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The unequal impacts of Covid-19 on global garment supply chains

Research summary for UK policymakers and brands.

This is a research summary of the report The unequal impacts of Covid-19 on global garment supply chains: Evidence from Honduras, India, Ethiopia and Myanmar tailored for companies and government agencies and policymakers in the United Kingdom (UK). The research was developed and proposed by Professor Genevieve LeBaron of the University of Sheffield and Penelope Kyritsis at Worker Rights Consortium (WRC), and data collection and analysis were undertaken by the authors of this summary along with WRC in-country staff who are not named due to security considerations as per WRC policy.

This study investigates how working and living conditions for workers in global garment supply chains feeding the UK market have changed during the Covid-19 pandemic. The researchers conducted original cross-country comparative research between September 2020 and May 2021 on the pandemic’s impact. They investigated how workers’ job security, income, vulnerability to forced labour and indebtedness have evolved, both for those who have remained in their current jobs and those laid off during the pandemic, and how companies’ varied responses to the pandemic shaped these patterns.

Key findings

  • Garment workers’ labour and living conditions have severely worsened during the pandemic; many are now in situations of severe economic hardship and experiencing heightened vulnerability to forced labour, as measured by the International Labour Organisation’s forced labour indicators.
  • Across all four of our case study countries (Honduras, India, Ethiopia and Myanmar), workers have experienced sharp declines in earnings and worsened working conditions. Many reported experiencing indicators of forced labour such as verbal abuse, threats and intimidation at work, and limits on their freedom of movement, which they had not experienced prior to the pandemic.
  • These dynamics are evident for workers who have remained in the same jobs with no change in their employment status, as well for those who have had their contracts terminated amidst the pandemic and found new jobs, which tended to involve worse working conditions and lower pay.
  • These patterns varied across case study country; individual-level factors such as age, gender, race and ethnicity, union affiliation, migration and employment status; and commercial dynamics in supply chains.
  • Company responses to the pandemic have been highly influential in shaping these outcomes. In a handful of cases, company responses have protected workers and upheld decent work, such as through the provision of direct cash support for workers; advance payments for suppliers; worker helplines and grievance systems with robust remediation; ensuring suppliers paid full wages and severance owed to workers; and flexibility with delivery times; and dialogue and open communication with suppliers.
  • However, workers have been hit hard where companies responded by protecting cash flow and their bottom lines, such as by: cancelling orders; demanding discounts from suppliers; invoking Force Majeure clauses; refusing to pay for orders already produced; paying suppliers late; and severing communication with factories.

Key recommendations

The report recommends that the UK Government:

  • Strongly encourage garment companies to report on their pandemic responses and impacts on suppliers and workers in their supply chains, as part of reporting under section 54 of the Modern Slavery Act, detailing how they have protected supply chain workers from forced labour during the pandemic.
  • Provide immediate cash support to suppliers and workers,
  • Reduce commercial pressure on suppliers and alter commercial practices that increase risk of forced labour and overlapping forms of exploitation in supply chains.
  • Where garment firms have received public, taxpayer support during the pandemic, the UK Government should be especially diligent in ensuring that companies have not used these funds to contribute to their profits, executive compensation, and shareholder dividends while supply chain workers have experienced economic hardship.
  • Make use of all available government levers to price forced labour-made goods out of the marketplace, such as making below-cost sourcing and selling illegal, ensuring that increased trade is not at the expense of labour rights by ensuring that free trade agreements currently being negotiated by the UK Government include a strong focus on fair treatment of workers, and consider introducing forced labour import bans to prohibit import of goods made with forced labour.
  • Recommendations for companies

The report recommends that garment companies:

  • Report on their pandemic responses and how these impacted on suppliers and workers in their supply chains, as part of reporting under section 54 of the Modern Slavery Act, detailing how they have protected supply chain workers from forced labour during the pandemic,
  • Take actions which this research identified as good practice for companies to protect workers and uphold decent work during the pandemic, such as providing immediate cash support to suppliers and workers and dialogue and open communication with suppliers,
  • Disclose how much taxpayer money they obtained and ensure this funding was not used to contribute to profits, executive compensation, and shareholder dividends while supply chain workers have experienced economic hardship,
  • Evolve and innovate their business models including by reducing commercial pressure on their suppliers and alter commercial practices that increase risk of forced labour and overlapping forms of exploitation, including sourcing below the true costs of production, certain forms of outsourcing, and failing to benchmark labour costs and relevant wage standards into purchasing decisions and contracts.