Major fashion brands sourcing clothes from Bangladesh for the UK market are reportedly paying less than production costs, according to a major new survey of 1,000 Bangladeshi manufacturers published today.
Most Bangladeshi factories, which sell to the world’s 24 biggest retailers, report paying the same prices nearly two years into the pandemic, despite rising raw material costs.
A large number of the fashion brands mentioned in the study “The Impact of Unfair Practices by Global Apparel Retailers on Bangladeshi Suppliers During COVID-19” bought from factories facing rising raw material costs, with nearly one in five struggling. pay the Bangladeshi minimum wage of £2.30 per day.
A total of 90% of larger brands buying from four or more factories were reported as unfair buying practices in a survey by the University of Aberdeen and trade justice charity Transform Trade.
More than 50% of suppliers reported experiencing unfair procurement practices, including cancellations, non-payment, late payments and rebate claims, with knock-on effects including forced overtime and harassment. Larger brands purchasing from multiple factories were more likely than smaller brands to engage in unfair purchasing practices, according to suppliers. Every brand buying from 15 or more factories was reported to engage in at least one of these practices.
Bangladesh is the world’s second largest garment exporter, supplying millions of garments to the UK market.
“Two years since the start of the pandemic, Bangladeshi garment workers have not been paid a living wage, with one in five manufacturers struggling to pay the minimum wage, while many fashion brands that use Bangladeshi labor have increased their profits,” said project leader Muhammad. Azizul Islam, Professor of Sustainable Development and Transparency Accounting at the University of Aberdeen Business School.
“Rapidly rising inflation rates around the world have probably made it worse.”
The survey also found that after the lockdown, garment factories employed only 75% of the workers they had before, suggesting that up to 900,000 workers may have lost their jobs.
“This research is a wake-up call,” said Fiona Gooch, Senior Policy Adviser at Transform Trade. “When retailers mistreat suppliers by breaking pre-agreed terms, employees suffer. If the retailer does not pay the agreed amount or delays payments, the supplier must cut costs in other ways, which is often passed on to its workers, who have the least power in the supply chain. 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.
“ALDI and LIDL’s grocery purchasing practices are regulated in both the UK and European markets, but their clothing purchases are not, so unethical behavior continues. 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. Only when suppliers are able to plan ahead and with confidence that they will earn as expected, can they ensure good working conditions for their employees.’
Nearly two-thirds of the factories reported receiving some financial support from the Bangladeshi government or Bangladeshi banks to stay afloat.
Of the brands featured in the report, 12 are members of the Ethical Trading Initiative, which aims to promote workers’ rights around the world.
“Multi-million dollar fashion brands are extracting their wealth from some of the world’s poorest countries in a form of 21st century neo-colonialism,” said Professor Pamela Abbott, director of the Center for Global Development at the University of Aberdeen and co-investigator of the project. “Due to the unequal power dynamics between suppliers and buyers, none of the suppliers who cited illegal breach of contract in the survey filed legal action to recoup their losses.”
The garment industry accounts for 85% of Bangladesh’s export earnings, with more than 12 million Bangladeshis dependent on the sector.
The research was funded by the University of Aberdeen through an award from the Scottish Funding Council under the Global Challenges Research Fund (GCRF).