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Virus-Stricken Garment Factories Face ‘Existential Crisis,’ Labor Rights Group Warns

With once-humming production lines grinding to a halt, the COVID-19 pandemic presents an “existential crisis” for the garment industry, labor-rights activists warn.

“The picture that is emerging is devastating,” IndustriAll Global Union wrote in a blog post last week. “Social distancing measures taken in countries currently most affected by COVID-19 are driving wholesale closure of thousands of garment factories with millions of workers being laid off without a social safety net.”

As the virus spreads within the garment-producing countries themselves, more facilities will have no choice but to shutter, which could leave millions more workers unemployed.

Already, garment workers eking out hand-to-mouth livelihoods are expected to pay the price for the clothes they make, it said. Not only are major brands and retailers such as Zara canceling future orders in the face of plummeting consumer demand for clothing, but they are also leveraging emergency provisions in contracts to block shipments and avoid paying for garments that have already been produced, IndustriAll said.

“This leaves factories holding the goods, unable to sell them to the customer that ordered them, and in many cases unable to pay the wages of the workers who made them,” it added.

Garment-producing countries are already knee-deep in the the first and second of three “critical stages” that require critical intervention: 1. Payment of wages to workers for orders that have been filled but will not be paid for by brands, 2. Payment to workers during periods of factory closures, either from lack of orders or from government measures against COVID-19 and 3. Support for restarting production.

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“Unless measures are taken now to protect factories and workers to enable them to survive the crisis, the short-term decisions being taken by brands and retailers to renege on existing contracts will end up destroying the very businesses they are seeking to protect,” IndustriAll said.

Brands, employers and governments, it said, must come together urgently with trade unions to find ways to support their workers during this “unprecedented period” and ensure the future viability of the industry—or risk the consequences.

“Once the crisis has passed and global brands and retailers are able to start trading again, how many factories will still be in business and have a workforce ready to restart production?” IndustriAll asked.

Similarly, in a LinkedIn post on Thursday, Mostafiz Uddin, CEO of Bangladesh Apparel Exchange, called for a united front against a “joint battle” that can only succeed if brands and manufacturers stand shoulder to shoulder.

“Our industry is staring down the barrel of a financial and humanitarian catastrophe,” Uddin wrote. “Millions of workers face losing their jobs. This problem will be magnified dramatically in Bangladesh because our economy is so massively dependent on the global apparel industry.”

Bangladesh’s $30 billion clothing sector accounts for 80 percent of its export earnings and 16 percent of the country’s gross domestic product. In recent weeks, however, the South Asian country has fielded billions in dollars’ worth of cancelled orders, which could bring the world’s second-largest clothing exporter to the brink of collapse, even though factories are exempt from the recent nationwide lockdown.

Uddin is asking the international community for financial support to tide the industry over till the pandemic passes, as Prime Minister Sheikh Hasina’s proposed 5,000 crore Bangladeshi taka ($590 million) bailout for export-oriented industries may prove insufficient.

“In Europe, governments are ready talking about huge bailout packages for key strategic industries,” he said. “To this end, I would propose a multibillion dollar per-interest loan with a five-year payback period from one or a combination of the World Bank, [International Monetary Fund] and [International Finance Corporation].”

Uddin would also like to see special trade support from the European Commission and other major economies such as the United States, United Kingdom and Japan in the form of tax rebates or incentives.

“The problem is that our industry is in gridlock right now,” he said. “Orders are not coming in; orders that have come in have been frozen; and nobody quite knows where their next dollar is coming from. When our customers—brands—suffer, we suffer with them.”

The International Apparel Federation (IAF) on Wednesday urged for not only “supply chain solidarity” in the face of massive disruptions due to the coronavirus outbreak but also international solidarity.

IAF secretary general Matthijs is encouraging appropriate multilateral organizations and government financial instruments to “step in to quickly make an industry-wide support plan for the most vulnerable parts of the global apparel and textile industries.”

“Choices made now will be scrutinized later,” Crietee said in a statement. “International solidarity is needed from governments and citizens to help financially support the tens of millions of workers that make our clothing.”

The Garment Manufacturers Association in Cambodia (GMAC) also released a plea via the Khmer Times on Wednesday. Cambodia’s 600-plus garment factories employ more than 700,000 workers, most of them young women, and contributes 40 percent of the country’s gross domestic product. Recent raw-materials crunches, however, have seen job losses rise to more than 10,000.

“The current global pandemic COVID-19 has brought chaos to all our lives and businesses. To overcome this critical situation, GMAC would like to appeal to all stakeholders to join hands so that we can all survive together,” it wrote. “To all Buyers: PLEASE DON’T GIVE UP ON CAMBODIA! We urge you to fulfill your existing contractual obligations by taking delivery of goods already produced and goods currently in production and pay under the normal term. This will allow us to be able to pay our workers and continue the work for them.”