Wage Theft By 15 Top Brands

So far, majority of international NGOs/civil societies/trade unions are coming up with such reports which are targeting Indian exporters and raising questions on their working, ethical practices… Since decades, this ‘routine process’ is continuously harming the image of Indian apparel exporting companies. Time to time, Apparel Resources (AR) has covered many such reports.

But now, especially after Covid, there is a change in this routine way of reporting and the same organisations are now coming up with reports raising questions on top brands and retailers. This change might have been triggered owing to the serious unethical steps taken by brands, retailers during Covid. Recently Asia Floor Wage Alliance (AFWA), a pan-Asian labour rights group, has released a report Money Heist: COVID-19 Wage Theft in Garment Global Supply Chains identifying 15 big brands and retailers which abruptly cancelled orders or refused payment to garment factories in Asia, which in turn passed on their losses to workers by imposing mass layoffs and illegal firings, in addition to adopting other exploitative tactics. The report surveyed 2,185 garment workers across 189 factories in Bangladesh, Cambodia, India, Indonesia, Pakistan and Sri Lanka. It claims that garment workers sank into extreme poverty, crushing debt, hunger and poor health. Moving further, AFWA is also taking legal action against international brands.

Reduction in wages due to demotion, reduction in employment-related benefits due to shift in contract type, non-payment of layoff wages and terminal benefits as per the legal provisions in each country or according to the ILO standards for social protection, terminal benefits and employment security are major forms of wage theft.

Anannya Bhattacharjee, International Coordinator, AFWA says, “Wage theft is intrinsic to the business model of global fashion brands, and it was exacerbated by the pandemic. It was not an unintended result of the crisis. We have highlighted this through the report and demonstrated how brand actions caused and contributed to human rights violations through wage theft.”

Also Read: Transparency in Fashion: Much More Yet To Do

India suffers

In India, 433 workers from 51 apparel factories and 4 processing units (yarn and fabric) are spread across four top garment producing states in India in Ahmedabad, Gurgaon, Faridabad, Bengaluru and Erode and Tirupur.

The report’s wage theft estimates says that 79,600 (total number of workers across surveyed factories) workers faced US $ 29.67 million wage theft across surveyed factories.

The report claims that 89 per cent of the workers experienced employment shocks at some point during 2020, either in the form of layoffs or terminations. Workers reported an overall wage theft of 23 per cent in 2020, with a sharp decline in wages by 73 per cent during the Covid lockdown period. The average size of debt for garment workers increased more than twofold in 2020, from US $ 152 in the pre-pandemic period to US $ 360 by December 2020.

Though it also adds that 67 per cent garment workers reported that they were able to access some form of Covid relief in 2020, most workers stated that it was too little, too late.

Rukmini, President, Garment Labour Union says, “After the lockdown, throughout 2020, garment factories refused to reopen creches in factories or help women workers find alternative child care options. Not providing a creche is a violation of the Maternity Benefits Act of India – and brand and suppliers jointly violated these fundamental rights of women workers in India… All costs from the beginning of COVID-19 are borne by garment workers and their families for brands. Brands have profited from the bodies of women workers. They have exploited it for their personal profit…”

Legal action

As far as legal action in India is concerned, AFWA and local labour unions have filed a legal complaint against H&M in the labour department, Bengaluru.

The complaint of AFWA asks that H&M be held jointly liable for alleged labour abuses that took place in 2020 at a supplier factory, where it claims the brand ‘has total economic control over the workers’ subsistence, skill and continued employment’.

The report also claims that even though workers’ rights were protected under national laws, most garment workers did not have the access or power to seek redress for lost wages during the pandemic due to the need to find other work, the threat of destitution and low enforcement of labour laws by the authorities.

AFWA’s argument is that a brand or retailer doesn’t just source apparels; they determine and control the entire process in the production, so they should not argue that the workers who make their products do not work for them.

“After the carnage that was unleashed on workers last year, we wanted to examine the possibility of holding brands legally accountable instead of only having the leverage or threat of reputational damage,” said Ashim Roy, an Indian trade unionist and AFWA member.

Reacting on the complaint, H&M has said that in the specific case referred to in the legal complaint, the workers were paid in line with legal regulations. Columbia Sportswear Company also said that it did not cancel orders or re-negotiate product costs for open orders. Asics also refuted the blame.

Pakistani apparel workers face worst wage theft

The report claims that Pakistani apparel workers faced worst wage theft in the Asian garment industry as most of the country’s orders were cancelled by various global brands. It estimates that 2,44,510 apparel workers across 50 Pakistani factories were denied US $ 85.08 million as wages due to order cancellations, non-payment for existing orders and other irresponsible practices by brands during the pandemic.

 Burden by brands

(All figures in US $)

 Joint employer liability of global apparel brands with suppliers

There is no doubt that due to Covid and other allied reasons, everyone across the supply chain is under pressure but one can’t deny that majority of apparel brands and retailers are still in profit and expecting better demand in future. So there is no reason that the worker, the backbone of the apparel industry, should suffer in any way. And the report rightly says that ensuring workers’ right is prime concern of brands and retailers. It can be ensured by joint employer liability of global apparel brands with suppliers.

AFWA is using legal challenges to argue that international apparel brands should be considered joint employers, along with their suppliers, under national laws and be held accountable for alleged wage violations during Covid. Two of these complaints have already been filed with the authorities in India and Sri Lanka, with further complaints pending in Indonesia and Pakistan. There may be some countries where there are possibilities for a strong case law for joint liability, but it is not common for a brand and a supplier.