Covid-19 and the Apparel Supply Chain

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To:WRC Affiliate Universities and Colleges
From:Scott Nova
Date:April 13, 2020
Re:Covid-19 and the Apparel Supply Chain

I want to share with you the overall approach the WRC is taking to address the impact of Covid-19 on the collegiate apparel supply chain. The present crisis affects factories making collegiate apparel just as severely as it affects virtually all garment factories, but it is not a problem that the collegiate apparel industry can solve on its own. As with the building safety crisis in Bangladesh in 2013, which involved thousands of deaths and injuries due to unsafe conditions across thousands of factories, the current crisis requires an industry-wide solution.

This is why the WRC has prioritized efforts to advance a comprehensive approach to protecting garment workers. The approach we are pursuing has three elements:

Advocating for major brands and retailers to pay for orders produced or in progress: As we have reported, we are asking major brands and retailers (whose financial resources put them in a far stronger position than either their suppliers or smaller brands to weather the crisis) to refrain from the retroactive cancellation of production and to pay for this production in the amounts originally agreed. We are pleased at the substantial progress that we have seen over the last two weeks, with a growing list of major brands and retailers committing to pay for all orders completed or in production. If more follow suit, this alone will help avert thousands of factory bankruptcies and prevent millions of workers from being dismissed without compensation. The WRC is tracking brand practices on an ongoing basis; you can check here for updates (if we do not list a company, it is because we do not yet have sufficient information to fully assess its practices).

Promoting a publicly funded international plan to aid garment workers and suppliers: Even with more brands paying for past orders, the lack of future orders—with stores closed and many factories shut for public health reasons—will leave tens of thousands of garment factories and tens of millions of workers without income. Governments in most apparel exporting countries cannot provide the trillions of dollars in assistance we are seeing in wealthy nations (even the $2 trillion the US has allocated to support American workers and businesses may not be enough, so you can imagine the challenges facing low-income countries like Bangladesh, Cambodia, and Haiti). There is a solution: the mobilization of resources from international financial institutions (World Bank, International Finance Corporation, and International Monetary Fund) to create a rescue package for garment workers and suppliers. Such a rescue package would prevent hunger, deprivation, and social unrest among supply chain workers and ensure that production infrastructure in the exporting countries survives the crisis, so people can return to work once it abates. We believe such a package is possible and that it should be tied to commitments from country governments and major brands and retailers to put more resources, after the crisis is over, into programs to protect workers from sudden income loss. The WRC has published a white paper outlining the case for a global rescue package.

Closely monitoring impacts on workers: Given the enormous scope of the crisis across garment supply chains, it is important to track, as comprehensively as possible, such impacts as job losses, repatriation of migrant workers, and nonpayment of wages and severance. This information will help ensure that potential rescue funds reach all eligible workers. It will enable the WRC and other organizations to assist workers, after the crisis abates, in securing wages and other compensation that may go unpaid in the weeks ahead. The WRC has prioritized the monitoring and documentation of worker impacts, particularly in the university apparel supply chains, and has provided detailed guidance for licensees regarding the legal wage and severance obligations of their suppliers when workers are suspended or dismissed due to factory closures.

If major brands and retailers, with the resources to do so, honor their commitments to pay for past orders and if international funds are mobilized to support workers and suppliers through the months ahead, this will help avert a great deal of suffering across the apparel supply chain and help thousands of employers survive the crisis. While the WRC is also working to identify—and, wherever possible, address—specific problems at collegiate factories, such as nonpayment of wages, we believe that supporting these broader, industry-wide solutions is the best way to protect the well-being of the greatest number of workers across all factories making university apparel.

We will keep you posted as this work proceeds. As always, please let us know if you have any questions or thoughts about this communication.