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Campaigners have called for fashion watchdogs to be set up to stop “unacceptable shopping practices” found by researchers who named high street stores Zara and Primark as among those treating suppliers unfairly.
In a study of 1,000 Bangladeshi manufacturers, researchers found that big brands pay below production costs, with most factories paying the same price for raw materials sold to large retailers despite rising prices.
In a study published on Sunday by the University of Aberdeen and the charity Transform Trade, it said suppliers had reported unfair practices of 1,138 brands they had contracts with in February 2020, and 37%.
More than half of suppliers reported experiencing unfair procurement practices, including cancellations, non-payment, late payment and rebate requests, forced overtime and harassment.
Fiona Cook, senior policy adviser at Transform Trade, described the findings as a “wake-up call”.
“We need a fashion watchdog group to stop the unacceptable buying practices of clothing retailers who benefit from large consumer markets, similar to the protection we have for food vendors,” she said.
Suppliers can only provide good working conditions for their employees when they can plan ahead with confidence that they will receive the expected income.
Zara has 90 factories producing for the brand as of March 2020, according to the report.
Researchers found that 31 percent of factories had canceled or partially canceled orders, 27 percent had price reductions, 10 percent had orders that the company refused to pay for while in transit or production, and 30 percent said payments were delayed by at least three months.
Meanwhile, according to the report, Primark, which has 35 factories working on products, has canceled or partially canceled orders from 34% of factories surveyed, order prices have fallen by 20%, and 11% of factories have reported payment delays.
The study, The Impact of Global Garment Retailers’ Unfair Practices on Bangladeshi Suppliers During Covid-19, also said a large number of firms reported buying from factories for rising raw material prices, and nearly one in five were struggling to pay Bangladeshis. A minimum wage of £2.30 a day.
The supplier survey found that large brands that buy from multiple factories engaged in unfair purchasing practices more frequently than smaller brands, and every brand that buys from 15 or more factories reported engaging in at least one of these practices.
The study found that garment factories cut a quarter of their workforce after the crackdown, and the report’s authors estimate that up to 900,000 workers could lose their jobs.
Garment making has become Bangladesh’s most important manufacturing sector, accounting for 20% of GDP. Employing about four million workers, more than 12 million of them are dependent on the sector, according to researchers.
“It’s the workers who suffer when retailers treat suppliers badly by breaching pre-established contracts,” Ms Gok said.
“If a retailer can’t pay the agreed amount or delays payments, the supplier has to cut costs in other ways and this is often passed on to their less powerful employees in the supply chain,” she said.
“Reports of re-employment of poor pay and conditions, reports of bullying and unpaid overtime are predictable outcomes. We need a fashion watchdog to oversee UK clothing retailers in a similar way to the current supermarket watchdog.”
Supermarkets have a grocery code umpire (regulator), regardless of location, who enforces a rule of law that prohibits certain unfair purchasing practices of food and grocery suppliers.
A Primark spokesperson said: “The rights and conditions of the workers who make our products are extremely important to us and we know how devastating covid-19 has been for the global clothing industry.”
“The unprecedented nature of the pandemic forced all stores around the world to close. At the time, and with no online presence, we had no way of knowing how long this would last, the spokesperson added, adding that for these reasons the company has taken the incredibly difficult decision to cancel all orders in March 2020. which has not yet been given to us”.
All forwarded orders are paid within 30 days, and there are no payment delays or price negotiations, the company said, and it has developed several initiatives to “support suppliers and their employees” until 2020.
The company has stated that compliance with the Code of Conduct is mandatory when working with Primark and the company is a founding member of the Action Collaborative Transformation Initiative.
In the report, Zara’s owner, Inditex, said it had “designed a strategy to support staff at the start of the pandemic” and “guaranteed payment for all orders already placed and in production and worked with financial institutions to facilitate delivery”. Providing credit to suppliers on favorable terms”.
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