Home ›› 10 Jan 2023 ›› Front
Major global high street fashion brands – sourcing clothes from Bangladeshi suppliers for the UK market – are paying less than the production cost, effectively lowballing the country’s apparel exporters with unfair buying practices despite rising raw material prices.
This was revealed in a survey titled “Impact of Global Clothing Retailers’ Unfair Practices on Bangladeshi Suppliers during Covid-19,” conducted by the University of Aberdeen on 1,000 Bangladeshi apparel manufacturers, and published on Saturday.
Apparel sector, the largest contributor to the national exports, contributed $45.7 billion or 83.60 per cent of the total $54.7 billion figure posted in 2022. Out of the $45.7 billion, knitwear exporters earned $24.71 billion, while woven products fetched $21 billion.
The field survey of factories was carried out in December 2021. Face-to-face interviews were carried out by trained interviewers in Bengali with factory owners or senior managers in the workplace using a structured questionnaire.
The majority of Bangladeshi factories selling to 24 of the largest global retailers report these companies paying the same prices almost two years on from the start of the pandemic, despite the cost of raw materials increasing, findings show.
Due to the lower prices paid by the retailers and brands, nearly one in five manufactures are struggling to pay the Bangladeshi minimum wage of £2.30 per day. In total 90 per cent of larger high street brands buying from four or more factories were reported as engaging in unfair purchasing practices.
More than 50 per cent of suppliers reported experiencing unfair purchasing practices, including cancellations, failure to pay, delays in payment and discount demands, with knock-on effects including forced overtime and harassment, the report added.
According to suppliers, larger brands buying from many factories were engaging in unfair buying practices more frequently compared to smaller brands. Every brand purchasing from 15 or more factories was reported to be engaging in at least one of these practices.
Project lead Muhammad Azizul Islam, professor of Sustainability Accounting and Transparency at the University of Aberdeen Business School, said, “Two years on from the start of the pandemic, Bangladeshi garment workers were not being paid enough to live on.
“One in five manufacturers are struggling to pay minimum wage, while many fashion brands use Bangladeshi labour to increase their profits. Inflation rates soaring around the world are likely to have exacerbated this even further.”
A wake up call
“This research is a wake-up call,” said Fiona Gooch, senior policy advisor at Transform Trade, adding, “When retailers treat suppliers badly by breaching previously agreed-upon terms, it’s the workers who suffer.
“If a retailer fails to pay the agreed amount, or delays payments, the supplier has to cut costs some other way, and this is frequently passed on to their workers, who have the least power in the supply chain.” She continued, “Reports of being rehired on worse pay and conditions, bullying and unpaid overtime are the predictable result. We need a fashion watchdog to regulate UK garment retailers, along the same lines as the existing supermarket watchdog.
“ALDI and LIDL’s grocery buying practices are regulated in both the UK and European markets, but their clothing purchases are not, which is why unethical behaviour persists.”
Fiona then said, “We need a fashion watchdog to stop unacceptable purchasing practices of the clothing retailers benefiting from large consumer markets, along the same lines as existing protections for food suppliers.
“Only when suppliers are able to plan ahead, with confidence that they will earn as expected, can they deliver good working conditions for their workers.”
Professor Pamela Abbott, director of the Centre for Global Development at the University of Aberdeen and co-investigator of the project, said, “Multi-million fashion brands are extracting their wealth from some of the world’s poorest countries in a form of 21st century neo-colonialism.
“Because of the unequal power dynamic between the suppliers and buyers, none of the suppliers who reported illegal contract breaches in the survey took legal action to recoup their losses.”
Steps importing countries can take
The governments of countries where the major global brands and retailers sell their clothes should act to ensure that there are no unfair purchasing practices by setting up a garment trade regulator, adjudicator or a fashion watchdog.
The survey findings showed that a fashion watchdog or regulator in importing countries could prevent unfair buying practices, when combined with due diligence, and updated and enforced labour laws in producing countries.
Recommendations for Bangladesh
The government and industry stakeholders should advocate for a cross-border mechanism to stop unfair purchasing practices, cancellation of orders, price reduction, refusing to pay for goods dispatched or in production, and delaying payment of invoices by international brands and retailers.
The report also recommended developing policies and mechanisms to address exploitation, forced labour, gender-based violence and making exporters accountable for paying even minimum wages.
It suggested an annual survey of Bangladeshi suppliers by credible academics on their experience of purchasing practices, which can then act as a factual basis for advocacy to improve purchasing practices.
As third-party compliance and audit costs are a burden for most suppliers, buyers could easily bear this cost, while stakeholders need to sit together and find a fair mechanism to meet compliance and factory audit costs.
