On labor rights, you get what you pay for

From March 2020 to December 2021, it was a period of profound changes, interwoven with a multitude of challenges.

In the fashion industry, the sudden restrictions caused by the pandemic have forced brands to try to decipher the rapidly changing market. They canceled orders and then increased purchases again as it became clear that homebound consumers still wanted to buy. The supply chain is snarling due to sudden delivery costs and the price of raw materials. Suppliers have faced additional challenges — and costs — in adapting to doing business in a way that keeps workers safe.

But amid the upheaval, there was one constant: the prices brands paid their suppliers to produce garments such as sweatpants and hoodies remained largely unchanged, according to a survey of 1,000 manufacturers in Bangladesh published in a new report by the University of Aberdeen and the Group for UK-based fair trade campaign Transform Trade.

More than three-quarters of respondents said that by the end of 2021, Western brands such as Gap and H&M would pay no more for clothes than they did at the start of the pandemic. Almost one in 10 said they were paid below the cost of production.

In the face of rising costs, this price stagnation made it difficult for manufacturers to pay minimum wages to their workers and contributed to job losses. Workers who kept their jobs faced bullying and harassment to speed up work and were forced to work unpaid overtime to meet tight deadlines as demand surged after an early downturn in the pandemic, the survey found.

The findings reflect how brands’ buying practices can directly affect working conditions, with worthy commitments to ensure fair labor standards and pay decent wages often conflicting with the demand for cheap fast fashion and the pursuit of higher profits.

The pressure on producers has not abated in the last 12 months.

When demand fell this fall in response to inflation and economic problems, some big buyers asked suppliers to hold shipments for as long as a year, the president of the Bangladesh Garment Manufacturers and Exporters Association, Faruque Hassan, told me during a trip to Bangladesh in November. Many brands asked for discounts, and some manufacturers accepted prices that meant they were operating in the red just to keep factories running, industry insiders told me at the time.

The problems are not limited to the price of goods. Short lead times, poor planning or sudden design changes can lead to excessive overtime as factories struggle to meet inflexible brand deadlines. Abrupt cancellations can result in layoffs and threaten manufacturers’ ability to provide severance pay, according to a new summary of research on the impact of purchasing practices published by the Better Buying Institute.

New regulations could change this dynamic, making brands more accountable for what happens in their supply chains and paving the way for labor groups and labor advocates to take legal action against them when things go wrong.

The European Union is moving towards stricter due diligence requirements for brands, building on legislation already in place in countries such as France and Germany. The New York Fashion Law, legislation currently under consideration by the New York State Assembly, includes guidelines on responsible purchasing practices. If passed, brands could be fined up to two percent of global revenue for non-compliance.

That kind of real financial risk may ultimately be what is needed to shift the balance of incentives so that the pursuit of profit truly aligns with the pursuit of social good.

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