INTERNATIONAL BUSINESS PAGES
Behr, this appears to be an unjustified
use of the force majeure clause since
most force majeure clauses do not
specify pandemics as a reason for fail-
ure to pay. More importantly, accord-
ing to Article 7.1.1 of the Vienna Con-
vention for International Commercial
Contracts, force majeure claims should
apply to the party with the most rel-
evant contractual obligation, which in
this case would be the Bangladeshi
factories producing items, not the buy-
ers that have agreed to pay for them.
Press reports show that, as of March
22, 2020, buyers had canceled $1.44
billion worth of Bangladesh garment
exports. The survey results show that
in the majority of cases (72.1% of
cases), when in-process orders have
been canceled, buyers have refused
to pay for the cost of raw material (fab-
ric, etc.) that was already purchased
by the suppliers. Buyers also refused
to pay the suppliers’ cut and make pro-
duction costs in 91.3% of the cases.
[See Figures 3a and 3b.] The impact
of these abrupt cancellations of in-pro-
cess orders has been severe; 53.4%
of suppliers report shutting down most
of their operations and 4.5% of suppli-
ers report having already closed their
facilities. [See Figure 4.]
Impact of the Three Crises on Work-
ers
The impact of these developments on
workers has been devastating. At least
1.2 million workers had already been
affected by the order cancellations. The
question now is what sort of support,
if any, workers can be expected to re-
ceive. For suppliers who abruptly lost
buyer in-process contracts with no
compensation, 72.4% said they were
unable to provide their workers with
some income when furloughed (sent
home temporarily), and 80.4% said they
were unable to provide severance pay
when order cancellations resulted in
worker dismissals. [See Figure 5.]
When asked if buyers agreed to as-
sist suppliers with the cost of furlough-
ing workers as a result of buyer in-pro-
cess order cancellations, 98.1% of sup-
pliers indicated no such support wasFigure 6a:Figure 6b:
Buyers Helping with Worker
Furlough CostsBuyers Helping with Worker
Severance Costs
Yes2%Yes3%
No98%No97%
provided. When asked if buyers agreed
to assist suppliers with severance pay
costs when workers were dismissed
as a result of buyer in-process order
cancellations, 97.3% of suppliers re-
sponded that buyers provided no such
support. [See Figures 6a and 6b.]
As noted by Kalpona Akter, executive
director of the Bangladesh Center for
Workers Solidarity, “Garment workers
live hand to mouth. If workers lose their
jobs, they will lose their monthly wages
that put food on the table for them and
their families.” She adds, “If workers
are laid off, brands should ensure im-
mediate payments to factories so that
workers receive their full legally-owed
severance.” As Covid-19 starts to gain
a foothold in Bangladesh, workers and
their families also will be burdened with
considerable health care expenses,
making the payment of wages and
severance all the more urgent.
Covid-19 in Bangladesh and the
Government Lockdown
On March 25, 2020, the situation
reached an entirely new level when the
government announced a countrywide
lockdown. The lockdown includes a ban
on passenger travel via waterways,
rail, and domestic flights. Public trans-
portation on roads also has been sus-
pended. However, it appears that, given
the importance of garment exports to
the economy, at this writing, garment
export production is permitted. The
challenge for those factories still re-
ceiving orders will be providing trans-
portation to workers while fully ensur-
ing that they are kept safe with appro-
priate social distancing and other mea-
sures.
Conclusions
The global apparel industry is undoubt-
edly in its greatest crisis in over a gen-
eration. Store closures in Europe, the
NCM-APRIL 2020
79United States, and beyond has shut
much of the industry down. While
online shopping is an option, given ris-
ing 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 dam-
age 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 sav-
ings and little hope sustained govern-
ment support will leave workers in dire
situations. And chronic low tax rev-
enues 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 gov-
ernment support to cover their obliga-
tions to supplier factories so that they
can cover their expenses and pay their
workers in order to avoid sending mil-
lions 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 or-
ders, timely payments, and pricing
mechanisms that cover the total cost
of sustainable production, from living
wages and proper benefits to tax rev-
enues that allow governments to build
proper social safety nets. And it in-
cludes allowing worker participation to
be an integral part of this process
through full respect for the right to form
unions and bargain collectively.