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Billions Owed to Fashion Industry Garment Workers

Updated: Jan 5

Nina Rosner investigates how Covid-19 has impacted workers in the garment industry, exposing the ethical shortcomings of a number of fashion brands.

Photo by Cotton Bro


In March, when people around the world shifted their habits from shopping to bread making during Covid-19 lockdowns, it was garment workers at the bottom of the supply chain who bore the brunt of a worldwide drop in demand for clothing. Their clients – major players in the fashion industry – suddenly cancelled mass orders and withheld payment for items already in production, throwing them into economic crisis.

A report released in March by the Center for Global Workers’ Rights (CGWR) and the Worker Rights Consortium (WRC) revealed how, over the course of Covid-19, over 1900 global fashion brands cancelled billions of dollars worth of orders, postponed payments indefinitely, and demanded heavy discounts in order to accept shipments, putting their Bangladeshi clothes suppliers at risk of bankruptcy, and forcing them to close their factories and lay off thousands of workers.



The Impact of Mass-Order Cancellations


According to the report, a total of $40 billion was unpaid to Bangladeshi garment suppliers between April and June 2020. Months later, even after some brands agreed to pay what they owed, $16.2 billion remained missing from just US and EU market figures. This alone includes a loss of over $1.6 billion in workers’ wages, in an industry where garment workers already struggle with salaries that barely meet their basic needs.

Speaking to Clean Clothes Campaign, a leading group fighting for the rights and livelihoods of garment workers, Khalid Mahmood of the Labour Education Foundation in Pakistan commented:

“As these workers were already living on poverty wages, they had not been able to save anything before the pandemic hit. The wage gaps caused by the crisis mean that workers are not able to feed their families properly, they are not able to pay for school fees of their children, or pay for medical expenses and that many of them are in debt.”


An Unethical Industry

In April, garment producers and factory owners suddenly facing debt, bankruptcy, factory closures and forced mass layoffs began to speak out despite the risks of being blacklisted and losing future contracts. Since the publication of the CGWR report, labour unions and campaigns like Pay Up Fashion and Labour Behind the Label have begun putting pressure on brands to fulfil payments, and the WRC set up a brand tracker to keep progress in check.


Despite some fashion brands agreeing to pay what they owed, many still fell short of doing so and are still demanding discounts or refusing to pay for orders they made – and were in various stages of production – months ago. Brands including Topshop, Espirit, Matalan, Mothercare and Urban Outfitters are still refusing to pay what they owe their suppliers.


According to the CGWR report, this kind of behaviour is made possible by the fashion industry's unethical payment terms. Contracts are arranged so that clothing suppliers in countries like Bangladesh, India and Cambodia cover the up-front production costs, and are not paid until items are shipped, leaving them completely exposed. Moreover, many garment workers are employed casually without formal contracts, making it even harder for them to exercise their rights or claim money they are owed.

Despite continual pressure from workers’ groups and ethical clothing campaigns, the worldwide fashion industry continues to exploit its suppliers, as exemplified by their response to Covid-19.


You may also like: The Ethical Concerns of the Cosmetic Industry

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