COVID-19 and the Garment Industry’s Invisible Hands

Yves here. The fashion industry is normally Jerri-Lynn’s beat, but this post gives a sense of how in even a highly fragmented but nevertheless very much international supply chain, like garment manufacture shocks at one key node, in this case demand from the US, propagates through the system. Here, the focus is on the distress in the low wage countries that have become ever more important, like Bangladesh and Pakistan. If you read the story closely, you’ll see that one of the buyers is H&M, one of the lead instigators of the “fast fashion” fad, which has led to even more clothing piling up in landfills since it was designed to be thrown out rather than last. And as the article makes clear, these buyers of low (and probably some mid-range) clothing pretend that they have no role in the abusive labor practices that makes their cheap frocks possible.

The worst is that this exploitation isn’t always driven by cheaper wages. In my old gym in NYC, one of the evening regulars was an energetic, gregarious early 50s man named Danny. He buttonholed me a couple of times about his fight as a Garment District manufacturer to keep his operations in Manhattan. I didn’t nail down who his buyers were; I think he made mid-range clothes. He was proud of the fact that he paid high wages, particularly to skilled workers like his cutters, who earned enough to send their kids to college.

But what had forced him to sent more and more of his work abroad (not to Asia but to Guatemala) wasn’t wages but rents. Even though the Garment District was zoned for light manufacture, the city effectively waved the zoning without going through any proper steps because gentrification. By contrast, developers in other parts of the city have to go through all sorts of hoops just to put up a building, particularly community meetings, and many more if they want any waivers. Danny, other manufacturers, and their lawyers met repeatedly with city officials, brandishing legal and economic arguments, to no avail. In the 1930s, the city’s fathers set out a long-term plan to turn Manhattan into a community of affluent professionals. The best account is Robert Fitch’s classic, The Assassination of New York. From its blurb:

In this indictment of those who have wrecked New York, Robert Fitch points to the financial and real-estate elites. Their goals, he argues, have been simple and monolithic: to increase the value of the land they own by extruding low-rent workers and factories, replacing them with high-rent professionals and office buildings. The planning establishment has been able of raise the value of real estate inside the city boundaries over twenty-fold. In doing so, Fitch suggests, it effectively closed New York’s deep-water port, eliminated its freight rail system, shuttered its factories and destroyed its capacity for incubating new business.

Now to the damage on the other side of the world. Notice how the buyers think nothing of trying to force huge price cuts onto suppliers of good they’d already agreed to take. There’s a reason that “garmentos,” as they are called, have such a bad name. This sort of retrading of deals is pervasive. For instance, “markdown money” translates roughly as, “If I have to mark down the inventory I bought from you in order to move it, you will take a haircut too.” Hard to find many other businesses where “A sale is not a sale” is normal practice.

By Katherine Hearst, a writer, film maker and organiser who has directed 3 animated shorts featured on the BBC and Sky Arts and has worked as climate strike organiser in collaboration with BP or not BP activists and members of BECTU and PCS. Originally published at openDemocracy

In her recent essay, ‘The Pandemic is a Portal’, writer Arundhati Roy likened COVID-19 to a “chemical experiment” that “illuminated hidden things.”

In the textile industry, it has unveiled the hidden hands that stitch, pick, and package clothes in the bottom rungs of global supply chains.

In Pakistan, the pandemic has driven workers from their machines and to the factory gates, manifesting their outrage at unpaid wages. Their employers – many of whom are suppliers to international brands – responded with mass layoffs and gun fire.

Further up the supply chain, shop workers in Debenhams Ireland have picketed stores and demanded their redundancy payments.

The global supply chain of the textile industry is labyrinthine, and its lower rungs are cloaked by a web of agencies, contractors and subcontractors. The linkages between each end of the chain are obscure. The only thing that connects those on the shop floor with those behind the machines is typically a clothes tag that bears the name of the brand. This precarious model has only lasted this long because it has not been transparent and because different ends of the chain do not come into contact.

Now the chemical reaction of the pandemic has illuminated this supply chain, and shone an unforgiving light on the structures that link the shop assistant in Ireland who has lost their job with the seamstress in Pakistan who has been robbed of her pay packet. For the first time, it has allowed them to see one another.

On the Factory Floor in Pakistan

The garment industry is the second largest employer in Pakistan. It accounts for 8.5% of GDP and almost 70% of the country’s exports. Declining demand in Europe and North America as a result of COVID-19 prompted big brands to cancel orders, which in turn have led to mass layoffs and non-payment of wages.

In response, wild cat strikes have erupted at factory gates across the country. According to Nasir Mansoor, the General Secretary of The National Trade Union Federation of Pakistan, this kind of grassroots organising was unprecedented in over three decades: “It’s a paradigmatic shift. Previously, we would have mobilised them, now they are doing it themselves…the protests begin as small rallies on the factory floor, then they move onto the streets, then up onto the roofs of the buildings. And they are getting more militant.”

Lahore based company ChenOne is a subsidiary of the Chenab group, one of the biggest exporters of textiles in Pakistan. Haseeb, a former assistant manager at ChenOne, recalls the conditions in the factory before lockdown: “It was common for us to wait two months for wages. Minimum wage is 17,500 rupees a month, I received only 10,000 in a month…. When COVID hit, lots of people were sacked, those who stayed weren’t paid for 4 months.”

One worker on a picket outside the ChenOne factory described the situation on a patchy phone interview: “We haven’t been paid for 4-5 months, we haven’t been able to pay our rent or utility bills…the money that is owed to us is from before lockdown.” Following a series of protests in which workers were fired upon by factory guards, management paid the salaries. All the workers were then sacked.

Similar scenes played out at the gates of Karachi based company Denim Clothing – the largest Pakistani supplier of textiles to brands like H&M and C&A. The company fired 15,000 of its workers to avoid paying their Eid Bonuses, flouting the Sindh Covid-19 Emergency Ordinance 2020 which banned redundancies during lockdown. The remaining 28,000 workers continued to demand their bonuses, which they relied on to visit their families during the holiday. Management eventually capitulated, but then cancelled the factory shuttles that transported the workers to the factory the following day. The workers arranged their own transport, but were met with armed factory guards.

H&M were approached for comment, and responded that only 8,500 workers were employed by their supplier and that no workers were laid off during the lockdown period. However, they acknowledged that “450 workers left the factory without any notice nor applying for leave, and after waiting for them to return within the legally mandated time period, the supplier needed to replace them. These 450 workers have been paid full wages and bonuses in accordance with agreements.”

According to one source, out of the 70,000 Denim Clothing workers “90% were not registered with social security and pension scheme… 60% were [employed on] a third party contractor system [via an agency].” Denim Clothing themselves reported to the Clean Clothes Campaign that they employed 10,000 workers across four units, all registered with the Sindh Social security Institute (SESSI). However, according to the SESSI’s records the company registered ten units and only 4,612 workers. This paperless, labyrinthine network of suppliers and contractors means the buck stops with no one.

On Monday 15 June, graphic photos and shaky iPhone footageemerged from a picket outside the gates of Kassim Garments – a supplier to German brand Tom Tailor Jeans. Workers protesting the dismissals of 35 employees had been fired at by the factory guards. Four were injured, and fifteen were arrested.

In one video, a worker wielding his smartphone was faced with a loaded gun, and said almost wearily, “Go on, go ahead and shoot.” Tom Tailor Group were approached for comment but did not respond.

Flexible Working

Before COVID-19, the garment and textile industry supply chain was already fragile. It has always relied on a precarious army of workers in producer countries with weak or non-existent social security systems.

This is by design – it demands flexibility from workers in production companies with regards to unpaid overtime and delayed or unpaid wages, all of which creates wiggle room for the buyers further up the chain.

The acrobatic feat of working 10-12 hour days for sub-minimum wage is met by rigid inflexibility at the other end of the chain. This production model removes the brands’ obligations to the supplier factories. According to the Clean Clothes Campaign, many suppliers are forced to pay the costs for production upfront, and brands often don’t pay for orders until 60-90 days after delivery. The black and brown workers at the other end are required to be ‘flexible’ and expect a minimum delay of 2 months in the receipt of wages as a result.

The same flexibility is applied to health and safety guidelines, which has cost workers their lives. The deaths of 259 workers in the fire at Ali Enterprises textile factory in Karachi due to fire exits being sealed and a lack of fire alarms and safety equipment is an illustration of the fatal implications of a buying model that is structured on the expendability of its lowest paid workers.

80% of garment workers are women, and this is no accident – they are desirable precisely because of their flexibility. The obligation for them to perform multiple jobs in addition to domestic labour renders them a malleable workforce.

Supply chains are a winding network of loosely linked agents and subcontractors. The connective tissue that stitches them together is the ‘flexibility’ of the working conditions for those at the bottom.

A Shock to the System

COVID-19 has disrupted this delicate balancing act, and the connective tissue in the system is now fraying.

The economic repercussions of declining orders in Europe and North America have rippled down the supply chain, landing squarely on the shoulders of already exposed workers in countries like Bangladesh, Cambodia and Pakistan. Garment brands have cancelled orders worth $1.6 billion from Bangladesh alone.

COVID has unveiled a carefully engineered production model that insulates brands from shock and enables them to shirk cost further down supply chain, retroactively cancelling orders or even refusing to pay for orders already in production.

Rather than accepting responsibility, big brands have demanded yet more flexibility from their suppliers. Workers should not only be content with less – they should forego wages altogether.

According to Christie Miedema from the Clean Clothes Campaign, “this injustice is not caused by COVID, the industry was broken before this. These issues were already there, they’re just more exposed now.”

Invisible Hands

In recent weeks many of the slick, woke brands in Europe and North America have issued Black Lives Matter support statements. While their PR departments comfortably style themselves as anti-racists, their contractors deny their black and brown workers their wages and open fire on their picket lines.

But tracing these abuses is no easy task. Accountability evaporates with every twist and turn in the chain.

In Pakistan, garment workers are typically hired via an agency and lack a written contract. As far as the brands are concerned, they don’t exist. In an email exchange, the H&M press office said that 15,000 workers could not have been sacked from Denim Clothing “because we only have 8,500 on the books”. This may be true, but just because their names aren’t on paper it doesn’t mean they don’t exist.

Women, who are predominantly employed as home-based workers, labour in practical obscurity, rarely knowing the brand they’re stitching tees or gluing tennis shoes for.

Zehra Khan, general secretary of The Home-Based Women Workers Federation estimates that 12 million women in Pakistan are home based workers, the majority of them employed without formal contract.

In Pakistan, home-based workers are not legally recognised as workers; they don’t exist and therefore are not entitled to basic worker protections. An ILO study from 2017 led by Khan revealed that on average, home based workers work 12.3 hours a day, six days a week for an hourly wage of $0.39. Due to their contract-less status, they have no bargaining power. “Of the workers who attempted to negotiate better rates with their middlemen, 95% failed” the report details.

For the past two years, Khan has done the painstaking work of trying to estimate the numbers of home-based workers in Pakistan and piece them into the chain connecting them with international brands via a winding network of agencies and contractors. Navigating this labyrinth is a Herculean task of guesswork when workers exist the shadows of their own homes. “There is no data for them,” Khan explains.

The Chain Will Keep Us Together

Further up the supply chain in Dublin, Debenhams retail workers were informed via email on 9 April that they were losing their jobs. The eleven company stores were to be liquidated; the entire Irish arm of the company was gone. In the dark of a bank holiday weekend, the women, many of whom had done over twenty years of service for the company, scrambled around for information.

“It was so calculated… because of that long weekend, there was nowhere open,” Ann, a mandated shop committee member and personal shopper for Debenhams of fourteen years, explains. “By the Tuesday, Debenhams were hoping we would have been yesterday’s news. We’re in the middle of a pandemic, let’s move on. Unfortunately for them, that wasn’t to be.”

On the following Tuesday the workers rang around every radio station, TV channel and newspaper. “We inundated every minister we could think of with emails. We came out fighting, screaming and champing at the bit,” Ann recalls.

And they did their research. Much like the brands cloaking their most exploited workforce in a quagmire of third-party contractors at the other end of the supply chain, Debenhams used obfuscation when dealing with their staff. The strikers had no previous experience of campaigning, but they rolled up their sleeves and did the painstaking work of unpicking the string of companies Debenhams was using to dodge responsibility.

Debenhams.ie became Debenhams Online, which continued to trade in Ireland after liquidation of the stores was announced – until the strikers managed to crash their online store four times. “We got all our friends and family to inundate the comment section… if you go on there now you won’t be able to use it” Ann recalls proudly, adding with a smile, “we were pretty chuffed with that.”

According to Mandate Trade Union, in early 2020 the UK parent company took control of the Debenhams Ireland online business before seeking liquidation. According to Michael Meegan, the union Divisional Organiser, “shortly after doing this, Debenham’s UK withdrew its financial support of the Debenhams Ireland business which directly resulted in the Irish arm of the business going into liquidation.” In doing so, “approximately 1,500 workers lost their jobs.”

To stop the company transferring the stock in the Irish stores to the UK, Ann and her colleagues drew up 24 hour rotas for pickets outside the stores – often doing ‘spot checks’ at 3am to ensure it was being manned and that “not a pair of stockings would leave that store.” Burly security guards sent by the liquidators, KPMG, were startled by a line of women standing resolutely in front of the doors.

“The company should live up to its obligations and abide by the redundancy agreement that the company freely entered into with the workers in 2016”, Meegan explains. “These workers have a combined 10,000 years of service to this company, helping to generate profits for the owners year after year.”

This rigorous detective work led the Debenhams workers to the garment strikers in Bangladesh. While unpicking the stitches of the garment supply chain, they found that at the other end workers were being denied at least two months’ pay and that Debenhams UK owed $18.5 million to suppliers in Bangladesh for goods they had released from UK ports into their warehouses. According to a Bangladeshi supplier for Debenhams and member of the Debenhams Vendor Community, a network of suppliers, in addition to the goods that were released from the UK ports without payment, the company owed around $44.6m on orders sitting in the factories.

“The money we’re asking for is not charity money, it’s our money, our people live on that. It’s our sweat and blood,” he explains. He estimates that up to 160,000 workers could potentially be left starving as a result of Debenhams refusal to honour payment. The company eventually agreed to pay for $5m of the goods sitting idle in UK ports – after initially demanding a staggering 90% discount they eventually negotiated a 25% discount. Subsequently they hired subcontractor, Centrotex to negotiate payment for just $1.4m of the $44.6 worth of goods in the Bangladeshi factories.

In response, the Irish strikers set up a Go Fund Me for the Bangladeshi workers, stating that “as a group of workers recently made redundant by Debenhams it angered us that this company could be responsible for ruining the livelihoods of so many people in such a cavalier manner.” Debenhams were approached for comment and said that “suppliers who are continuing to work with Debenhams in administration are being paid to terms.”

H&M stressed that “in these troubling times it is crucial we get our facts straight”. The Debenhams workers learnt this very early on in their fight for their redundancy payments. “We’ve learnt a lot through this process, it’s opened our eyes and what we’ve seen has disgusted us”, Ann explains.

In their pursuit of the truth, they have unravelled a rotten business model propped up on the exploited labour of those sewing stitches at the bottom of it. For workers at both ends of the chain, there’s no going back through the portal.