On March 27, 2020, the Center for Global Workers Rights from Penn State University, published a full report about “The impact of covid-19 on workers and businesses at the bottom of global garment supply chain”. It highlights “[…] the devastating impact order cancellations have had on businesses and on workers” and emphasizes “[…] the extreme fragility of a system based on decades of buyers squeezing down on prices paid to suppliers: factory closures, unpaid workers with no savings to survive the hard times ahead, and a government with such a low tax revenue that it has very limited ability to provide meaningful support to workers and the industry.”
The report is made from online survey of garment Bangladesh employers, run between 21/03/2020 and 25/03/2020. “There are approximately 2,000 suppliers in Bangladesh and 4,000 factories (many suppliers own multiple factories). Of these, 316 suppliers completed the survey. This puts the sample size within the approximate confines of a 95% confidence level and a 5% confidence interval.”
“The current crisis facing the garment sector in Bangladesh developed in three phases. First, there was the crisis of ‘raw materials’ procurement. Second, there was the crisis of buyer late payments. Third, there has been the crisis of buyer cancellations of in-process orders. The culmination of these three phases has been devastating on businesses and over 1 million workers. The survey covers these three phases.”
For more than 20 years buyers have spent a lots of energy and money to commit to better social practices For more than 20 years buyers have spent a lot of energy and money to commit to social vigilance, to adhere to such or such social initiative, to define a code of conduct, to pay company like us to perform social audit on site, to set up dedicated teams internally and to participate in conferences and workshops around the world to promote good social practices.
In other words, buyers show a clear and dynamic involvement in social practices’ improvement on the last decades, requesting, logically, to their suppliers to also adapt themself, accept external audit and mobilisate additional resources and budget on the matter. Globally, most of suppliers have responded positively.
Social disasters, extreme vulnerability and poverty are brewing at the 4 corners of the supply chain. Therefore, it’s interesting to look at the results of the survey regarding the attitude of buyers towards their suppliers’ request of help & support during each phase of the crisis.
Did Buyers Adjust Prices to Help Cover Cost of Raw Material Increase? NO > 91% When buyers have cancelled orders, have they agreed to pay for raw material (fabric, etc.) that you already purchased? NO > 72% When buyers have canceled orders, have they agreed to pay for production (cut-make) costs? NO > 91% Buyers Helping with Worker Furlough Costs ? NO > 98% Buyers Helping with Worker Severance Costs ? NO > 97%
In other words, most of buyers have absolutely no problem to break contract, cancel orders and avoid legitimate indemnifications. We are very far from a minimum social frame. What a huge disappointment.
These results are a shame for our industry. As CEO of a worldwide group, I can clearly say that in our developed countries we are very lucky. Yes, the crisis is difficult and tough. Yes our businesses dropped down radically. Yes our cashflow is clearly affected. Yes our business perspective is uncertain for the coming months. But we have the massive support of our national governments and of our financial partners, on the deck to find solutions. We also have a high capacity to raise capital and can benefit from several social state support to maintain at most the salary of our teams.
It should be understood that few countries in the world have access to these facilities. In any case not the countries which manufacture our “sustainable” fashion. Reading that companies from developed countries are finally even not keeping their word on previous agreement, try to negotiate discount on agreed prices or refuse to take responsibility by granting indemnification, is really scandalous and shall be denounced . In such situation, they should rather think how their “national facilities” could trickle down into their ecosystem instead trying to bankrupt supplier and throw on the “poverty road” garment workers.
Are these buyers forgetting that they will still need tomorrow a strong and dynamic textile ecosystem ? That we cannot take and drop partners. That high volume request high responsibility. That CSR is not only a #.
Some understood it and already show the way. H&M, Inditex, Kiabi, PVH, Target, VF. The trickle down started, these companies assure that they will pay and take delivery of goods in production or already manufactured. Hope every player of our ecosystem will finally join this list to the credit of their honor, to the credit of the honor of our industry.
This simple step can change everything for millions of workers and can be, hopefully, the first step of something bigger. Something where fair prices, reciprocity, progress, global collaboration and ecosystem’s synergies might have a major role to play.
At Qualith, we call on it and are ready to take our part.