Fired, Then Robbed: Fashion brands’ complicity in wage theft during Covid-19
Tens of thousands of garment workers at factories producing for leading fashion brands, who were fired during the Covid-19 pandemic, are being denied terminal compensation, in violation of the law and the labor rights obligations of the brands and retailers whose clothes they sewed. This research report exposes severance pay theft at dozens of factories, all named in the report, where workers were robbed of an average of more than a thousand dollars (US) per person.
The WRC’s data represent a modest fraction of the factory closures in the industry, indicating that the severance theft the report reveals is the tip of the iceberg. The WRC estimates that the millions of garment workers terminated globally during the pandemic have been robbed of more than half a billion dollars in earnings since the pandemic’s outset.
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This research report presents new data about how garment workers’ food security—and linked dynamics of employment status and income—has deteriorated amidst the pandemic. Our data reveal an alarming pattern: garment workers’ declining incomes are leading to widespread hunger among workers and their families, as they are increasingly unable
to obtain adequate food and nutrition. These dynamics are a direct result of apparel brands’ responses to the Covid-19 pandemic, as well as the long-term trend of low wages for garment workers in brands’ supply chains, which has left workers unprotected.
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A July – August survey of 75 garment suppliers in 15 countries reveals shocking changes in brands’ pricing and purchasing practices on new orders. The report finds that brands are using suppliers’ pandemic-driven desperation as leverage to drive down prices and impose onerous payment schedules on new orders they are placing. Many suppliers are being forced to accept orders below cost, potentially forcing them out of business and putting workers’ livelihoods at risk.
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US and EU trade data provide considerable evidence of a significant loss in value due to order cancellations. A total of USD 16.2 billion was lost, combined, from April through June in the US and from April through May in the EU (a number that will almost certainly increase when June data are available for the EU). Assuming that wages make up 10 percent of the value (at import price), what this suggests is the loss of more than USD 1.6 billion in workers’ wages, based on reduced imports and retroactive price discounts for the US and EU markets alone.
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This paper by the European Center for Constitutional and Human Rights, ILAW, and the Worker Rights Consortium explores the power imbalances between brands and suppliers and their contractual manifestation. It examines the law of force majeure and related doctrines and how they apply to the current circumstances. The paper explains how brands violate their due diligence obligations through canceling orders.…
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The report “Un(der)paid in the pandemic” analyzes nonpayment of wages to garment workers during the months of March, April, and May resulting from order cancellations by apparel brands, unpaid leave, and state-sanctioned wage cuts during the Covid-19 crisis. Based on a review of news reports and information from worker organizations, we estimate that across South…
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This report, authored by Pennsylvania State University’s Center for Global Workers’ Rights, in collaboration with the WRC describes the results of a survey of more than 300 garment suppliers in Bangladesh and has just reported the results. The survey found that 80 percent of apparel suppliers have been forced to slash employment as a result of buyers canceling orders—with nearly 60 percent reporting they have shut down most or all of their operations. Meanwhile, four out of five fired workers have not received the severance pay mandated by law. The survey found that almost none of the buyers had offered suppliers any financial support to help pay workers.
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Co-authored by WRC executive director Scott Nova and the CCC’s Ineke Zeldenrust, this white paper explains how brands and retailers are shoring up their own finances by refusing to honor contracts with apparel suppliers, forcing suppliers to the brink of bankruptcy and causing large-scale dismissals of workers. The report calls for brands to pay suppliers what they owe them, for the swift mobilization of international financial resources to provide income support to garment workers, and for deeper reforms to address the supply chain inequities that Covid-19 is laying bare.
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