Actions to pay back wages to garment workers during the Covid-19 pandemic

A report from labor rights advocacy organisation Clean Clothes Campaign (CCC) estimates that “garment workers around the world are owed in between 3.19 and 5.78 billion USD in wages for just the first three months of the pandemic,” owing to factory closures, layoffs, order cancellations, and other work lost as a result of the COVID-19 pandemic. The report, Un(der) Paid in the Pandemic: An Estimate of What the Garment Industry Owes Its Workers, calculates the wages lost by 13 million garment workers over March, April and May 2020 in 7 countries: Bangladesh, Cambodia, India, Indonesia, Myanmar, Pakistan and Sri Lanka. The report outlines the situation in each country and details actions for employers to ensure that workers receive lost wages and access to employment opportunities despite the pandemic.

The figures in the report were calculated using a variety of data sources and extrapolations, including reported and estimated numbers of layoffs in each country’s apparel sector; reported and estimated factory closures and reductions in factory output; and funding by governments or other sources that supplemented workers’ incomes. Based on the figures calculated for the seven countries studied, the researchers then estimated the potential impact on the global garment sector for the same three months, using two different scenarios of the number of workers impacted and regions where they work to arrive at an estimated global wage gap of between 3.19 and 5.78 billion USD.

Source: Clean Clothes Campaign, Un(der) Paid in the Pandemic: An Estimate of What the Garment Industry Owes Its Workers (August 2020)

Top findings of the report are listed below:

• Informal workers make up a large proportion of the apparel sector workforce in some countries, so total lost wages may be even higher than reported by CCC. For example, in Cambodia informal and home-based workers make up 10% of the garment workforce. In India, “[c]onservative estimates indicate that 2.1 million workers are employed in [cut, make and trim] export-oriented garment factories in India. Notably, this number does not include homeworkers, workers engaged in other sections of the export-oriented supply chain, or India’s large domestic garment industry. Estimates suggest that this number could be few as 12 million or as high as 45 million.” As another example, “[a]n estimated 85% of garment workers in Pakistan lack formal employment contracts and their employers have failed to register them with social security institutions, making it harder for them to successfully demand income owed to them.”
• In countries where the garment sector is a major source of employment and income, the wage gap has the potential for wide-reaching economic impacts. For instance, “[o]ne in every five households in Cambodia is dependent on a job in the industry.” Over March, April and May, “the wage gap in Cambodia has risen to 123.59 million USD.”
• Government stimulus payments and loans to garment factories helped bridge the wage gap somewhat, but were generally insufficient to ensure that workers remained employed or to cover their full loss of income. For example, in Bangladesh, the government introduced stimulus measures to “provide working capital for small and medium enterprises. However these loans did not come with conditions of ensuring workers’ wages were paid.” As another example, the Indonesian government introduced the Kartu Pra Kerja scheme (pre-employment card) to help laid off workers and informal workers. This scheme provides a total of 3.5 million IDR (228.44 USD) per person over a four month period. However, the pre-employment card scheme has been marred by inefficiency and corruption. As a result, by June 2020, although 434,000 people had already completed the training, only 361,000 had received 600,000 IDR (39.16 USD) each, or just 7% of the median minimum wage of a garment worker, up to that time.” In Sri Lanka the government imposed a curfew for all non-essential workers and committed to paying a monthly relief allowance to those workers impacted by the curfew. However, many garment workers in Sri Lanka are migrant women who travel from rural areas of the country to factories and “were prevented by their employers from returning to their home communities before the curfew went into effect,” so they did not receive this allowance.
• A lack of government oversight led to some legal labour protections being undermined in practice. For instance, in Indonesia, “[d]irectives from local governments on factory closure and reduction of working hours have been described as ‘fragmented and unclear’, and, although employers are required to negotiate with trade unions and worker representatives the terms of furloughs and layoffs, in reality according to prominent labour rights observers, the majority of factories proceeded to furlough or terminate workers without agreement with the unions.”
• Inconsistent information and a lack of communication about factory closures by governments and employers compounded the challenge for workers. For instance, in Bangladesh, the government imposed a national ten-day shutdown but a “lack of clarity existed about whether garment factories were to close as well, a situation which was repeated around the moment of potential reopening of factories and caused a lot of insecurity and hardship for workers travelling back and forth to their villages in absence of public transport.”

The report sets out two concrete actions brands are asked to take to ensure that workers’ labour rights are respected and that fair wages are paid throughout the COVID-19 pandemic:

1. Sign onto the Covid-19 Action Plan for the Garment Industry (“Call to Action”) coordinated by the ILO “to engage with financial institutions, governments, and other donors to support garment manufacturers during the economic disruption of the pandemic and to protect garment workers’ income, health, and employment.” While the Call to Action is a “positive first step,” CCC emphasizes that “it is not a comprehensive solution to providing workers with the wages they lost due to the crisis” and that companies need to take specific, enforceable measures to ensure wages are paid.
2. Implement measure to ensure wages are paid to workers. Per the CCC, “[i]n an effort to build upon the outcomes foreseen in the Call to Action, labour rights organisations and unions have launched a campaign calling on apparel companies to publicly assure that all apparel, textile, and footwear workers in their supply chain who were employed at the onset of the Covid-19 crisis will receive their legally mandated or regular wages and benefits, including back pay or severance pay if applicable.” This wage assurance commitment can take different forms depending on the brands, their supply chains, and their leverage in each factory or country where they source. The guidance gives examples of what this might look like, such as:
3. Honouring existing contracts, including schedules and pay rates
4. Reviewing which suppliers still owe wages to their workers and following up to ensure wages are paid in a timely manner
5. Supporting emergency relief funds for apparel sector and conducting due diligence to ensure recipients of funds are paying all owed wages to workers
6. Providing direct relief to suppliers to support rehiring of laid-off workers and payment of full wages
7. Establishing funds for payment of future wages and other owed remuneration such as severance

The following is the wage assurance CCC is urging brands to commit to:

“Garment workers desperately need assurance: they are the weakest and most vulnerablegroup in the supply chain, and yet they are the ones presently footing the bill. While the industry as a whole is facing economic challenges, workers are facing personal poverty and destitution long before the brands or employers feel significant hardship. … The current crisis shines a light on a deeply flawed supply chain model that is rooted in the concentration of corporate power at the expense of workers. The severity of this crisis could have been averted if living wages had been paid, and social protection mechanisms had been implemented. The only way to reverse the catastrophic loss to workers’ livelihoods and prevent a crisis like this from ever happening again is for brands to take immediate and lasting action.”                      

        Clean Clothes Campaign, Un(der) Paid in the Pandemic: An Estimate of What the Garment Industry Owes Its Workers (August 2020)