40pc fashion brands yet not committed to paying in full for orders: Survey

About 40 percent of fashion brands and retailers have made no public commitment to pay in full for their completed orders, despite mounting public pressure on them.

The remaining 60 percent of fashion brands and retailers said they would pay for complete orders in full, according to a survey report.

The Business & Human Rights Resource Centre conducted the research based on responses from 35 fashion brands and retailers and publicly available information.

Apparel exporters acknowledged that Bangladesh is also experiencing almost the same situation as the country is the second-largest apparel exporter after China.

"We are not exceptional, and those all brands and buyers are buying from different factories. Now they don't have minimum ethics to pay suppliers' dues," said David Hasnat, managing director of Viyella Tex Group, one of the leading apparel exporter.

"All those buyers and brands all the times teach us business ethics/sustainability!" he added.

Apparel exporters also said the country may engage its diplomatic missions to negotiate with those brands and buyers for realising their big outstanding payments to buyers.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), over 2 million readymade garment workers face destitution after conflicting responses from major international clothing brands due to Covid-19.

Over 1,000 apparel exporters have faced about $2.97 billion worth of order cancellations and withdrawals by brands and buyers.

Despite some leading brands like H&M, Inditex and Adidas publicly committing to pay for orders placed before the pandemic, a significant number have cancelled orders or demanded huge discounts, reports Just-style.

These decisions are having a devastating impact on garment workers in supply chains: as orders dry up, millions of workers have lost their jobs or gone up to two months without being paid wages, while those still working are earning a fraction of their usual pay. This has led to workers from Pakistan and Bangladesh to Cambodia to take to the streets in demand of wages as they face futures with no food, housing or work.

The survey highlights that the pre-existing power imbalance between clothing brands, suppliers, and workers has been exacerbated by the pandemic.

The survey finds one-fifth (23%) of companies have demanded discounts on orders already agreed. Debenhams has reportedly requested a 90 percent discount.

The British retailer Debenhams has already appointed administrators, making a payment of $69 million uncertain to the Bangladeshi suppliers.

Apparel makers said not only Debenhams, most of the British retailers have also cancelled a large number of orders.

BGMEA and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) have already threatened to blacklist British retailer Edinburgh Woollen Mill (EWM) for not paying to Bangladeshi suppliers.

"We should bargain collectively how to realise the most of our outstanding bills, instead of negotiating by individual factories," said Md Fazlul Hoque, managing director of Plummy Fashions Ltd, the greenest knitwear factory of the world.

"Bangladesh has diplomatic missions in almost every export destination country and we should engage them to negotiate with those who have cancelled orders or demanded huge discounts," he added.

Bangladeshi apparel exporters have already sent some corresponding letters to some of the brands that cancelled orders or demanded big discounts.

They said some of the USA brands are also playing the same role. JCPenny and Sears have filed for bankruptcy.

Apparel makers may face a shortage of orders from July to September due to order cancellations, said Dr Ahsan H Mansur, executive director of the Policy Research Institute, a private think-tank.

Answering questions on their pandemic response, 18 brands – including H&M, Inditex, and Burberry – showed new transparency around payment times which directly affects workers' wages, says survey report.

Companies including Arcadia Group (Topshop) and Gap not only failed to respond to the survey but also made no commitment to pay for completed orders.

Some 23 companies said they have taken steps to make sure workers are paid for March and April, and 19 companies are helping suppliers through access to local finance. Yet a large number of workers have not been paid for these months or are being paid only part of their wages, prompting large protests by workers in Cambodia and Bangladesh, according to the survey.

Eight companies (23%) have delayed payment, extending their usual payment times to suppliers, with Primark extending up to 180 days (six months). By contrast, three brands (Hermès, N Brown, Zalando) said they have shortened payment times for some suppliers to help cash flow during the crisis.

"We will keep our efforts continued through government and diplomatic missions to find some ease for our factories wherever possible," said Rubana Huq, president of BGMEA.

Already BGMEA has taken all-out steps to reengage the buyers in discussions, she added.

"We are also working closely with social and international partners like International Labour organisation, Human Rights Watch, Workers Rights Consortium and academia to build a global opinion to support our manufacturers and workers in this difficult time," said Rubana Huq.

"In the face of international disruption caused by Covid-19, too many fashion brands are only looking to protect their own profits at an untold cost to workers who make the clothes they sell," said Thulsi Narayanasamy, senior labour researcher at Business & Human Rights Resource Centre.

Separately, an online tracker created by the Worker Rights Consortium (WRC) in association with Penn State's Center for Global Workers' Rights (CGWR) is monitoring the response of leading apparel and footwear brands and retailers to their suppliers and workers during the coronavirus crisis.