Garment workers go unpaid as virus disrupts fashion retailers
DHAKA, Bangladesh — A survey of factory owners in Bangladesh found that major fashion retailers that are closing shops and laying off workers in Europe and the U.S. are also canceling their sometimes already completed orders, as workers often go unpaid.
A report released Friday by Mark Anner, director of Pennsylvania State University’s Center for Global Workers’ Rights, says the coronavirus crisis has resulted in millions of factory workers — mostly women from rural areas — being sent home without the wages or severance pay they are owed.
About 4.1 million people work in apparel factories in Bangladesh, the world’s No. 2 garment exporter after China.
The disruptions from the outbreak are straining a fragile supply chain in which big buyers have been squeezing their suppliers for years. The government, having offered huge tax incentives to entice manufacturers and buyers to move to Bangladesh, has scant resources to help protect workers.
More than 1 million garment workers in Bangladesh already have lost their jobs or have been furloughed because of order cancellations and the failure of buyers to pay for canceled shipments. Nearly 60% of the 316 factories that responded to the survey by the Center for Global Workers’ Rights and the Worker Rights Consortium, a Washington, D.C.-based labor rights organization, said they had already closed down most of their production.
About 6% of factories have had all orders canceled due to the outbreak, while nearly 46% said they have lost a big share of their orders.
The survey, conducted March 21-25, included nearly 200 large suppliers with more than 750 workers that mainly make garments for European markets.
It found nearly all buyers refused to contribute to wages for those workers, and more than 70% of those furloughed were sent home without pay. Of the workers who were fired, less than 20% were given severance pay, the survey found.
Anner and other labor experts say the big fashion retailers are resorting to “force majeure” clauses in their contracts — usually used in case of natural disasters or war — to justify not paying manufacturers that have already paid for fabric and other materials and labor to make the orders. Earlier, suppliers were being penalized for late deliveries resulting from difficulties obtaining fabric or other materials due to factory shutdowns and other disruptions caused by the virus outbreak that originated in the Wuhan, China.
Factory owners are unlikely to fight back out of fear they might lose future business once the crisis passes.
The virus outbreak “is showing us just how extreme that power imbalance is,” Anner said. “It’s just an absolute disaster.”
The damage is not limited to the garments sector. The International Labor Organization has estimated that 25 million jobs may be lost due to the virus outbreak.
Kalpona Akter, executive director of the Bangladesh Center for Workers Solidarity group, blasted buyers for canceling orders.
“We have a cruel reality here. Simply, they will go hungry, their families will suffer, their children, their parents will suffer for lack of food, medicine. The global brands will lose a fraction of their profit, the owners will also lose their share, but the workers will be left without food and medicine,” she said.
The Bangladesh Garment Manufacturers and Exporters Association said that as of Friday orders worth about $2.7 billion had been canceled or suspended, directly affecting nearly 2 million workers.
In a video message, its president, Rubana Huq, urged global buyers including H&M and Walmart to not cancel orders and to accept those finished or under production.
“We will have 4.1 million workers literally going hungry if we don’t all step up to a commitment to the welfare of the workers,” Huq said.