Brands owe factories $22 billion. Workers are bearing the brunt.
For nearly a year, A-ya spent up to 10 hours a day at Trax Apparel in Phnom Penh, the capital of Cambodia, where she stitched sportswear for brands such as Adidas for $300 a month. Soon after Covid-19 hit the shores of the Southeast Asian country, the company’s once-humming production lines suddenly ground to a halt. In April 2020, she was sent home. Two months after she was furloughed, A-ya was dismissed.
A-ya, who asked that her last name be withheld for privacy reasons, received her final wages plus $80 in suspension support from the Cambodian government — but not the severance payment she was legally owed. Without savings to help cushion the fall, she has bounced from temp position to temp position, unable to send money to her family and barely making ends meet herself.
“I’ve had to reduce my food expenses and cut down on electricity use,” A-ya says through a translator, adding that she regularly misses meals and goes hungry. “I eat only rice with a little bit of other food, but no sweets or fruit.” Her elderly parents, who rely on her for support, now skip breakfast, eat less for lunch, and frequently forgo meat.
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More than 10,000 miles away in Haiti, Marline has struggled to feed her three children, the youngest of whom is 2, since last summer, when she was fired from Sewing International (a clothing producer for brands such as Gildan) after protesting what she described as employer wage theft. The pandemic had already hit the Caribbean in full force by then, and Marline, whose last name is also being withheld for privacy reasons, saw her monthly salary plunge from 15,000 Haitian gourdes (around $205 in US dollars) to 5,000 gourdes ($68 USD) as the factory sharply curtailed work hours due to slashed orders.
Marline hasn’t been able to find another job, and she’s already burned through what little savings and government assistance she had. Milk is now a luxury, and meat and fish have proven challenging to procure. “We are living day to day to survive,” she says.
The garment industry employs 40 million people worldwide — 60 percent of whom are in the Asia-Pacific region, according to the International Labour Organization — and yet A-ya and Marline’s stories are far from unique. Though the pandemic has upended the fashion industry, it’s the workers who can least afford it who are bearing the brunt of the pain that began nearly a year ago, when the Covid-19 outbreak was first declared a pandemic and Western retailers suddenly pumped the brakes on thousands of in-progress or finished orders. The preemptive cost-cutting move, though ethically murky, was perfectly legal due to a “force majeure” contract clause that let brands skirt any liability: The pandemic was tantamount to an “act of God” and, therefore, beyond their control.
This strikes those on the side of garment workers as ridiculous. Despite the very real economic shock, however, several retailers are not only hanging in there but are actually prospering, especially as people trade in constricting “outside” clothes for stretchier indoor ones. Meanwhile, activists say suppliers are teetering on the edge of financial ruin through no fault of their own. No matter how it’s spun, the dichotomy has been difficult to square.
The damage in Bangladesh, the world’s second-largest exporter of clothing after China, was particularly acute as suppliers suddenly stared down $3.1 billion in nixed orders. Though it wasn’t the only manufacturing hub affected, the South Asian nation — where apparel accounted for 84 percent of the country’s export revenue in its 2019 fiscal year — quickly became the poster child for an industry in a state of emergency. Met with public outcry and adept campaigning by grassroots groups such as Remake, some brands, including H&M and Zara owner Inditex, later reversed course and committed to pay up in full for completed orders. Countless more, however, didn’t, leaving factories in the lurch and their workers in the cold.
To date, brands still owe their supplier factories some $22 billion, says Scott Nova, executive director of the Worker Rights Consortium (WRC), a labor rights advocacy group based in Washington, DC. This has resulted in a “cascading effect” throughout the supply chain, including layoffs and increased incentives for factory owners to illegally reduce payroll costs by, say, forgoing government-mandated benefits. “Some suppliers went out of business and some are struggling to survive,” Nova says.
The response from brands wasn’t entirely knee-jerk: Insolvency was a real risk for retailers, such as Topshop owner Arcadia Group and J.C. Penney, which were on the brink of bankruptcy even before the contagion reared its head. For the most part, though, and despite throttled foot traffic and dampened consumer enthusiasm for spending, the industry hasn’t imploded. What it has revealed, however, are its apparent priorities.
Kohl’s, one of the deadbeat buyers on the WRC’s “naughty list,” canceled millions of dollars worth of garment orders from Bangladesh and South Korea in mid-March yet was able to fork over $109 million in dividends to shareholders the following month. In the meantime, Nova says, garment workers, whose livelihoods were already precarious, are facing starvation and destitution with even less recourse than before.
In August and September of 2020, WRC surveyed both employed and recently unemployed garment workers from 158 factories in Bangladesh, Cambodia, El Salvador, Ethiopia, Haiti, India, Indonesia, Lesotho, and Myanmar. The survey, the results of which were published in November, found that 20 percent of respondents had grappled with hunger on a daily basis since the pandemic began, and another 34 percent had gone hungry at least once a week. Some 75 percent of workers surveyed reported they had borrowed money or taken on debt since the start of the pandemic just to afford food. Like A-ya and Marline, the vast majority of garment workers — 88 percent, to be precise — said they’ve had to eat less on their diminished incomes.
The situation is dire even for those who have held on to full-time employment. In August, the Clean Clothes Campaign, the apparel sector’s largest alliance of labor unions and nongovernmental organizations, calculated that garment workers worldwide — excluding China — were deprived of anywhere between $3.19 billion and $5.79 billion in wages in March, April, and May alone due to Covid-19 cutbacks. Workers in South and Southeast Asia, the organization estimated, received 38 percent less pay than usual during those three months, though the number sometimes exceeded 50 percent in certain regions of India. Activists say unscrupulous factory owners have also wielded the pandemic as an excuse to purge unionized workers from their ranks or otherwise crack down on labor rights, which could roll back years of hard-won progress.
Nova describes a “hangover effect” that will linger long after Covid-19 is a memory and apparel production starts to return to pre-pandemic levels. The stacks of debt and health problems caused by malnutrition, for instance, won’t magically disappear, nor will the collective intergenerational trauma of barely surviving what many have dubbed a “humanitarian crisis.” Legal action has taken suppliers only so far. After a group of 21 Bangladeshi factories filed a $40 million lawsuit against the parent company of Sears in June 2020, they received only a fraction of the amount they were owed. Meanwhile, the position of suppliers is “weakening further” as the pandemic continues to rage and the power imbalances that were always there are thrown into even sharper relief, Nova says.
“Some [companies] are doing better than others, but all of them are doing well enough that they should have prioritized paying their bills and not push the economic pain of the pandemic down the supply chain [onto] workers,” he adds. “As long as they still exist and are operating and taking in revenue, they should be directing it to fulfill their obligations.”
It’s true US apparel sales tumbled by 25.6 percent from 2019 to 2020, though the contraction has mostly been from physical stores, according to analytics firm GlobalData. Online spending, in the meantime, has boomed, providing a lifeline in a sea of red ink. The outlook isn’t completely hopeless, either, since some clothing categories are performing better than others. For instance, sportswear — think leggings, sweatshirts, and bra tops — climbed 2.7 percent.
“In a depressed apparel market, sportswear was an area of growth,” says Neil Saunders, managing director of retail at GlobalData. “Consumers looked for comfortable clothing to wear around the home, buying things like comfortable leggings and sweatpants. A focus on being healthy and exercising more outdoors also helped sales of performance wear.”
Athleisure was already gaining steam; shelter-in-place rules and #WFHLife only accelerated its ascent. Online, products designed for running or jogging have been selling out as exercise fiends hunkering down at home seek alternatives to the gym. Those looking for a bit more zen have retreated to yoga, fueling a boom for retailers such as Lululemon, whose e-commerce business in North America shored up its net revenue in the third quarter of fiscal year 2020 by 22 percent to a whopping $1.1 billion.
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And the rest of us? We — and Anna Wintour — just want all-day wear to slouch on our couch with maximum ease. Global fashion shopping platform Lyst said in an interview that global searches for joggers ballooned 123 percent in April compared with the same period the previous year. Leggings ticked up 48 percent.
Savvy brands are reading the tea leaves. Denim giant Levi’s, for instance, is doubling down on sweatpants and sweatshirts it says represents a “significant opportunity” for the future. Abercrombie & Fitch, says Saunders, has placed more emphasis on comfy joggers, even introducing PJs with a sweatpant silhouette as a “response to changing customer demand and tastes.” Taking it a step further, Athleta rolled out its first sleepwear line to provide “comfort for recovery.” Target, which clocked a whopping $1 billion in sales from a line of activewear and home-gym equipment it launched a year ago, recently joked that its workout wear is also its customers’ favorite work wear. Fashion isn’t dead, it’s just pivoting in this new reality, just like the rest of us.
And yet the contrast between brand balance sheets and the workers whose labor underpins them remains painfully stark. A survey of 50 leading apparel brands, published in November by the Business & Human Rights Resource Centre (BHRRC), a London nonprofit, found that 29 companies have remained profitable, yet nine of those have still not yet committed to paying for suspended or canceled orders. Just one company — PVH Corp., which operates Calvin Klein and Tommy Hilfiger — had persuaded its suppliers to institute a “pandemic policy” to ensure vulnerable workers such as pregnant women and union members are not being disproportionately targeted for layoffs, though several brands said they had a preexisting policy that covered this.
Only three — Aldi Nord, Aldi Sud, and Lidl, all supermarkets that happen to sell clothes — made it a new policy not to ask factories for price reductions or discounts on similar items commissioned during the previous season. In other words, brands are now paying less for the same items of clothing than they did before the pandemic, even though the margins were already razor thin. (Some brands, like Levi’s, have refuted this, however, with a spokesperson from the denim giant noting in an email that the way it determines the cost of products with its suppliers “has not changed.”)
It’s a strategy that pits suppliers’ interrupted cash flows and desperation for work against them, says Thulsi Narayanasamy, senior labor rights lead at the BHRRC. “So while factories are struggling to stay open and to keep on all of their workforce, brands are suddenly finding themselves in a position where they can drive prices down even further than they were before the pandemic,” she says. Retailers may no longer be outright canceling orders during the second Covid-19 wave, but they’re continuing to squeeze margins in subtler, more insidious ways.
When the WRC and the Center for Global Workers’ Rights at Penn State University polled 75 factories across 15 countries last year, 65 percent of suppliers reported that buyers have demanded discounts on new orders steeper than the year-over-year reductions they usually solicit. More than half of respondents admitted accepting orders below cost, and the majority said they’ll probably end up capitulating to those demands in time. Suppliers also have to wait longer after they complete and ship orders before they’re compensated. While only 34 percent of buyers took longer than 60 days in the Before Times, one in four buyers currently imposes payment terms of 120 days or longer.
This means that workers, who were already chronically underpaid, now have to work twice or thrice as hard to drum up the same poverty wages they received before Covid-19 struck, Narayanasamy says. Or they might end up taking on more debt from predatory moneylenders.
For suppliers, the changing cadence has had just as much of an adverse impact as order cancellations, “since factories are not being able to have a forecast and plan their capacity,” says Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, the country’s largest trade group of apparel factory owners.
Buyers are also following a “go slow” approach by placing an average of 30 percent fewer new orders than they usually do this time of year, according to 50 factories surveyed by the organization. Export in December alone declined by 9.7 percent on a year-over-year basis. “It’s getting worse day by day,” Huq says. “Buyers are following a different approach to manage their supply chain.”
Boohoo is among the brands that have pivoted to activewear with flying colors.
In a September earnings report, the UK-based digitally native retailer, which churns out $5 crop tops and $12 mini dresses designed to mimic pricier looks flaunted by A-listers like Kim Kardashian, Kylie Jenner, and Cardi B, credited the first wave of lockdowns for a surge in new customers who “migrated to the safety of online shopping” to sate their needs. The company reacted “quickly to the changes in demand from home working” by ramping up its offering of activewear, loungewear, and tops, to what it described as a great success.
The pivot was prescient. In January, the company, which also owns the PrettyLittleThing, Karen Millen, Nasty Gal, Oasis, and Warehouse brands, recorded a sales bump of 40 percent to £661 million ($903.4 million) in the four months leading up to December 31, outstripping analysts’ predictions of 29 percent growth as consumers continued to click “buy.” It told investors it anticipated revenues to rally by 36 percent to 38 percent for the financial year ending in February, exceeding its previous — and already upgraded — guidance of between 28 percent and 32 percent. A few weeks ago, Boohoo confirmed it was scooping up Debenhams — once known as Britain’s favorite department store — for £50 million ($68.5 million), along with Arcadia Group’s Burton, Dorothy Perkins, and Wallis for £25.2 million ($34.6 million).
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Rival Asos announced this month that it will be snapping up Arcadia Group’s flagship Topshop, Topman, and Miss Selfridge brands for £265 million ($363.3 million), though it’s unclear if either it or Boohoo will be taking responsibility for the latter’s debts with suppliers. (Asos did not respond to a request for comment.) Business for the e-tailer, which sells more than 850 brands, including its own, has also boomed during lockdown. In a recent earnings report, Asos said revenue growth in the four months to December 31 surpassed expectations due to a “strong product performance” with a “dynamic reshaping of offer in the second half” to line up with customer demand in “lockdown categories” such as skincare and, yes, activewear.
What makes Boohoo’s story all the more remarkable, however, is the fact it had just weathered a storm of revelations about illegally low wages and unsafe conditions at its subcontractor factories in Leicester, England, a clothing manufacturing hub that sets aside as much as 80 percent of its output for the retailer. (Boohoo did not respond to a request for comment.) Even as the company rushed to disavow misbehaving suppliers, rolling out an initiative intended to improve corporate governance and raise standards across its supply chain, Boohoo stumbled into another imbroglio — this time involving workers in Pakistan allegedly making 29 pence an hour in factories stacked like tinderboxes and one stray spark away from tragedy.
In December, when UK ministers of parliament questioned Boohoo chair Mahmud Kaman about its “99 percent off” Black Friday sale, which was shredded by critics for selling dresses for as little as 8 pence, and called into question how much its workers were paid, Kaman was impassive. “The fact that we’re talking about it today means that that marketing worked,” he said.
But activists question the true cost of such low prices, which are almost always the result of worker exploitation. Last July, Leicester saw a localized spike in Covid-19 cases, which some blamed on Boohoo suppliers that continued to operate during Britain’s first lockdown. (Boohoo later said it had “terminated relationships” with those factories.) Similar outbreaks have been recorded at garment facilities across Los Angeles, including at distribution centers operated by fellow Instamous brand Fashion Nova, which a 2019 Labor Department investigation found owed workers $3.8 million in back pay.
“The trifecta of order cancellations, delays in payment, and then these price cuts has meant that workers are increasingly in a more and more precarious situation,” says Ayesha Barenblat, founder and CEO of Remake, whose #PayUp campaign on social media helped unlock billions in owed debts to suppliers.
There’s also a tie-in to the racial injustice protests that erupted across the world last summer. “The pandemic winners happen to be billionaire white men [making a profit] predominantly on the labor of Black and brown women who are being pushed deeper and deeper into a cycle of poverty.” Women comprise roughly 80 percent of the garment sector workforce, according to the International Labour Organization (ILO).
While the governments of various garment-producing nations have rolled out stimulus programs to prop up their respective sectors, the aid hasn’t proven sufficient, labor groups say. They’re urging brands to establish some kind of “wage assurance fund” to ensure that all workers who make and handle clothing in their supply chains receive what they are owed in accordance with labor laws and international standards. Remake recently kicked off a #ShareYourProfits campaign to ask the 12 top-performing brands — Adidas, Amazon, Asos, Gap, H&M, Levi Strauss, Lululemon, Primark, Under Armour, Uniqlo owner Fast Retailing, Nike, and Inditex — to reserve 1 percent of their net revenue for garment worker relief and pay out 10 cents more per unit of apparel into a severance guarantee fund.
It’s not too much to ask, Barenblat says; the brands Remake is targeting raked in more than $1 billion in profits during 2020. “We know from looking at year-end earning statements that some brands have gone back to [the same] order volumes [from] 2019 — so this is a lot of athleisure brands because it seems people are still buying comfortable clothes at home,” she says.
Whenever this subject is raised, retailers typically say they’re already helping garment workers, citing their involvement in the ILO’s Call to Action, which secures financing to promote “income protection and business continuity” in the garment sectors of Bangladesh, Cambodia, Ethiopia, and Indonesia.
A spokesperson for H&M, one of the few brands that responded to Vox’s queries with more than a boilerplate statement, says that while the brand “is positive to all initiatives that can lead to an improved textile industry — and of course eager for this to happen quickly — we must simultaneously take actions that contribute to systemic change that will stand the test of time.”
“As advised by the ILO, and global trade unions that are the voice of the workers, we will continue our work to support social protection, freedom of association, and stable wage processes,” the spokesperson added in an email. “We will of course also continue to be a fair and responsible buyer, including committing to contractual agreements.”
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The International Organization of Employers, International Trade Union Confederation, and IndustriAll Global Union, which are coordinating the ILO effort, said in an emailed joint statement that many brands are taking “additional action to support manufacturers and their workforce in the pandemic.”
“Brands and their suppliers have shown innovation and mutual understanding in finding solutions which are viable for the parties concerned,” they add. “However, the ability of brands is often limited by the extremely challenging situation they face due to the impact of continued or renewed lockdowns in important markets.”
Members of the American Apparel and Footwear Association, such as Carter’s and Walmart, might tout their support for the US Agency for International Development-led memorandum of understanding, which seeks to “alleviate hardships” faced by workers in Bangladesh, Cambodia, Sri Lanka, and Vietnam, though the agreement doesn’t provide financial support so much as serve as a vehicle for facilitating dialogue, a USAID spokesperson told Vox. (On the other hand, it’s just “one component” of USAID’s efforts to safeguard workers’ rights and respond to Covid-19, the spokesperson added.)
Labor advocates such as Barenblat insist that these initiatives are by and large toothless, providing brands with the appearance of taking responsibility despite nebulous actions and few to no financial stakes. “It really is just window dressing because there’s no money [from brands] attached,” she says.
To be fair, there are brands that have shelled out, including H&M, which donated $1.3 million to nonprofits like Save the Children and WaterAid to provide 76,000 Bangladeshi women and their families with emergency relief. Levi’s says it is disbursing $3 million in Covid-19 grants while ensuring that all suppliers have access to “working capital financing,” i.e. low-interest loans. Amazon told Vox it has “supported organizations who are providing critical assistance to factories and workers across the globe,” though it didn’t provide specifics. The burning question is whether their respective largesses are commensurate to the scale of the problem or whether they’re papering over the cracks.
In the case of the Call to Action, not only has the funding to date proven insufficient, Barenblat says, but it’s also European taxpayers who are footing the bill, not brands. “Why should government taxpayer money be bailing out their supply chain workers when they themselves are sitting on cash?” she asks. “There just doesn’t seem to be a sense of urgency or empathy from any of these brands when it comes to protecting the dignity of the very people who have seen them through the pandemic.”
Because “time is of the essence,” she adds, Remake has set up a GoFundMe, with an initial goal of $10,000, to raise direct relief for garment workers. All proceeds will go to providing garment workers with emergency food and medical relief through front-line organizations such as Awaj Foundation in Bangladesh, Stand Up Movement Lanka in Sri Lanka, and the Garment Worker Center in Los Angeles. “We’re calling on citizens to do what brands are refusing to do,” Barenblat says.
Despite widespread job losses, Farhana has managed to hang on to her job at Zoom Sweaters in Bangladesh, where she sews garments for a brand called Blend; her husband did not. As many as 357,000 of Bangladesh’s 4.1 million garment workers — or more than six times the official figure of 56,372 — have become unemployed due to the pandemic, according to a recent survey by the Centre for Policy Dialogue. The factory’s management hasn’t paid out its workers’ annual leave benefits, which are required by law. To afford medicine for her father-in-law, Farhana, which is not her real name, has succumbed to loans with steep interest rates.
“The price of basic goods has increased, so we are generally just eating eggs and potatoes,” she says through a translator. “There were a few months during the pandemic when we couldn’t even afford potatoes. Before the pandemic, we could afford to eat chicken weekly, but nowadays we can only afford to eat it twice a month. We love beef but there is no way we can afford it these days.”
Narayanasamy from the BHRCC worries that with workers no longer receiving their full wages, discussions of a living wage that provides more adequate coverage for food, shelter, and other necessities could fall by the wayside. “What we’re looking into is, what would that situation have been for workers if they had originally been paid a living wage?” she says. “And what we’re really finding is that their position would have been so different. Economic precarity is hardwired into the fashion industry as a whole — it’s not just that exploitation or labor rights abuses are a symptom of the fashion industry, it’s that they are the fashion industry at this point.”
Last month, three workers’ rights groups — the Asia Floor Wage Alliance, the Clean Clothes Campaign, and the Worker-Driven Social Responsibility Network — proposed a legally binding agreement, similar to the Accord on Fire and Building Safety that emerged in the wake of the 2013 Rana Plaza collapse in Bangladesh, that would require brands to pay an additional “living wage contribution” on every order they place with their suppliers. Existing initiatives, such as ACT (Action, Collaboration, Transformation), which count H&M, Primark, and Inditex as members, are not legally enforceable and have not produced wage increases to date.
“It’s about time that a credible proposal is made in which brands are truly held accountable for the dreadful circumstances under which workers and their families have been living for decades while they, the brands, were making gigantic profits,” Anannya Bhattacharjee, president of the Garment and Allied Workers Union, said in a statement when the initiative was announced. “Brands’ [corporate social responsibility] reports are full of promises regarding wages. Now it’s time for them to put their money where their mouth is.”
There are other signs a reckoning is coming for the inequities that have long plagued the sector, not as a bug but a feature that serves brands to the exclusion of almost everything — and everyone — else. Earlier this year, nine trade organizations from Bangladesh, Cambodia, China, Myanmar, Pakistan, and Vietnam banded together to create the Sustainable Textile of the Asian Region — or STAR, for short — network to negotiate better purchasing practices with brands. More countries may be slated for inclusion.
One common excuse from fashion companies is that they don’t typically own the factories they source from, limiting the amount of oversight or control they have on labor conditions. But it’s precisely that — an excuse, Narayanasamy says. Most of the bigger brands have offices based in the countries they produce in, she says. And their relationship with suppliers is necessarily close because they have to monitor what goes on in the factories.
“Brands have the ability to dictate what clothes look like right down to the last stitch,” she adds. “Everything that we see when we buy clothes has been determined entirely by the brand, not by the supplier factory. If they’re able to do that, if they’re able to be continually sending orders to factories and get those clothes on time [and] in exactly the way that they determine, then they also have the power to determine what happens to those workers in their supply chain.”
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