43% garment factories running with half workforce

With demand for clothing products declining due to the Covid-19 pandemic, about 43% of suppliers in Bangladesh have been operating with less than 50% of their pre-pandemic workforce in the third quarter of this year, says an ILO report. 

Besides, apparel imports from Asia dropped by up to 70% in the first half of 2020, due to the collapsing consumer demand, lockdown and disruptions in raw material procurement for garment production. 

The study, “The supply chain ripple effect: How Covid-19 is affecting garment workers and factories in Asia and the Pacific”, was launched yesterday at a virtual briefing in Bangkok. The study covered factories in Bangladesh, Cambodia, China, India, Indonesia, Myanmar, Pakistan, Philippines, Sri Lanka and Vietnam. 

The pandemic has hit the garment sector in the Asia Pacific region hard, with plummeting retail sales in key export markets affecting workers and enterprises throughout supply chains in the region. 

“Factories operational at the start of the third quarter of 2020 – whether they had remained operational throughout or reopened – were reportedly not operating at their pre-pandemic capacity. Approximately 43% of suppliers in Bangladesh are operating with less than 50% of their pre-pandemic workforce,” said the report.

Only 3.9% of suppliers retained their entire workforce. The largest proportion of suppliers (around 20%) are operating with between 30-39% of the number of workers they had before the pandemic, it added. 

On the other hand, as of July, the average number of workers returning to work after reopening was 57% of the factories’ pre-pandemic total workforce and a total of 230,749 workers among Better Work Bangladesh’s (BWB) member factories were still not working as factories re-opened, the report said. 

Currently, 260 RMG factories are connected with BWB. 

“The Covid-19 has had a massive impact on the garment industry at every level. It is vital that governments, workers, employers and other industry stakeholders, work together to navigate these unprecedented conditions and help forge a more human-centred future for the industry,” said Chihoko Asada Miyakawa, ILO Regional Director for Asia and the Pacific. 

Worker layoffs and dismissals have increased sharply, while factories that have reopened are often operating with a reduced workforce.

“Thankfully, many RMG exporters have resumed operations over the past few months. At the same time, these resilient Bangladeshi enterprises and workforces are having to wrestle with the ongoing pandemic and ensuring safe conditions for all,” said Tuomo Poutiainen, Country Director, ILO Bangladesh. 

“To this end, the ILO has supported the development of a national Occupational Safety and Health (OSH) guideline on COVID-19 to mitigate infections in workplaces."

 Key finding of the report 

By June 2020, total year-to-date imports from Bangladesh fell by as much as 29% compared to the same period in 2019.

Comprehensive data on the resulting decline in apparel orders by country is not available, but a Better Buying survey of 179 suppliers from 30 countries, including Bangladesh, conducted in May 2020 found that 64% of apparel factories had received cancellations from customers.

A survey conducted by ILO’s Better Work Bangladesh (BWB) in May 2020 over 250 BWB factories showed that  38% of factories faced order reductions or were asked to hold shipments, 34% per cent experienced order cancellations, and 4% could not produce garments due to a lack of raw material. 

The survey also showed 60% of suppliers kept the factories shut for over 3 weeks, while the largest proportion of suppliers, approximately 40%, closed for 26-35 working days.

Another survey (March-2020), that of Penn State Center for Global Workers’ Rights, found 72% of buyers had not paid for raw materials and 91% had not paid for the production cost of already-produced goods to their Bangladeshi apparel suppliers, who cancelled orders.

As of September 2020, almost half of all jobs in garment supply chains were dependent on demand for garments from consumers living in different countries. 

Recommendations 

To tackle the Covid-19 crisis, the ILO has proposed a policy framework focusing on stimulating the economy and employment, supporting enterprises, jobs and incomes, protecting workers in the workplace.  

It also called for resource mobilization to safeguard jobs and livelihoods, including those in the garment sector.

Continued support for enterprises, as well as the extension of social protection to all, is key to mitigate adverse impacts of the crisis in the garment supply chain, the ILO suggested.  

So it was time to rethink about garment supply chains, equality, inclusivity and sustainability. In addition, technological innovation is reshaping the possibilities for how and where production takes place, and the role the factory workforce plays in this process, it added.