INTERNATIONAL BUSINESS PAGES
the liquidity needed to cover their ex-
penses. As shops, outlets, and malls
are ordered shut, retailers and brands
are taking an enormous hit to their bot-
tom line and cash reserves. However,
the hit on supplier factories, who gen-
erally operate on paper-thin margins
and have far less access to capital
than their customers, is that much
more extreme. And the burden on work-
ers – who very rarely earn enough to
accumulate any savings and who still
need to put food on the table and pos-
sibly cover unforeseen health ex-
penses – is enormous.
1. It is incumbent on the parties with
the greatest ability to procure loans
and benefit from government bail-
outs to share those benefits down
the supply chains. In this regard,
we call upon all buyers to respect
the terms of their purchasing con-
tracts and pay suppliers for orders
already in production or completed.
2. Suppliers, for their part, must en-
sure that payments received from
these buyers are used to cover all
legallymandated wages and ben-
efits, including severance pay-
ments to dismissed workers.
3. The government of Bangladesh
must continue to mobilize all the
resources at its disposal to subsi-
dize suppliers and provide wage
support to all workers during the
crisis.
4. Going forward, buyers should learn
from this crisis to revise purchas-
ing practices to ensure proper so-
cialandenvironmental
sustainability. These changes in-
clude order stability that allows for
proper planning, timely payments
of orders, and full respect for work-
ers’ rights. It also includes a cost-
ing model that covers all the costs
of social compliance: living wages,
benefits, severance pay, building
safety, etc. One way to cover some
of these expenses is an additional
charge levied on freight on board
(FOB) prices.
5. Given present realities, adequateprotection for the vast numbers of
garment workers affected by the
crisis, in Bangladesh and across
the global supply chain, will require
the mobilization of international fi-
nancial resources. The cost of
maintaining income for the world’s
garment workers represents a small
fraction of the trillions in financial
stimulus and rescue now being
brought to bear on behalf of busi-
nesses and workers in wealthy
countries.
Apart from the tremendous human
tragedy left in its wake, the coronavirus
pandemic will have profound economic
repercussions for workers everywhere.
The effects of the global economy’s
collapse will worsen before they ame-
liorate and will continue to be felt for
years to come. The International Labour
Organization predicts that 25 million
jobs will be lost worldwide as a result
of Covid-19.2 Workers in global sup-
ply chains are particularly vulnerable
to termination and economic destitu-
tion.
As governments in wealthier countries
order lockdowns to control the pan-
demic, demand for apparel is plummet-
ing, leading many brands and retailers
to halt production. As a result, facto-
ries around the world are shuttering,
rendering millions of garment workers
in Bangladesh and beyond jobless.
These are workers who, prior to their
termination, were making extremely in-
adequate wages and for whom saving
up for a safety net was never an op-
tion.
While anecdotal accounts in the me-
dia have already begun to paint a dis-
heartening picture of the effects of
Covid-19 on the global garment
workforce, this research brief provides
strong empirical evidence exposing the
breadth and depth of the problem in
Bangladesh’ s garment sector.
The next section discusses the meth-
ods employed in this study. This is fol-
lowed by a section outlining the three
phases of the Covid-19 crisis for the
garment sector in Bangladesh, after
which the profound impact of the cri-
NCM-APRIL 2020
77sis upon garment workers is examined.
The government’ s response to Covid-
19 in Bangladesh follows, before con-
cluding with a set of recommendations.
Methods and Data
This report draws on a survey of
Bangladesh suppliers conducted online
between March 21 and March 25, 2020.
There are approximately 2,000 suppli-
ers in Bangladesh and 4,000 factories
(many suppliers own multiple factories).
Of these, 316 suppliers completed the
survey. This puts the sample size
within the approximate confines of a
95% confidence level and a 5% confi-
dence interval.
Of the respondents, 15 are owners of
small factories (250 or fewer workers),
104 are owners with mediumsized fac-
tories (between 251 and 750 workers),
and 197 have 751 or more workers.
Most of the buyers of these suppliers
(67.7%) are European; 15.8% are
American, 4.8% are Asian, and the
remainder are “other” or a mix of Ameri-
can, European, and Asian firms.
Three Phases of the Crisis
The current crisis facing the garment
sector in Bangladesh developed in
three phases. First, there was the cri-
sis of ‘raw materials’ procurement. Sec-
ond, there was the crisis of buyer late
payments. Third, there has been the
crisis of buyer cancellations of in-pro-
cess orders. The culmination of these
three phases has been devastating on
businesses and over 1 million work-
ers. The survey covers these three
phases.
Crisis Phase One: Raw Materials
On December 31, 2019, the govern-
ment of China alerted the World Health
Organization (WHO) to a health emer-
gency in Wuhan City in the Hubei prov-
ince. Just over three weeks later, the
government placed Wuhan’s 11 million
inhabitants on lockdown. Other cities
in the province followed suit soon af-
terwards. For garment global supply
chains, this impacted not only Chinese
exports of final products, but it dramati-
cally impacted Chinese raw materials