Campaigners have called for a fashion watchdog to be set up to stop “unacceptable buying practices” revealed by researchers who named high street stores Zara and Primark among those treating suppliers unfairly.
In a survey of 1,000 Bangladeshi manufacturers, researchers found that big brands pay below production costs, with most factories selling to the biggest retailers paying the same prices even as raw material costs rise.
In research by the University of Aberdeen and the charity Transform Trade, published on Sunday, the authors of the report said that suppliers named 1,138 brands with which they had contracts in February 2020, and of these, 37% were reported to be involved in unfair practices.
More than half of suppliers said they had suffered unfair procurement practices, including cancellations, non-payment, late payments and demands for rebates with side effects including forced overtime and harassment.
Fiona Gooch, Senior Policy Adviser at Transform Trade, described the findings as a “wake-up call”.
“We need a fashion watchdog to stop the unacceptable buying practices of clothing retailers who benefit from large consumer markets, as well as existing protections for food suppliers,” she said.
“Only when suppliers can plan ahead, with confidence that they will earn as expected, can they ensure good working conditions for their employees.”
According to the report, Zara had 90 factories producing for the brand in March 2020.
The researchers reported that 31% of factories reported canceled or partially canceled orders, 27% had price reductions, 10% had orders that the firm refused to pay for during shipping or production, and 30% reported that payment was delayed by at least three months.
Meanwhile, Primark, which had 35 factories working on products, according to the report, canceled or partially canceled orders from 34% of factories surveyed, cut order prices to 20% and 11% of factories reported payment delays.
The study, titled The Impact of Unfair Practices by Global Apparel Retailers on Bangladeshi Suppliers During COVID-19, also said a large number of firms were buying from factories facing rising raw material costs, with nearly one in five struggling to pay Bangladeshis. minimum wage £2.30 per day.
Larger brands buying from many factories engaged in unfair purchasing practices more often than smaller brands, the supplier survey said, and every brand buying from 15 or more factories reportedly engaged in at least one of these practices.
The survey also found that garment factories will lay off a quarter of their workforce after the lockdown, suggesting up to 900,000 workers could lose their jobs, according to the report’s authors.
Garment manufacturing has become Bangladesh’s most important manufacturing sector, accounting for 20% of its GDP. Researchers said they employ approximately four million workers and more than 12 million depend on the industry.
Ms Gooch said that when “retailers mistreat suppliers by breaching pre-agreed terms, workers suffer”.
“If the retailer doesn’t pay the agreed amount or is late, the supplier has to cut costs in another way, and that often gets passed on to their workers, who have the least power in the supply chain,” she said.
“Reports of rehiring for worse pay and conditions, bullying and unpaid overtime are a predictable result. We need a fashion watchdog to regulate UK clothing retailers, just like the existing supermarket watchdog.
Supermarkets have a Groceries Code Adjudicator, a watchdog that enforces a legal code that prohibits certain unfair purchasing practices by major retailers against their food and grocery suppliers, regardless of location.
A Primark spokesman said “the rights and conditions of the workers who make our products are extremely important to us and we know how devastating Covid-19 has been for the global clothing industry”.
“The unprecedented nature of the pandemic has meant that all of our stores around the world have been forced to close. At the time, and without an online presence, we had no way of knowing how long it would take,” the spokesperson said, adding that it was for these reasons that the company made the “incredibly difficult decision in March 2020 to cancel all orders. which has not yet been handed over to us”.
All forwarded orders were paid within 30 days and there were no late payments or price renegotiations, the company said, and it has created several initiatives to “support suppliers and their workers” by 2020.
The company said adherence to its code of conduct is mandatory when working with Primark and the firm is a founding member of the Action Collaboration Transformation initiative.
Inditex, which owns Zara, said in a statement that it had “devised a strategy to support these workers in the early stages of the pandemic” and “guaranteed payment for all orders already placed and in production and worked with financial institutions to facilitate loans to suppliers on favorable terms”.