The Impact of Covid-19 on Workers & Businesses at the Bottom of Global Garment Supply Chains

Conclusions

The global apparel industry is undoubtedly in its greatest crisis in over a generation. Store closures in Europe, the United States, and beyond has shut much of the industry down. While online shopping is an option, given rising unemployment, declining incomes, and remote working, shopping for new clothes is either not an option or not a priority. Thus, the crisis of brands and retailers is real and profound. However, the way the brands and retailers are managing the crisis is envisaging damage far more dire on suppliers and their millions of workers. Decades of low prices have left many suppliers with minimal capital and now mounting debts. Years of low wages with no savings and little hope sustained government support will leave workers in dire situations. And chronic low tax revenues from buyers have left exporting country governments with weak social safety nets to assist workers in this time of crisis.

The responsible approach is for brands and retailers to find ways to access lines of credits or other forms of government support to cover their obligations to supplier factories so that they can cover their expenses and pay their workers in order to avoid sending millions of workers home with no ability to put food on the table let alone cover medical expenses.

Going forward it is necessary to re-think how the industry does business. Purchasing practices must be reformed for social and environmental sustainability. This includes stable orders, timely payments, and pricing mechanisms that cover the total cost of sustainable production, from living wages and proper benefits to tax revenues that allow governments to build proper social safety nets. And it includes allowing worker participation to be an integral part of this process through full respect for the right to form unions and bargain collectively.