Suppliers in the survey reported that 98.1% of buyers refused to contribute to the cost of paying the partial wages to temporarily suspended workers
Over 91% of apparel brands and retailers who buy goods from Bangladesh but canceled their work orders due to the coronavirus pandemic, have refused to pay for production costs, according to a survey report by Pennsylvania State University. On top of that, suppliers in the survey reported that 98.1% of buyers refused to contribute to the cost of paying the partial wages to furloughed workers (temporarily suspended from work) that the law requires, and 72.4% of furloughed workers were sent home without pay. 97.3% of buyers refused to contribute to the severance pay of dismissed workers, also a legal entitlement in Bangladesh, it added. The report was published recently by Penn State’s Center for Global Workers’ Rights and the Worker Rights Consortium (WRC), titled “Impact of Covid-19 on Workers and Businesses at the Bottom of Global Garment Supply Chains.” Additionally, 72.1% of the buyers refused to pay for raw materials including fabric already purchased by the suppliers. According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, 1,098 apparel factories reported work order cancellations worth $3.01 billion as of Friday. “When orders were canceled, 72.1% of buyers refused to pay for raw materials (fabric and others) already purchased by the supplier, and 91.3% of buyers refused to pay for the cut-make-trim cost (production cost) of the supplier,” said the report findings. Also, 45.8% of suppliers reported that “a lot” to “most” of their nearly completed or fully completed orders were cancelled by their buyers, while 5.9% of suppliers had all their orders cancelled altogether, it added. The findings also show that due to lack of payment and order cancellations, 58% of the factories reported having to shut down most or all of their operations. As a result, more than one million garment workers in Bangladesh already have been fired or furloughed as a result of order cancellations and the failure of buyers to pay for these cancellations “There are moral obligations and ethical issues. Buyers cannot ignore taking the goods already produced as that was done through an agreement,” former World Bank lead economist in their Dhaka office, Zahid Hussain, told Dhaka Tribune. “There may be delays but cancellation is not a solution. In the case of worker payment issues it is a shared responsibility,” he added. He suggested a joint initiative from government, factory owners and the buyers, as workers cannot be made to suffer and it is for the sake of both manufacturers and buyers. “Though several buyers have canceled orders, we from the BGMEA are negotiating with them to reach a consensus,” BGMEA director Md Rezwan Selim told Dhaka Tribune. The buyers are imposing different types of conditions such as discounts, delayed payments, or payments in phases, he added. According to the BGMEA and some apparel makers, the brands and retailers that have agreed to take deliveries of their previous orders include H&M, INDITEX, PVH Corp, TARGET, KIABI, KappAhl, Benetton, Decathlon, M&S, C&A, Puma, Kontoor, Primark and Tesco.
