LABOUR BEHIND THE LABEL – WRITTEN EVIDENCE (EMP0005)

Employment and COVID-19 inquiry
 

About Labour Behind the Label: Labour Behind the Label (LBL) is an NGO that supports garment workers' efforts worldwide in improving working conditions and ensuring human rights are respected. Through partnership working, campaigns and lobbying, we promote solutions to human rights violations and raise awareness of ways to improve conditions for the people who make our clothes. This includes case work in factories, discussions with brands and decision makers, and collaborative research calling for change. LBL is a UK member of the Clean Clothes Campaign – a global network of unions, workers’ rights groups, and human rights defenders dedicated to improving working conditions and empowering workers in the global garment and sportswear industries.

Field of response: Our submission will relate chiefly to the garment industry, with a focus on both the impact on global supply chains led by UK companies, but also on domestic production in Leicester and elsewhere. From the questions posed by the inquiry we would like to comment on 2:

- What positive and negative trends in employment have been accelerated as a result of COVID-19?

- What steps should be taken to create a sustainable recovery over the medium and longer term?

What positive and negative trends in employment have been accelerated as a result of COVID-19?

Global impact on employment in fashion

1. The global pandemic has laid bare once again the power imbalance that exists in global fashion supply chains, where economic actions taken by UK brands at the head of value chains dictate the ability of suppliers at lower stages to pay their workers’ wages, ensure safe and healthy working conditions, and provide workers with legally mandated benefits upon termination in countries worldwide. An estimated $3.7bn US of orders were cancelled in Bangladesh alone in spring this year. Order cancellations and failure to honour existing contracts led to factory closures, illegal docking of pay, and increased poverty for families affected by order stoppages. The impact of this action was compounded by the lack of social security and protection from states that exists in the majority of Asian nations where clothing is produced.
2. Since the start of the pandemic, millions of garment workers around the world have not received their regular wages, or have not been paid at all for months on end. The Clean Clothes Campaign report Un(der)paid in the pandemic analyses non-payment of wages to garment workers during the months of March, April and May 2020 resulting from order cancellations by apparel brands. The report estimates that across South and Southeast Asia garment workers have received an average of 38% less than their regular income. In some regions in India, this number rises above 50%[i]. Looking to the global garment industry, a conservative guess of wages lost by garment workers worldwide, excluding China, for the months of March, April, and May amounts to between 3.19 and 5.79 billion USD[ii].
3. As garment workers were on average already living on poverty wages, and savings were not possible, the wage gaps caused by the crisis mean that workers are not able to feed their families properly, are not able to pay school fees for their children, or pay for medical expenses. Many millions of them are in debt as a result. Garment workers desperately need compensation to be paid for their wage losses: they are the weakest and most vulnerable group in the supply chain, and yet they are the ones presently footing the bill.
4. In April 2020 over 120 brands, manufacturers, and worker organisations endorsed the ILO Covid-19 Action Plan for the Garment Industry (“Call to Action”), engaging 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[iii]. While this is a positive first step, the Call to Action stops short of laying out a timeline or indicating clear duties on what should be paid to workers who owed wage payments and by whom. More needs to be done if action is to be initiated.

Domestic impact on employment in fashion

5. The past decade has seen numerous reports detailing abusive working conditions in Leicester garment factories, and other factories in the UK. The pandemic once again compounded the issues - news reports[iv] and our own research[v] uncovered illegal pay, furlough fraud, modern slavery, abusive working conditions, breaches of Covid-19 guidelines, health and safety risks as well as widespread wage theft and the exploitation of vulnerable workers. Wages as low as £3 an hour were recorded at sites during lockdown.
6. The pandemic drove a change in consumer shopping habits where online brands saw a boost in sales (Boohoo Group reported a 44% growth in Q1 of 2020), while UK highstreet brands recorded record losses. For Leicester factories, where 75-80% of production anecdotally is for brands within the Boohoo Group Ltd[vi], factories were placed under pressure to meet new orders and encourage workers to attend often cramped and unsafe workplaces throughout the crisis. The city of Leicester to date is still in local lockdown. The economics of this situation were a key driver in action taken in factories, where increased orders under tight turn-around times meant workers were encouraged to stay in factories working overtime during lockdown. This highlights further the power held by lead supply chain companies to impact the ability of suppliers to provide legal wages and decent working conditions for employees in their factories.
7. Some response has been provoked from government bodies by these findings including the establishment of a cross government task force to investigate ‘on the ground’ in Leicester.

What steps should be taken to create a sustainable recovery over the medium and longer term?

8. Post-COVID, we have an opportunity to build back better with an economy that respects people and our natural resources. For the fashion industry, this means a garment industry that is regulated – where brands in the global industry are held accountable for their actions and for the workers throughout their supply chain. We would like to see a garment industry where UK brands can lead to way in ensuring that workers – in the UK and abroad – are protected from abuse and provided with decent work for decent pay. We would like to see an end to the huge power imbalances in the garment industry and an end to the systemic exploitation of workers creating massive profits for big brands who can then have the power to cancel orders at a moment’s notice.

For the global industry

9. UK companies are obliged under the United Nations Guiding Principles for Business and Human Rights, and the OECD Due Diligence Guidelines, to prevent and mitigate adverse human rights impacts at their suppliers, and to provide for or cooperate in the remediation of harm that they have caused or contributed to. The significant shortfall in workers’ wages in global fashion supply chains that has been caused by actions taken by UK companies during the pandemic, should be addressed by those companies and plans to remediate the harm caused should be published. Workers, who had already been living on poverty wages before the pandemic, should be paid in full for the billions in outstanding pay owed to them. They need assurance by the actors at the top of the supply chain that this gap will be filled. Taking forward the work done by the ILO, the UK Government could take a leading role by convening brands to discuss the situation and how to take forward remedy.
10. Looking to the longer term, the UK Government should also adopt human rights due diligence legislation to put in place an obligation on companies to respect human rights and the environment in their operations and supply chains. Such legislation should require companies to conduct due diligence on their human rights and environmental risks and take appropriate steps to prevent and mitigate such risks, and publish evidence of these steps. It should also hold companies accountable in courts if they abuse human rights or fail to mitigate human rights abuses in their supplier factories. Legislation currently under consultation from DEFRA about forest risk commodities, which would place a duty on UK companies to conduct due diligence in global supply chains and prevent global deforestation, doesn’t go far enough. This should type of initiative should apply across all human rights and environmental concerns – see the French Duty of Vigilance law. 

For domestic garment workers

11. While we welcome the establishment of a cross government task force to investigate violations of workers’ rights in Leicester, it is crucial that the underlying drivers of abuse are identified so that effective long-term solutions can be developed. The economic factors for the industry need to be closely examined, and purchasing practices by clothing retailers, which have contributed to this situation, factored into outcomes. Clear evidence shows that margins for many garments produced in Leicester do not allow for legal wages to be paid and health and safety costs to be observed. We recommend that the terms of reference for the task force includes the following questions: a. What are the drivers perpetuating the illegal working conditions in the garment industry in Leicester and other cities with garment manufacturing in the UK? b. What challenges have held the government back from taking effective action when the issues have been discussed in the public domain for many years? c. What are the solutions, including legislation, and what are the coordinated roles needed by all relevant authorities – including those regarding enforcement, remediation, and oversight?

2 September 2020