Executive Summary of the 2021 CCC REPORT: STILL UN(DER) PAID -- How the garment industry failed to pay its workers during the pandemic

Full Report (English) can be found here:

https://cleanclothes.org/file-repository/ccc-still-underpaid-report-2021-web-def.pdf/view

Drawing on research focused on seven countries, this report presents Clean Clothes Campaign’s latest projection of the economic toll of the Covid-19 pandemic on garment workers. Based on the estimated wage gaps in seven production countries, Clean Clothes Campaign estimates that garment workers lost 11.85 billion from March 2020 through March 2021. The pandemic has exacerbated several factors that were already of concern before the pandemic.

CCC’s Un(der)paid in the Pandemic report of August 2020[1] estimated that garment workers globally had lost between US$3.2 and US$5.8 billion between March and May 2020. Through the rest of 2020, the pandemic continued to spread globally, reaching new levels of severity in many garment producing countries and bringing business decisions and government measures that adversely affected workers in its wake. Brands’ responses to the pandemic, in the form of massive order cancellations and unilaterally imposed discounts, continued to cause a catastrophic squeeze on manufacturers. This in turn had horrific impacts on workers. By autumn 2020, research showed that brands had taken advantage of their suppliers’ desperation for orders to push prices paid to factories down by 12% compared to the previous year and almost doubled payment terms to 77 days after shipment on average.[2] Suppliers were forced to accept prices below the cost of production for some orders.

This report follows up on the August 2020 Un(der)paid in the Pandemic report and describes how garment workers’ incomes in seven major Asian garment producing countries have been affected during the full first year of the pandemic, from March 2020 through March 2021. It estimates from the available data for these countries the wage gap that garment workers have suffered during the pandemic. Based on these wage gap estimates, the report projects a global estimated wage gap of $11.85 billion for the first 13 months of the pandemic. To remedy this massive shortfall in workers’ income, apparel brands and retailers must guarantee wages and severance for everyone working in their garment supply chains by negotiating an enforceable agreement with unions as proposed by the PayYourWorkers –RespectLabourRights[3] campaign.

The data presented in the table below give an estimate for only the first year of the pandemic. Since March 2021, the third wave of the pandemic has hit several countries in this report, such as India, Cambodia, and Sri Lanka, with more force than any of the waves of the first year. In response, governments imposed new regional or nationwide lockdowns during the writing of this report because of high infection rates. It is very likely that these lockdowns will have seriously affected garment workers’ income during those periods. This is only partially captured in this report, due to its scope and because at the beginning of the third wave reliable data on factory closures, dismissals, and payments was often unavailable.[4] It does demonstrate the importance of a structural solution and framework for addressing income and severance gaps caused by the pandemic as well as going forward.

The estimated wage gap is based on an assessment of the likely extent of underpayment of wages and additional income based on all available information. From evaluating statements from employers, industry and worker surveys, media reports on the impact of the pandemic on the garment industry, and reports of worker protests to demand unpaid wages, we make a series of assumptions in each country about the unpaid wages during furlough, withheld severance, and other instances of underpayment of wages in the wake of the pandemic. The assumptions are explained throughout the report and may be open to revision in future reports if more thorough data becomes available.

* Ibid

** In Pakistan, very few workers have contracts or registration and there is currently no reliable information on worker numbers, so the extent of job loss was not recorded or reported. In 2020, the Pakistani industry did not suffer as much from lost orders as other countries. In fact, the industry gained orders intended for other producing countries because Pakistan had a much lower COVID-19 infection rate and no lockdown. Lower production was mostly dealt with by having workers work fewer hours.

*** Similar to the 2020 Un(der)paid in the pandemic report, the data from the 7 researched countries were used to estimate a global figure. We used the same figures (50 million workers in the global garment, textile and footwear industries earning on average 200 USD per month). Assuming that the average wage gap in the 7 researched countries cannot be applied globally, as there are strong indications of the availability of more government support in other countries, we apply only half the average percentage of 18.23% (=9.12%) to come to the estimated wage gap.

These disturbing developments are not new to the industry. The pandemic has exacerbated several factors that were already of concern before the pandemic. Clean Clothes Campaign network organisations in all researched countries report that factories have used the pandemic as a cover to dismiss trade union members, thus undermining workers’ ability to negotiate higher wages or protest against wage cuts. Several studies have found that workers have faced an increasingly hostile environment to organise collectively to demand their wages or necessary safety or hygienic measures. In at least three countries in this report (Pakistan, Bangladesh, and Myanmar), violence has been used against workers who protested over unpaid wages.[5] Union activities have also been hampered by lockdown rules in many countries. In Bangladesh union registrations have fallen because union meetings required to register a union could not be held due to lockdown rules.

Secondly, prior to the pandemic, workers relied on overtime to raise their wages closer to a level that meets their basic needs. Workers during the pandemic are struggling to make ends meet without overtime earnings, which emphasises the inadequacy of prevailing wages in the industry. Thirdly, many garment workers are engaged informally without employment contracts or access to social protection, mainly in India and Pakistan. These workers are particularly vulnerable to lay-offs and sudden wage cuts. Even where workers are formally employed and registered for social security, social security benefits are often inadequate. Access is limited for migrant workers on a regular basis. Even workers on official but temporary contracts mostly are not entitled to vital protection mechanisms such as severance pay in case of dismissal. Finally, CCC network organisations reported that many factories do not take sufficient hygiene and safety precautions to ensure workers can work without risking their health. A combination of these factors has forced workers to make impossible choices: continue working with a high risk of contracting the virus or stay home and risk going hungry and accumulating even more debts. In some cases dismissed workers were left so destitute that they were forced into dangerous or even illegal means of earning an income.

WHAT NEEDS TO HAPPEN

Global brands, retailers and e-tailers remain responsible, under international standards and their own codes of conduct, for ensuring that workers employed in their supply chains are paid at least their legally mandated or regular wages – whichever is higher. Their argument of any brands that claim they are living up to this promise through their participation in the ILO Call to Action is a sham. They must take direct responsibility for the workers in their supply chains.

As both the ILO Call to Action and brands’ course of action have failed to protect workers from facing even more hardships than they normally already do, a coalition of over 230 unions and civil society organisations, united in the PayYourWorkers – RespectLabourRights Campaign[6], are calling on brands to negotiate an enforceable agreement on wages, severance, and basic labour rights. This binding agreement, to be negotiated and signed by trade unions with brands, individual employers, or employer associations, will require signatory brands to ensure workers in their supply chains receive their regular wages during the period of the Covid-19 pandemic, in addition to ensuring payment of severance compensation for workers at factories that close or undertake a mass dismissal and respect basic labour rights. For the purpose of assuring workers’ wages, brands will initially contribute a lump sum amount sufficient to cover the wage gap workers in their supply chains experience during the pandemic. On an annual basis, signatory companies will contribute a fee into a severance guarantee fund to ensure that the workers who produce their products are never again left without the severance pay they are owed when they are terminated in a mass dismissal or factory closure.

The binding agreement on wage assurance, severance guarantee fund, and basic labour rights should be part of a larger effort to establish a more sustainable and resilient industry in the near future, consisting of supply-chains with better planning and pricing models, which include costing models that cover fair payment schedules, and financial space for living wages, safe factories, and social benefits.