The challenge for workers

Fair and consistent pay for garment workers continues to be a challenge in the global fashion industry. Most garment workers just want to be paid enough to put food on the table for their families. Sadly, this isn’t really taken into consideration by fashion companies, and they usually chase the lowest manufacturing costs. Garment suppliers then start to compete on price, which often means that wages get pushed to low levels. 

Before Covid came along, the 2019 Ethical Fashion Report found only 20% of companies could show that they were paying a living wage to even a portion of  workers in their supply chains. This shows us that even before the pandemic hit, the industry wasn’t supporting garment workers in the way they should be supported. 

When the fashion industry is working in a normal way, a fashion company will place an order with a supplier for clothing items they plan to stock for a coming season. These orders are based on how much the company is expecting to sell. The pandemic has forced order adjustments, and some companies are even cancelling their orders and penalising suppliers financially, which makes garment workers even more vulnerable to the impact of Covid-19.

As a means of maintaining some sort of cashflow during events like lockdowns, companies have slowed or stopped production. In March, more than half of surveyed suppliers in Bangladesh reported that the majority of their production had been cancelled by fashion companies. When cancellations come at a late stage and fashion companies refuse to pay for the order, suppliers are the ones who suffer as they’ve already incurred costs for materials and the staff they need to create the orders.

Lost wages critically impact workers’ ability to meet even their most basic needs. In April, 97% of surveyed garment workers in Bangladesh reported that they were eating less than they felt they should have because there wasn’t enough money for food.

The industry response

It’s vital for fashion companies to pay for orders that are in-progress or completed. This is so that suppliers can maintain financial viability and cover expenses, including workers’ wages. 

Our research in this Commitment area looked at how companies have adjusted their purchasing practices through Covid-19. This focused mostly on whether the company followed through on order payments. Here’s what we found: 

  • 64% of companies surveyed were able to provide some evidence that they maintained payments to suppliers for garments that were completed or already in production.
  • 42 of our researched companies made a detailed public commitment to maintain orders
  • 42 companies adjusted orders in negotiation with their suppliers
  • 19 companies assisted suppliers with financing
  • 63% of companies had no evidence of upholding workers interests during this period

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