The Covid-19 wage crisis for factory workers: the people paying the cost of cancelled orders

A SGSF union protest in Bangladesh in June, demanding wages, and a pregnant worker from that demonstration

by Anna Bryher, Advocacy Director for Labour Behind the Label

When the Covid-19 outbreak took hold in spring this year, it is well known that many fashion companies stopped orders and refused to pay for shipments of clothing for months. This action at the top of supply chains had a huge impact globally in countries creating clothes around the world. It is only now that the impact of this action on workers is really being fully understood as unpaid wages, job losses and factory closures are playing out as poverty, anger and fight back.

EU and US Fashion companies refused to pay overseas suppliers for more than $16bn (£12.3bn) of goods since the outbreak of Covid-19, according to academic estimates. $3.7bn of orders were cancelled in Bangladesh alone in spring this year. These actions had a serious impact on the ability of suppliers to pay workers’ wages, ensure safe and healthy working conditions, and provide workers with legally mandated benefits upon termination in countries worldwide. The Clean Clothes Campaign estimates that wages lost by garment workers worldwide in spring amount to between $3.19bn and $5.79bn.

In April and May, many thousands of workers in Bangladesh took to the streets and blocked highways to protest wage underpayment. 4,000 workers from Primark suppliers Doreen Apparels and Doreen Garments Ltd in Dhaka were included. They blocked a highway demanding their full wage for April, and calling on factories to reopen. One Primark worker recounted her experience that followed: “The officer said that the factory cannot keep you because of the lack of orders. So, we have to dismiss non-permanent workers like you people... We requested them and told, if we lost the job how we will survive, what we will eat, how we will pay house rent? But the officer replied, we cannot do anything, we cannot afford to keep you in work anymore... The management gave me 11453 BDT [134 USD] in total and told me not to come back.”

“I always live hand to mouth. The income and the cost are always almost equal. I reduce my food cost to send more money to my daughter and my mother. I have nothing to reduce or to curtail. I’m at the border line... When my neighbours go to their factories, I look at them. I can’t stop my tears. ... From whom could I borrow money? I’m an orphan, my father passed away when I was an infant, my maternal uncles are also very poor day-labourers.”

The minimum wage in Bangladesh of 8,000 taka a month is less than a third of an estimate of the cost needed to support a family to live with dignity. As Garment workers are already living on poverty wages, savings are not possible, so the wage gaps caused by the crisis mean that workers are not able to feed their families, are not able to pay school fees for their children, or pay for medical expenses. At Labour Behind the Label, we have heard many accounts of growing debt, which is leading to an ongoing humanitarian crisis. This isn’t a small impact. In Bangladesh, more than a million garment workers have been fired or furloughed due to cancelled orders and buyers’ refusal to pay. These stories are repeated over and over.

Labour Behind the Label have been calling on brands to intervene to stem the impacts of order cancellations on workers. Campaigning initially focused on asking brands to honour contracts and pay orders. However, when this proved to not be enough to ensure payments filtered through to workers who needed it most, our conversations stepped up to ask brands to guarantee that workers in their suppliers would receive all unpaid wages they were owed. Although there have been multiple responses from brands, none have yet committed to follow through and ensure this happens.

Labour Behind the Label are now calling on the UK government to intervene over the billions owed in unpaid wages in fashion supply chains, and facilitate UK brands to discuss their duties under the UN Guiding Principles on Business and Human Rights, to provide remedy for human rights violations due to their business action.  Read the open letter below and sign our petition to seven key UK brands.