Global brands continue to squeeze suppliers | The Daily Star
12:00 AM, October 18, 2020 / LAST MODIFIED: 12:44 AM, October 18, 2020

Editorial

Global brands continue to squeeze suppliers

High time brands put their money where their mouth is

Seven months since the onset of Covid-19, the RMG industry in the country appears to be reeling from the initial shock of losing out billions of dollars in cancellations and postponement of orders from at least 1,931 global brands. Following a massive international #PayUp campaign, some of the biggest brands made public commitments to pay in full for orders completed and in production, which helped the industry turn around within a short period of time—although not before tens of thousands of workers were laid off and terminated at the height of the pandemic. However, a recent report by the Center for Global Workers' Rights (CGWR), published in association with the Worker Rights Consortium (WRC), warns that the worst may be far from over, as brands and retailers are continuing to exert undue pressure on suppliers as they place new orders during the continued Covid-19 pandemic.

A survey of 75 suppliers from 15 countries between July 5 and August 21, 2020 shows that in 65 percent of cases, buyers demanded price cuts on new orders and on average, buyers told suppliers they must cut prices by 12 percent, relative to last year's price for the same product. Furthermore, suppliers surveyed said they have to wait 77 days after they complete and ship customers' new orders to receive payment, as opposed to 43 days prior to the pandemic. A majority of suppliers said they have less than half the order volume now relative to the same period last year and that they dismissed at least 10 percent of their workers, and are anticipating another 35 percent if current trends continue.

The global supply chain is inherently unequal, in which big brands exercise tremendous power to negotiate terms that suit their interests at the cost of suppliers—which, in the end, are borne by workers. The pandemic has brought to the fore how little brands, who otherwise make grand statements about upholding worker rights, truly care about the vulnerability of workers down their supply chain. Thus far, some brands, such as H&M, have signed a Call to Action which commits them to work with governments and financial institutions to mobilise sufficient funding to keep manufacturers in business including payment of wages, as well as income-support and job-retention schemes to address the impact of the crisis. However, it does not obligate the signatory brands to commit to any payment themselves.

It is high time we ask them to put their money where their mouth is, and honour their commitments to their suppliers, rather than use the latter's financial stress in the pandemic as bargaining leverage to further squeeze them on price. Furthermore, if and when workers are laid off due to unfair purchasing practices, brands must commit to paying a significant share of the workers' unemployment benefits. We urge countries that are home to these brands to play their part in ensuring fair practices and prices.

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