INTERNATIONAL BUSINESS PAGES
Abandoned?
The Impact of Covid-19 on Workers & Businesses
at the Bottom of Global Garment Supply Chains
Mark Anner, Ph.D.,
Director, Center for Global Workers’ Rights in Association with the Worker Rights Consortium
A Research Brief by the Center for Global Worers´Rights (CGWR) draws from responses from an online
survey of Bangladesh employers, administered between March 21 and March 25, 2020, to document these
trends. It reveals the devastating impact order cancellations have had on businesses and on workers.
Crucially, it illustrates the extreme fragility of a system based on decades of buyers squeezing down on
prices paid to suppliers: factory closures, unpaid workers with no savings to survive the hard times ahead,
and a government with such a low tax revenue that it has very limited ability to provide meaningful support
to workers and the industry.
Executive Summary
The global Covid-19 pandemic has had
a devastating impact on global garment
supply chains, and the situation will get
far worse before it gets better. As cloth-
ing outlets have been shut by
lockdowns in developed market econo-
mies, sinking demand for apparel,
brands and retailers have moved
quickly to cancel or postpone produc-
tion orders – refusing, in many cases,
to pay for clothing their supplier facto-
ries have already produced. The result
has been the partial or complete shut-
down of thousands of factories in pro-
ducing countries. As a result, millions
of factory workers have been sent
home, often without legally-mandated
pay or severance.
This Research Brief draws from re-
sponses from an online survey of
Bangladesh employers, administered
between March 21 and March 25, 2020,
to document these trends. It reveals
the devastating impact order cancella-
tions have had on businesses and on
workers. Crucially, it illustrates the ex-
treme fragility of a system based on
decades of buyers squeezing down on
prices paid to suppliers: factory clo-
sures, unpaid workers with no savings
to survive the hard times ahead, and a
government with such a low tax rev-
enue that it has very limited ability toprovide meaningful support to workers
and the industry.
1. Since the coronavirus pandemic
took hold, more than half of
Bangladesh suppliers have had the
bulk of their in-process, or already
completed, production canceled
(45.8% of suppliers report that ‘a
lot’ to ‘most’ of their nearly com-
pleted or entirely completed orders
have been canceled by their buy-
ers; 5.9% had all of these orders
canceled). This is despite the fact
that buyers have a contractual ob-
ligation to pay for these orders. But
many are making dubious use of
general force majeure clauses to
justify their violations of the terms
of the contract.suspended from work) as a result
of order cancellations and the fail-
ure of buyers to pay for these can-
cellations. Suppliers in the survey
reported that 98.1% of buyers re-
fused to contribute to the cost of
paying the partial wages to fur-
loughed workers that the law re-
quires. 72.4% of furloughed work-
ers were sent home without pay.
97.3% of buyers refused to contrib-
ute to severance pay expenses of
dismissed workers, also a legal en-
titlement in Bangladesh. 80.4% of
dismissed workers were sent home
without their severance pay. This is
despite the fact that many brands
have “responsible exit” policies, in
which they commit to support fac-
tories in mitigating potential ad-
verse impacts to workers should
they decide to exit.2. When orders were canceled, 72.1%
of buyers refused to pay for raw
materials (fabric, etc.) already pur-
chased by the supplier, and 91.3%
of buyers refused to pay for the cut-
make-trim cost (production cost) of
the supplier. As a result of order
cancellations and lack of payment,
58% of factories surveyed report
having to shutdown most or all of
their operations.4. The survey findings presented in
this report depict the most compre-
hensive evidence to date on the
depth of the crisis in Bangladesh.
The essential dynamics presented
here are evident in garment export-
ing countries worldwide.
3. More than one million garment work-
ers in Bangladesh already have
been fired or furloughed (temporarilyAll parties are feeling the extreme bur-
den caused by Covid-19. However, not
all parties are equally situated to find
NCM-APRIL 2020
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