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Myanmar-Sourcing Brands Between a Rock and a Hard Place

Primark is making a “responsible exit” from Myanmar following an evidence-based assessment that concluded that it “wasn’t possible” for responsible businesses to apply normal human-rights due diligence in the beleaguered Southeast Asian nation, which has been under the boot of military rule since last February.

The Ethical Trading Initiative’s (ETI) report, the British discount chain told Sourcing Journal, made for “very difficult reading,” with findings that show a “significant deterioration in the situation in Myanmar which poses significant challenges to our ability to ensure the standards we require to protect the safety and rights of the people who make our clothes and products.”

Elaborating on its position in a statement that it published Friday, Primark said that its first priority, as a responsible business, is the safety and well-being of the people who make its clothes and products.

“In light of this, we believe our only option is to begin working towards a responsible exit from the country,” said the retailer, which produces apparel at 21 factories in Myanmar. “In what remains a highly complex, dynamic and unpredictable situation, we will manage this exit in close collaboration with our partners and stakeholders in Myanmar and internationally, following the UN Guiding Principles on Business and Human Rights.”

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In the months since a coup ousted Aung San Suu Kyi’s semi-democratic government, Myanmar has plunged into a downward spiral of violence and bloodshed as security forces bomb and burn villages to bring the population to heel. Since it seized power, the junta has killed more than 2,280 civilians and arrested nearly 15,600, according to the Assistance Association for Political Prisoners, a monitoring group. In July, the regime executed four prisoners, including two prominent pro-democracy activists, Myanmar’s first use of the death penalty since the late 1980s.

When the ETI, a multistakeholder organization of companies, trade unions and non-governmental organizations, commissioned the assessment, it was amid burning questions about whether businesses could continue sourcing in Myanmar while maintaining international standards and responsible business guidelines. Several fashion brands that Sourcing Journal questioned during this time, including Primark, said that they were waiting for the report to make a decision about whether to stay or go.

Meanwhile, labor campaigners were furiously sounding the alarm. The rule of law, they argued, had all but evaporated, and even the most well-intentioned companies were failing to protect the people who stitched their products. A recent study by the Business & Human Rights Resource Centre (BHRRC) uncovered more than 100 cases of human-rights violations, including wage theft, attacks on freedom of association, abusive work rates and mandatory overtime, against at least 60,800 of the country’s garment workers since the military took over. Even then, these recorded cases were likely only the “tip of the iceberg” given the restrictions on civil liberties and the fear of reprisals for those who speak out against the injustices, the nonprofit said.

“Garment workers in Myanmar have been risking their lives to report labor rights violations in the country, only to be met with aggressive—even deadly—force to any opposition and dissent,” Alysha Khambay, the BHRRC’s then-head of labor rights, said at the time. “Brands must wake up to the harsh reality that decent working conditions no longer exist in Myanmar and continuing business as usual is no longer helping to ‘protect jobs and workers,’ as has been repeatedly claimed.”

‘Credible evidence’

Now their claims appear to have been vindicated. The ETI assessment included interviews with 3,120 workers from across 70 factories in Myanmar; interviews with key informants from across intergovernmental organizations, governments, businesses, trade unions, workers’ rights organizations and international NGOs; and desk-based research. It corroborated findings against human-rights cases from a slew of institutions, triangulating them across different sources of information. Everything workers’ activists complained about was true.

“The report provides credible evidence of forced labor and exploitation at a sector level, with evidence of workers facing long hours, low wages, unpaid overtime and harassment,” the ETI said. “In addition, workers are unable to exercise their right to freedom of association in a way that is aligned with international labor standards. The obstruction of this right is deeply concerning, particularly given its role in facilitating workers’ access to grievance mechanisms and their ability to negotiate with their employers.”

The assessment also identified a “significant” number of workers in precarious employment without a written contract or offer letter, a number of instances of sexual violence and reports that suggested child labor. Military action, the ETI said, has placed “substantial limitations” on civic freedom, preventing civil society, and the international organizations upon which responsible business can usually rely, from functioning as usual. The 16 labor organizations that comprise the Myanmar Labour Alliance have been declared illegal by the junta, and hundreds of union leaders are either behind bars or in hiding.

“These constraints make acting on behalf of workers or providing access to effective grievance mechanisms and/or remedy, highly risky for the individuals involved,” the organization said. “Given the military’s violent and coordinated actions against trade union confederations, we would expect (and at a minimum cannot rule out) similar levels of violence against individual trade unionists if there is increased trade union activity.”

Buyers, the ETI emphasized, do not hold any leverage with the military to mitigate these security threats to trade unions and workers’ representatives or anyone else working to support these efforts. And any human-rights risks are compounded by the “severe” lack of access to remedy for workers.

None of this is a surprise for Khaing Zar Aung, the exiled president of the Industrial Workers Federation of Myanmar (IWFM), which withdrew from the garment industry living-wage initiative known as ACT (Action, Collaboration, Transformation) last year because it was no longer able to operate freely. In response, ACT scuppered its activities in Myanmar, including its fast-track dispute resolution mechanism for workers.

“The report makes a clear picture of the harsh general environment in which people are surviving and fighting against the dictatorship,” Khaing Zar Aung told Sourcing Journal. “It blows up the illusion of those who pretend to stay and do business in a country subject to war crimes and crimes against humanity. The report is a clear strong call for change.”

The report, she added, confirms what the IWFM has been telling brands since the coup: that it’s impossible to implement due diligence in a country where there is a “total lack of the rule of law, the emergency state, the persecution of trade unionists, forced labor, worker and women harassment and wages that are less than 2 euros a day.” It is time for brands to leave Myanmar responsibly, Khaing Zar Aung said. Only then can they contribute to defeating the coup. Anything less than that only perpetuates exploitation.

Natalie Swan, labor rights manager at the BHRRC, agreed. There can be no business as usual in Myanmar’s garment sector and the idea of implementing any effective human-rights due diligence is little more than a pipe dream.

“Workers are unable to raise concerns regarding poor working conditions or exercise their right to protest without fear of reprisal,” she said. “Therefore, when it comes to what brands can do to help workers, they must balance the need to undertake heightened due diligence, meaningfully evaluating whether this is even possible at this time. Brands must be able to ensure they can guarantee the protection of workers’ rights in their supply chains. If they cannot do so, a responsible exit from the country is the only way forward.”

Threat to 320,000

But so far, brands have been loath to withdraw from Myanmar. According to the BHRRC’s research, only Aldi South and Tesco are the only major apparel purveyors to exit Myanmar, though Benetton Group and C&A previously told Sourcing Journal that they have stopped placing new orders. (The last goods from Myanmar left the country in December, C&A said.) Mango said it was actively reducing the number of factories it uses in the country. Myanmar is also not included in the current list of supplying markets authorized by the retailer.

In the wake of the ETI’s assessment, only Primark seems to have budged its position. Most of the brands Sourcing Journal spoke to expressed confidence in their due diligence mechanisms, even though the ETI assessment expressly said that such oversight wasn’t achievable. Most of them are also linked to factories where the BHRRC says that egregious violations have occurred.

Adidas, for instance, said it continues to “monitor the situation” in Myanmar and is “fully engaged” with “concerned” stakeholders and its suppliers to ensure that the “rights of workers in the supply chain are upheld.” The sportswear giant added it continues to “enforce compliance” with its standards through “due-diligence activities including on-site inspections.”

Lidl, a German discount chain, said it has a “zero-tolerance policy” toward any human-rights violations “of any kind” in its supply chain and that it “takes responsibility, respects and protects the fundamental rights of all stakeholders in the different stages of our supply chains.”

“If we have specific facts about violations of our regulations, we investigate and take appropriate action,” a representative said. “Lidl has especially strengthened and increased the due diligence for business activities in Myanmar to avoid or remedy any human-rights violations.”

Danish retailer Bestseller, which was also waiting for the results of the assessment, said that it is “currently looking” into the organization’s recommendations but that it was concerned that exiting would further destroy livelihoods.

“The assessment clearly highlights the gravity of the situation and makes it clear there are significant challenges to address for every international company in the country,” a spokesperson said. “At the same time, the assessment estimates that if all European brands leave Myanmar, an estimated 320,000 people—and their dependents—will be directly impacted, with an estimated 23,000 people at risk of destitution.”

Next, H&M and Zara owner Inditex did not respond to multiple requests for comment.

Like Bestseller, other brands have expressed a desire to stay to avoid imploding the country’s already fragile economy.

Indeed, the ETI said that the report has made “clear” that in the absence of the employment provided in garment factories, significant numbers of workers would be much worse off and some will be made destitute. “This latter reality must be taken into account in any action taken by business,” it said.

The report also said, however, that Myanmar’s economy is on a “significant downward trend” caused by multiple systemic issues, already in effect and unrelated to the garment sector. Whether buyers and their suppliers stay or go, the economic outlook for Myanmar will be “dire.”

Jay Kerr, campaigner at No Sweat and coordinator of the grassroots group’s Myanmar Military: Never in Fashion initiative, said that while the assessment is right to point out the severe impact on workers’ lives if brands cut and run, staying is not a better solution.

“​​The only course of action is for brands to use their immense wealth, that Burmese garment workers have helped create, to fund a humanitarian aid package to protect the people that have made their clothes,” Kerr told Sourcing Journal. “We urge brands to work closely with the Myanmar Labour Alliance and come up with a plan to keep workers out of poverty without forcing them into factories to face exploitation.”

That goes for Primark, too.

“We welcome the decision by Primark to begin the process of making a responsible exit, but we urge them to ensure that they provide sufficient financial support to the workers that they are leaving behind,” he said. “We call on Primark to set up a fund to provide garment workers with a basic income over the next year, and make every effort possible to support the campaign to restore democracy.”