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Worsening Forced Labor in Garment Industry Should be a ‘Wake-Up Call’

One thing that has thrived in the garment industry during the Covid-19 pandemic: Forced labor.

Not only has the ongoing health crisis made it more challenging for brands to root out modern slavery in their global supply chains, but early reactions such as canceled orders and withholding payment for goods are likely to have exacerbated many of its underlying boosters, including poverty, inequality and unemployment, according to a new policy brief published Wednesday by the Modern Slavery & Human Rights Policy and Evidence Centre.

“Demand volatility has been extremely high during the pandemic,” said Jo Meehan, senior lecturer in strategic purchasing at the University of Liverpool Management School, who led the Centre’s project on the impact of Covid-19 on the management of supply chains. “It acts as a driver of modern slavery as it erodes profits, encourages the use of temporary and precarious workers, and destabilizes capacity in supply markets.”

Government responses to Covid-19, too, have left workers in the lower tiers of the value chain more vulnerable to exploitation. Though national and regional lockdowns have been necessary to stem the tide of infection, they have also hampered standard due-diligence activities, shuttered businesses and slashed incomes, leaving children, migrant workers and women easy targets, the policy brief noted. This “heightened vulnerability” could persist for up to three years in low- and middle-income countries, especially since lawmakers are more likely to prioritize spending on pandemic recovery.

A previous analysis by the Centre found that many workers in Ethiopia, Honduras, India and Myanmar saw steep declines in wages, deteriorating working conditions and indicators like verbal abuse, threats and intimidation at work, and limits on their freedom of movement, which they had not experienced prior to the pandemic. The dynamics were the same for workers who remained in the same jobs with no changes to their employment status, as well as those who were reemployed after their old contracts were terminated during the pandemic, typically with worse working conditions and lower pay.

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Brand responses in a “handful of cases,” such as the provision of direct cash support for workers, advance payments for suppliers, grievance systems with robust remediation and flexibile delivery times have “upheld decent work,” the Centre said. More often than not, however, brands have acted to protect their own bottom lines by invoking force majeure clauses, demanding discounts from suppliers, paying suppliers late or not at all and refusing to engage with factories.

The overwhelming evidence that Covid-19 has worsened exploitation in global supply chains should serve as a “wake-up call” for businesses, said Owain Johnstone, the Centre’s partnership manager.

“The pandemic has highlighted the complexity and fragility of many supply chains and reinforced the link between the lack of visibility over supply chains and the vulnerability of workers to modern slavery,” he said. “More transparent, resilient supply chains are better for business and better for workers.”

‘Laundering’ forced-labor cotton

Indeed, enhanced supply-chain mapping will be critical to prevent goods made with forced labor from slipping through the cracks, according to Laura Murphy, professor of human rights at Sheffield Hallam University’s Helena Kennedy Centre for International Justice.

A study led by Murphy, also published Wednesday, found that more than 100 global retail brands could be at risk of using cotton produced or processed in China’s Xinjiang Uyghur Autonomous Region, where experts say that more than half a million Uyghurs and other ethnic minorities are forced to pick cotton by hand as part of a state-sponsored “poverty alleviation” scheme. Still more, they say, are being compelled to work in factories for major textile and apparel exporters, both within and outside the region, under highly surveilled and coercive conditions for little or no pay. Forced labor programs can also be linked to internment camps, one study found. Beijing has repeatedly denied that its actions amount to forced labor, insisting that the rights of Uyghurs are protected under Chinese law.

By examining the publicly accessible customs data of five major Chinese textile companies that reportedly use Xinjiang cotton—Huafu Fashion, Jiangsu Lianfa Group, Luthai Textile, Texhong Textile and Weiqiao Textile Company—researchers were able to suss out some of the routes through which Xinjiang’s leading fiber could make its way to international markets. They include the United States, which has banned cotton and cotton-containing products from the region since January. The companies did not immediately respond to a request for comment.

Xinjiang cotton has benefited from an export strategy that “obscures cotton’s origin,” the study said. The region is the source of 85 percent of China’s cotton, which in turn accounts for one-fifth of the world’s supply. But U.S. shipping records indicate that cotton, textile and apparel imports arriving from Xinjiang have nearly ground to a halt in the past two years, which suggests that products grown and manufactured in the region are being transported—or “laundered”—to other locations before being shipped internationally.

The report identified 53 contract garment suppliers from countries such as Bangladesh, Ethiopia, India, Mexico and Vietnam that allegedly purchased fabric and yarn from the five manufacturers to create clothing with “no indication to consumers of the cotton’s origin.” It’s through these intermediary manufacturers that Xinjiang cotton can wind up in items from household names like American Eagle, Calvin Klein, Gap, Ralph Lauren, J.Crew and Uniqlo, even though many of them have published statements confirming that they don’t source cotton, textiles or garments from Xinjiang or tolerate forced labor in any form.

“International brands may be unaware of the Chinese manufacturers their suppliers are sourcing from,” said Murphy, adding that she supports mandatory human-rights due-diligence legislation for this reason. “This research indicates that they can no longer afford not to know and that desk-based due diligence can serve as an effective route in identifying supply-chain risks.”

Brands that want to identify the intermediary processing of Xinjiang cotton “would be wise” to probe the sourcing behavior of any suppliers located in the top export countries for raw cotton and semi-finished cotton goods from China, Murphy said.  “Companies should be wary of those suppliers that source—directly or indirectly—from the Uyghur region but claim not to use those materials in the manufacture of particular goods, as it is often exceedingly difficult to prove,” she added.