The fashion industry must learn from coronavirus
It is increasingly clear that people living in poverty are shouldering the greatest cost for the pandemic. In the garment industry, the crisis has laid bare systemic inequalities in supply chains that are built on decades of poverty wages.
COVID-19 has highlighted the fragile interconnectedness of supply chains, where, like falling dominoes, a crisis in one country sets off a chain of painful consequences in others.
Lockdowns in China disrupted the supply of raw materials to suppliers in producer countries, like Bangladesh, resulting in temporary factory closures and suspension of workers’ wages. Brands reacted to lockdowns in Europe and America by cancelling an estimated £20bn worth of orders, refusing to pay for completed goods and even demanding discounts on goods already received. Many suppliers operating on narrow profit-margins, are not able to sustain the impact of mass cancellations and will forced into insolvency, resulting in job loss for garment workers.
The injustice we are seeing in the garment industry during the pandemic is not a new phenomenon, rather global supply chains are designed specifically to limit brands obligations to suppliers. Brands typically only pay after delivery of goods, which has made it possible for mass cancellations, including of orders that have been completed or are in production. It has also made it possible for brands to demand brutal discounts on goods already received. Cancellation of orders and renegotiation of payment or terms may not be contractually allowed, but in a relationship where brands have the upper hand, suppliers often have little choice but to comply.
The crisis faced by garment workers is rapidly evolving. Decisions that brands make in the coming days, weeks and months will have a long-lasting impact on workers and their families – and indeed on the future of many garment producing countries. After intense pressure, a growing number of brands are now backtracking on decisions to cancel orders and have agreed to honour existing contracts. Although this move is welcome, paying for orders they have placed is the bare minimum that we should expect of brands.
Brands are the architects of a system which exploits cheap labour in countries with little or no social security. Decades of prioritising profits and reducing costs, has left suppliers and workers with virtually no financial buffer to weather the COVID-19 storm. Brands have been wilfully complicit in a system in which they are the only real winners, and as a result they not only have a legal responsibility but also a moral obligation to take meaningful action to provide medium-term financial support for suppliers and workers. In addition to honouring existing orders, brands should set up emergency relief funds to provide income to workers. Collaborative and ethical action is needed to ensure that global funds and government bailouts in producing and consumer countries urgently reach employees and workers in their supply chains in the form of financial support.
Brands have thus far profited from a system which outsources work to worker in countries on the other side of the world, conveniently ‘out of sight, out of mind.’ However, COVID-19 has shattered the walls that brands have built to separate themselves from their workers. It is impossible to ignore the links between poverty pay and the destitution that workers now face. The case for brands to enter into enforceable agreements with unions, that obligate them to pay higher prices for products, pay living wages to workers and support social protection systems has never been stronger.
In order to make sure that workers are never again left so exposed to a public health or financial crisis, it is essential to radically change the global garment industry and embed social protections in supply chains. Brands and governments must start taking the first steps to reform purchasing practices in order to rebuild a more sustainable and equitable industry. We must implement better regulation and mandatory due diligence in the industry – never again can brands be permitted to comply with international human rights laws and due diligence on a voluntary level.
Should the garment industry return to its former state, in the post-pandemic world, brands will have failed to learn crucial lessons from the pandemic. Going forward, governments and brands must take bold steps and commit to proper human rights due diligence to create more sustainable, transparent and resilient industry that truly puts people before profits. Labour Behind the Label will be working to ensure that consumers around the world do not forget the actions of brands whose knee jerk reaction was to throw workers and suppliers overboard during this crisis.
Authored by Meg Lewis, Labour Behind the Label, for Thomson Reuters Foundation
April 24th, 2020