When the coronavirus pandemic hit the U.S. last year, major brands scrambled to cancel some $40 billion worth of orders of apparel from overseas factories. But as many of the same brands recover financially, the workers who make their products are not sharing in the comeback.
Over only three months last year, March through May, millions of workers, nearly all women, employed by international apparel factories did not receive between $3 billion and $5 billion in estimated owed wages, according to a study by the Clean Clothes Campaign. A just-released study from the U.K. nonprofit Business & Human Rights Resource Centre found that while some of those workers (all earning a monthly wage between $26 and $192, a range well below the living wage in each respective country) have since been paid a portion of what they are owed, many thousands have not.
The group investigated eight factories with reports of unpaid workers and seven of them turned up workers who remain wholly or partially unpaid “in spite of policy commitments from all fashion brands to ensure workers are paid for making their clothes,” the report said.
“A year into the pandemic, with growing profits, and after witnessing the utter destitution of workers, brands don’t have an excuse for failing to protect the basic rights of garment workers,” Thulsi Narayanasamy, senior labor rights lead at BHRRC, said. “It’s not optional to ensure legal wages and benefits are paid in your supply chain.”
Factories investigated were in Myanmar, Cambodia, Bangladesh, the Philippines and Ethiopia (the country with the lowest wages) where workers have gone either unpaid or only partially paid for their past work manufacturing apparel for major U.S. and European brands. These include L Brands, owner of Victoria’s Secret; Nike; Levi’s; H&M; The Children’s Place; PVH Corp.; Hanesbrands; Matalan; Sainsbury’s; Next; New Look; River Island; Mark’s; and s.Oliver.
The report found that such brands recorded profits of roughly $10 billion in the second half of 2020 alone. Certain companies, like PVH, H&M and Nike, told the BHRRC they are aware some factory workers have gone unpaid and are working to resolve the issue. But for many workers the process seems to be taking an undue length of time and often, they end up being paid only a portion of what they’re owed.
“The business model of fashion brands and the structure of global garment supply chains is built on an extreme inequality of power that creates and sustains poverty wages for garment workers,” Narayanasamy said. “To then have so many cases of not even paying workers during such a vulnerable time is excruciating.”
By outsourcing production to international factories that typically provide apparel for several brands at a time, fashion companies typically avoid responsibility for paying factory workers, because they technically do not work for the brand they dye, cut and sew apparel for. Taking responsibility for the entire supply chain is a central aspect pushed by sustainability advocates and experts and is even being required under some new laws in Europe.
One such case of workers going unpaid is at Violet Apparel, a factory in Cambodia, where workers were paid a monthly rate of $192 (the country’s living wage estimate is $588 a month) before it suspended all of them in May 2020 and then shut down in July. More than 1,200 workers claim to have gone wholly unpaid in their work at Violet producing goods for Nike and Carter’s, the children’s apparel company. While Carter’s did not respond to any of the BHRRC’s inquiries regarding the factory, Nike told the group it has not used it since 2006. However, evidence from the factory, including photos and dated order forms, purportedly shows Violet making Nike apparel that was then sent on to another factory, Olive Apparel, which is indeed a Nike supplier.
The Cambodian Alliance for Trade Unions said it found Violet workers have been “making Nike products for years” and that the brand is currently working with “sister factories” of Violet in Cambodia for its products.
“If Violet does not pay compensation properly according to the law, we believe that Nike should take responsibility,” the CATU said.
There is precedent for major companies taking responsibility for unpaid factory workers. Last year Starbucks, Tesco and Disney agreed to pay two dozen Thai workers $115,000 after they were found to be underpaid by a factory that produced their goods. NBCUniversal last year made a similar decision, paying $20,000 to another set of underpaid Thai factory workers. Also last year, Ted Baker, Joop and Massimo Dutti made up for intentionally shorted wages for Romanian workers at the Tanex factory producing their goods.
While the BHRRC’s investigations have found roughly 9,800 factory workers remain unpaid or underpaid since the pandemic started, the group said it does not have an exact figure for how many total industry workers have been affected by “wage theft.” Many apparel factories closed outright. Gap, for example, told BHRRC late last year that 15 of its factories closed, but that it had agreed to pay in full for all finished goods. Levi’s also noted in its response that “several” of its suppliers closed, but declined to specify how many.
The overall lack of clarity into how many workers remain unpaid, dubbed “wage theft” by labor advocacy groups, is in large part due to the fact that a number of companies do not monitor what happens in the factories they use, or decline to disclose whether they do. The BHRRC at the end of last year asked more than 50 brands and fashion companies about their monitoring of factories, and 14 did not respond at all. Those include Hermès, Boohoo, Walmart, Hanesbrands, Tapestry and LVMH Moët Hennessy Louis Vuitton, among others. Many luxury brands have been noted in the past for a lack of transparency in their manufacturing and supply chains.
“Payment of living wages as an industry standard would level the playing field for fashion brands and be transformative for workers ,” Narayanasamy said, “not only for a just recovery from the pandemic, but also to prevent the scale of crisis from repeating again.”
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