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Fashion Brands Accused of Exploiting Workers at Risk of Layoffs

Fashion Brands Accused of Exploiting Workers at Risk of Layoffs

Friday, 16 October, 2020 - 08:30

Millions of garment workers could lose their jobs as global brands are demanding price cuts and delaying payments to suppliers who are desperate for orders to survive the new coronavirus pandemic, US researchers said on Friday.

Suppliers have been asked to make their prices an average of 12% cheaper than last year, research by the Center for Global Workers’ Rights (CGWR) at Penn State University found, describing such practices as “leveraging desperation”.

In a survey of 75 factories in 15 countries, suppliers said they had to wait an average of 77 days for payment, compared to 43 days before the pandemic, raising fears of further factory closures in an industry employing 60 million people worldwide.

“We are seeing a dramatic squeeze down of price, reduced orders and late payment,” said Mark Anner, author of the report and director of the CGWR, Reuters reported.

“This worries me for the wellbeing of the suppliers and the workers. This will affect the small and medium suppliers first.”

Fashion companies cancelled orders worth billions of dollars earlier this year as COVID-19 shuttered stores worldwide, leading to wage losses of up to $5.8 billion, according to pressure group Clean Clothes Campaign.

Suppliers in countries including Cambodia, Ethiopia, Guatemala, India, Mexico, Peru and Vietnam told CGWR that they had already laid off 10% of their workers and would have to cut another 35% of their labor force if order reductions continued.

“If this figure holds true for the entire industry globally, millions of garment workers could be out of work,” CGWR said.

Manufacturers and labor rights groups said some orders that were cancelled or suspended earlier in the year were being restored, along with new orders, but they were less than the number of firms jostling for contracts.

“Buyers are taking advantage of this,” said Anner, dubbing it an “emerging second crisis” for suppliers after the billions lost in cancelled and unpaid orders earlier in the year.

“It’s a little hard to see right away the gravity of the (second) crisis because the new order volume is being mixed with the pay up of old orders that were pent up. It’s hiding the new crisis, which is the decline in order value.”

More than half of manufacturers surveyed said they would have to close down if the “sourcing squeeze” continued.

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