Bangladesh factory

In an effort to help compensate factory workers whose incomes have been dented due to the COVID-19 shutdown, the Asia Floor Wage Alliance is calling on brands to pay up.

A firestorm of media coverage was sparked in March due to factory workers in Bangladesh losing wages after numerous American and European brands canceled orders or suspended overseas production as a result of the coronavirus. Two months after that #PayUp campaign targeted companies for not yet compensating workers in Bangladesh for lost wages, 15 brands agreed to pay for back orders, totaling more than $600 million in Bangladesh. Adidas, H&M, PVH and Uniqlo were among the companies that agreed to do so.

The AFWA is challenging how garment supply chains in Asia have responded to the pandemic in its second “The Emperor Has No Clothes” report. The global labor and social alliance group has been monitoring the impact of COVID-19 on garment factory workers in Cambodia, India, Indonesia, Myanmar, Pakistan and Sri Lanka through on-the-ground reports from AFWA Partners and allies. For short-term relief, the AFWA is calling on brands to make a one-time “Supply-chain Relief Contribution,” wherein companies will pay an additional 2 percent of their past annual sourcing that will be passed on to suppliers to pay workers directly.

Looking further out, brands should commit to a fair price or premium that ensures that workers are paid a living wage and social security, as well as safeguarding freedom of association, according to the AFWA.

Executives at Gap, Mothercare, C&A, Kohl’s and URBN — some of the brands affiliated with the #PayUp campaign — could not be reached immediately for comment Tuesday. A Walmart spokeswoman declined comment. Another company named in the #PayUp campaign, Bestseller, has endorsed “COVID-19: Action in the Global Garment Industry,” an initiative that has been developed by ILO, IndustriAll and other global stakeholders. A Bestseller spokesman said. “We are actively tracking that workers are paid in due time in all factories working with Bestseller, and will continue to follow this process carefully over the coming months.”

Through individual sessions with suppliers, all due invoices have been paid enabling suppliers to cover their expenses. Referring to the pandemic crisis, he said, “We are acutely aware that our supply chain and their employees are extremely vulnerable in this situation. Their jobs, their health and their families’ well-being are paramount for us and our future, and we will do our utmost to work with our safeguard as many jobs as possible.”

Due to the aforementioned initiatives, Bestseller is not actively considering the SCRC suggested by the AFWA, the company spokesman said.

Citing media reports, the AFWA said millions of garment workers across Asia including 2.1 million in Indonesia and 1 million in Bangladesh have faced indiscriminate layoffs due to the shutdown. They have been triggered in part due to the lack of financing to continue production or material shortages. Market uncertainty is another factor. In addition to layoffs, furloughs are being used in some cases as a strategy to avoid severance pay in Indonesia, according to the AFWA report.

The report questions pandemic-related compensation plans for displaced workers in different countries. In India, for example, the government has announced plans for a package of INR 20 lakh crore, which is 1.1 percent of the GDP, to provide free food grains, loans, credit and cash relief for certain workers and to generate employment for migrants returning to rural areas through the Mahatma Gandhi Nationsl Rural Emplyment Guarantee Scheme. This package does not offer any specific support for garment and textiles workers, and is considered to be “highly insufficient” in mitigating the humanitarian crisis, according to the AFWA.

The report also claims that trade unions are concerned that the COVID-19 crisis will lead to a spike in child labor, bonded labor and human trafficking, with garment workers moving to other occupations including sex work.

AFWA is looking ahead to how the shutdown could lead to a realignment of production with many companies. Noting how current production is primarily geared toward completing orders, making samples for the upcoming year and meeting demand for PPE, the group cited how brands have decreased new orders considerably. The canceling and postponements of orders has hamstrung many suppliers in garment-producing countries that operate on wafer-thin margins, according to the AFWA.

Acknowledging how the pandemic has forced some fashion companies to file for bankruptcy, the report speculated that in the post-pandemic world, brands may be inclined to adopt near-shoring to reduce lead times and invest in digital technology to reduce uncertainty.