A study of 1,000 clothing factories found some fashion companies ‘engaged in unfair practices’, including H&M, Lidl and GAP.
Major international fashion brands, including Zara, H&M and GAP, are exploiting workers in Bangladesh’s garment industry, with some engaging in unfair practices and paying suppliers below the cost of production, according to a study published on Wednesday.
A study that examined 1,000 Bangladeshi factories producing clothes for global brands and retailers during the COVID pandemic found that many were being paid the same price despite the global pandemic and rising costs.
More than half of garment factories have experienced at least one of the following: order cancellations, payment refusals, price cuts or payment delays for goods, according to a study published by the University of Aberdeen and advocacy group Transform Trade.
“Such unfair trade practices have affected the employment practices of suppliers resulting in worker turnover, job losses and lower wages,” the study found.
Of the 1,138 brands/retailers listed in the study, 37 percent were reported as engaging in unfair practices, including Zarin Inditex, H&M, Lidl, GAP, New Yorker, Primark, Next and others.
The study also found that one in five factories have struggled to pay the legal minimum wage since they reopened after lockdowns in March and April 2020.
The fashion industry has to change.
Find out the results of a survey of 1,000 Bangladeshi factories by Transform Trade and the University of Aberdeen: https://t.co/yEcfhJr6LP pic.twitter.com/fsUR4nNdCG
— Transform Trade (@transformtrade_) January 10, 2023
It also found that some companies demanded price cuts for clothes ordered before the pandemic began in March 2020, while others refused to budge on prices, despite skyrocketing costs and rampant inflation.
The report included responses from some companies.
Inditex said it had “guaranteed payment for all orders already placed and in the production process and has worked with financial institutions to enable loans to suppliers on favorable terms”.
German supermarket chain Lidl said it “took the allegations very seriously”, adding that it “takes its responsibility towards workers in Bangladesh and other countries where our suppliers produce very seriously and is committed to ensuring that basic social standards are respected throughout the supply chain”.
Primark said that due to the pandemic, it made the “incredibly difficult decision in March 2020 to cancel all orders that had not yet been placed”.
The study recommended the establishment of a fashion watchdog to help crack down on unfair practices by ensuring “that buyers/retailers cannot shift disproportionate and inappropriate risks to their suppliers and that retailers and brands adhere to the norms of fair business practice”.
In August, Bangladesh’s garment industry faced a double whammy from slowing global demand and an energy crisis at home that threatened to derail the country’s recovery from the pandemic.
In the same month, major global retailers agreed a two-year deal with garment workers and factory owners in Bangladesh, extending an existing agreement that makes retailers liable if their factories fail to meet occupational safety standards, including retail giants H&M , Inditex , Uniqlo by Fast Retailing, Hugo Boss and Adidas.
The exploitation of workers and poor safety standards were highlighted after the 2013 collapse of the Rana Plaza complex, which killed more than 1,100 garment workers, the deadliest incident in the history of the garment industry.
The European Union has warned consumers to stop using their clothes as disposable items and said it plans to crack down on the polluting use of mass-market fast fashion.