Australian clothing brands are cancelling, delaying payments or asking for big discounts on millions of dollars’ worth of orders from Bangladesh, with potentially catastrophic consequences for the women who make their clothes. Advocates say some of the world’s lowest-paid garment workers are poised to be the biggest losers, as the industry deals with the “apocalyptic” fallout from COVID-19. The ABC can reveal one large Australian retail company, Mosaic Brands, is delaying payment, holding or cancelling orders worth a total of $15 million, according to figures sourced by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). Emails seen by the ABC show Mosaic Brands — which owns labels Rivers, Katies, Rockmans, Autograph, Noni B, Millers, W.Lane and Beme — told suppliers payments for some orders would be delayed by eight months. It emerged as Kmart revised its request for a 30 per cent discount on some orders already completed, after some suppliers said they could not withstand the price cut. In contrast, global brands — including Adidas, H&M, Marks & Spencer, Nike and Uniqlo — have been praised for publicly committing to pay in full for orders completed and in production.
Rubana Huq, who is president of BGMEA — which along with the Worker Rights Consortium is tracking data on the behaviour of brands towards suppliers — described the behaviour of some Australian retailers as “astonishing”. “We have workers who need to be paid,” she told the ABC. “Australian retailers are probably doing a little better than the North American and European retailers, so their businesses are not as badly hit. “So when we wake up in the morning and we have a 30 per cent discount proposal and 30 per cent cancellation proposal from Australian buyers, it is quite astonishing.” Ms Huq said delaying payments by longer than six months was “unacceptable” and even with the delays, some money must be paid in the meantime. “It’s not possible for us to survive for the next six months without being paid anything, and part payment must come in,” she said. The Bangladeshi Government has offered businesses loans to help them stay afloat, but Ms Huq said they would need to start paying those back in six months. A spokesman for Mosaic Brands said it was committed to working with its suppliers. “In the context of the COVID-19 pandemic, we are working with all our supply partners to try to agree arrangements that are satisfactory for all parties,” he told the ABC. “It would be inappropriate to comment while discussions are continuing.”
Kmart withdraws discount demand, but cancellations possible
Two weeks ago, Kmart Australia’s sourcing arm, KAS, asked suppliers for a 30 per cent discount on orders already made, before backtracking on the request the following Tuesday. A company spokesman told the ABC that after conversations and feedback from those suppliers, Kmart had committed to taking the whole order and paying in full on the proviso the suppliers could deliver the goods within a reasonable timeframe, given they were seasonal products. The company has warned suppliers that orders, which had previously been put on hold, must be delivered by the new deadline or they will be “cancelled without liability”.
One supplier who spoke to the ABC on the condition of anonymity said he would not be able to deliver all of his goods within Kmart’s timeframe. He described the situation as “difficult but better” than Kmart’s demand of 30 per cent off all goods, which he said would have been a disaster for his business. The ABC has been told that cancelling orders without full payment for items already underway or completed is unprecedented, unless a business has gone into liquidation.
A Kmart Australia spokesman said the business was committed to sourcing its products “ethically” and purchasing responsibly. “From the outset we have been focused on having individual correspondence with our suppliers to work through the impacts of this continually evolving situation,” the spokesman said. “We are regularly communicating with our suppliers, including those in Bangladesh, for mutually acceptable outcomes on all outstanding orders, which take into account the disruption that has happened in the supplier countries as well.”
Meanwhile, Cotton On has also backed down on its decision to cancel millions of dollars’ worth of orders. Cotton On had told suppliers it would cancel products worth $18 million, but that decision was recently reversed. “We are committed to honouring all existing supplier orders by taking delivery of stock that is already produced as well as goods currently in production,” the company said in a statement. “All suppliers have been paid on time and in accordance with agreed terms and pricing.”
Workers on brink of poverty
Nazma Akter, a former child garment worker who lobbies for better workplaces and conditions for employees, estimates 50,000 workers have already lost their jobs. Ms Nazma, who is from the Awaj Foundation and the Sommilito Garment Sramik Federation, also warned a further 1 million employees were likely to be out of work in the coming months. “The brand and supplier, nobody is caring about the workers and workers’ livelihoods, and nobody is doing any good things for them,” she told the ABC. Ms Nazma said the vast majority of garment workers were women and they were already living on the brink of poverty. “First of all, this blame should go to the brand, because when they cancel orders, when they suspend, they are not caring about the workers and suppliers,” she said. But she said suppliers should also have proper financial systems in place for emergencies like the pandemic. “Second, of course the suppliers also [should take some blame] — they don’t keep their social protection, emergency support, any money for any disaster management.”
Ms Nazma said she was concerned for workers who had “no food, no shelter, they need to pay housing”. “So that is why we request the Australian brands who are producing in Bangladesh, do your fair process and pay the due payment and do not cancel,” she said. “Don’t ask for any discount because the discount goes to our workers.”
Ms Huq said it was unrealistic to think suppliers had savings to draw upon during an emergency like the COVID-19 pandemic. “There is never enough [of a] buffer,” she said. “One, because we have grown very quickly, so we reinvest most of our capital — we have world-class manufacturers facilities — so it’s difficult for us to keep three months of salary payments. “Bangladesh pays $US423 million [$652.96 million] worth of salary every month so it’s not possible for us to keep such a huge buffer at this point of time.”
Brands urged to pay wage component of orders
Oxfam Australia, which has a long-running campaign for garment workers to receive a fair living wage, is calling on brands to commit to paying workers’ salaries during the pandemic. Oxfam labour rights spokeswoman Sarah Rogan said the wage component of the production cost was very small. “Of the retail price of a garment, only 4 per cent of the garment goes to wages,” she told the ABC. “For a $10 T-shirt, that’s only 40 cents, so there’s no reason why big brands in Australia can’t pay that amount to make sure the women who make our clothes receive their wages.”
Ms Rogan said although workers were employed by factories, brands had to be accountable for wages being paid. “Workers are employed by the factories, the suppliers, but the power in this situation rests firmly with the Australian and international brand,” she said. “Brands are responsible for what happens in their supply chain, that goes across the board. “What Oxfam is asking for is for the brands here in Australia to ensure that the wages are paid for a minimum of three months. This would ensure that the workers can receive their wage. “And also we’re asking that they pay for work in production to ensure workers don’t go hungry.”
Kmart Australia has said it is committed to “ensuring its suppliers and garment workers are supported during this time”. “We’re focused on ensuring a sustainable future for our suppliers and ourselves, which is why we are working with each supplier individually,” it said.
Ms Rogan said more than 2,000 people had used an online platform set up by the organisation, to ask brands how they intended to deal with the COVID-19 crisis. She said none of the brands had responded to consumer requests. And Ms Rogan said none of the brands had responded to Oxfam’s requests for information about how they would deal with workers’ salaries and whether they would honour their order commitments during the pandemic.
