form of social protection in garment-producing countries,” said Ineke Zeldenrust, international coordinator at the CCC. “Our campaign aims to reclaim funds for the workers, by convincing brands to take responsibility for the people who enabled great profits through their underpaid labor.”
The wage assurance, she said, is “deliberately open” about how brands and retailers will fulfill their commitment, since some may prefer to work through the existing International Labour Organization (ILO) Call to Action to secure loans to enable employers to pay wages while others may want to shell out to workers directly.
Because the Call to Action currently does not cover all countries, and not all brands have signed it, businesses will have to monitor which workers are left unpaid in their own supply chains and find “other means to make sure these workers receive what they are owed in the short and longer term.” This could mean direct support, issuing emergency funds, cooperating with employers and governments or creating a guarantee fund that earmarks cash for future severance.
In response, Primark pointed to a July announcement that it will be paying suppliers in full for all outstanding finished and in-production garments, including any fabric costs incurred.
“Even early on in the closure period, the company effectively committed to paying for close to 2 billion pounds ($2.6 billion) of inventory despite its stores being closed and sales of 650 million pounds ($834.1 million) a month lost,” a Primark spokesperson told Sourcing Journal. “With the business up and running again, we have been able to place significant orders worth 1.2 billion pounds ($1.5 billion) with our suppliers for the coming seasons, all paid on our usual 30-day payment terms.”
Nike, which has said it will honor all garment-order commitments, did not immediately respond to a request for comment.
H&M, one of the first brands to commit to paying for in-progress and finished orders, agreed that the pandemic “has put the garment workers in a difficult situation and there is undeniably a clear need for structural change within countries with weak social protection systems.”
“We want to support such a development in a responsible way, making sure that we contribute to stable systems and systemic transformation,” spokeswoman Ulrika Isaksson told Sourcing Journal. “We are therefore working closely together with the ILO, employers organizations and trade unions, and other brands on this issue.”
In July, H&M Foundation, the retailer’s charitable arm, launched what it described as a “long-term project” designed to support women garment workers in Bangladesh, beginning with addressing their immediate needs in the wake of the coronavirus outbreak.
Claims versus reality
But the problems go beyond that. CCC’s campaign comes just after the group published a report finding that “despite their sweeping promises,” none of the 108 brands and retailers across 14 countries it surveyed—including Adidas C&A, H&M, Primark, Nike and Zara—can prove that all workers in their supply chain earn a living wage.
Field research showed that garment workers are forced to contend with excessive overtime, complicated payment systems and impossible quotas to earn “pitiful wages.” The breakdown of wages is often provided to workers in “complex formats,” the CCC said, making it difficult for them to understand how they’re being paid or to challenge any inaccuracies. In India and Indonesia, payslip information is “so unreliable” that many don’t know how the amount they receive relates to the numbers on their stubs.
Gender discrimination in wages is also rife in an industry dominated by female labor, the report found. In India, for instance, women earn on average 88 percent of what their male counterparts receive. In its company poll, CCC noted, “not a single brand surveyed” provided evidence or public information on overall gender pay gaps in its supply chain.
“Currently, what happens in the factory stays in the factory,” said Priscilla Robledo, CCC’s lobby and advocacy coordinator. “This must change, because what happens in the factory has severe repercussions on people’s lives. The poor salaries paid to garment workers are unacceptable.”
CCC and H&M have long sparred over the issue of living wages, with the latter saying it has improved its purchasing practices by excluding labor costs from price negotiations in support of fair wages and the former claiming a “general lack of transparency…[and] deceptive public claims.”
Nike’s published code of conduct requires its suppliers to pay employees at least the local minimum wage or prevailing wage, whichever is higher, “including premiums for overtime worked, legally mandated benefits, and compliance with social insurance regulations required by country law.” Its code leadership standards, which communicate how supplier factories should implement the code of conduct, contain requirements for suppliers to “work on the progressive realization of a fair wage, defined as meeting employees’ basic needs, including some discretionary income.”
Primark said that every factory making its products must commit to meeting the standards set out in the Primark code of conduct, which is based on standards set by the Ethical Trading Initiative and states that wages “must be paid in line with the law or industry benchmark, whichever is highest, and that wages must always be enough to meet basic needs and provide some discretionary income.”
“Our team of over 120 ethical trade experts audits every factory making Primark products at least once a year, sometimes more, to check that all the standards in the code are being met, including checking that all suppliers pay wages in line with our code,” a spokesperson told Sourcing Journal. “Collaboration to address this industry issue is key, which is why we are a founding and very active member of Action, Collaboration, Transformation (ACT), an initiative between international brands, manufacturers and IndustriAll [Global Union] to support fairer wages across the textile and garment supply chain.”
CCC says, however, that the reality is less rosy and “there is an almost total disconnect between policy on paper and actual outcomes for workers.”
“Most brands listed have had a commitment to ensure that wages are enough to meet basic needs in their policies for years,” the report’s authors wrote. “Yet our outcomes-based assessment showed that no brand can yet prove that they are progressing towards workers being paid enough to live on.”