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Worker jobs cut as orders scrapped

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Big brands, such as H&M, are heaping extra hardship upon the low-paid workers who make their garments in Asia as they look to stem their losses from the Covid-19 pandemic. AFP

Worker jobs cut as orders scrapped

Advocates urge brands to honour their agreements with cash-strapped factories as hundreds of thousands in Asia face job losses.

Big brands are heaping extra hardship upon the low-paid workers who make their garments in Asia as they look to stem their losses from the Covid-19 pandemic, advocates say.

Scores of companies have cancelled orders, even after workers finished making them, and refused to take financial responsibility, leaving cash-strapped factories unable to pay wages, said Human Rights Watch (HRW).

Hundreds of thousands of factory workers in Cambodia, Myanmar and Bangladesh are facing job losses as retail stores around the world close to prevent the spread of coronavirus.

“Workers have received their March wages in many cases, but in April I think it’s going to be complete chaos,” HRW women’s rights division senior counsel Aruna Kashyap told DPA News.

Firms have taken advantage of long-standing unfair buying practices to protect themselves at the expense of workers, she said. “Most brands and retailers wield a lot of power over their suppliers.”

The German retailer C&A is among those to have cancelled orders. In a March 23 letter to a supplier in Cambodia, seen by DPA, the company said it was cancelling “all orders” due that month through to the end of June “with immediate effect”.

The letter argued that there was a “consensus” that the pandemic qualified as a force majeure event, which can be invoked in certain cases to free a company from its contractual obligations.

Under German law it is difficult to reach the legal threshold to get out of a contract this way, said European Centre for Constitutional and Human Rights vice-legal director Miriam Saage-Maass.

“Force majeure cannot be used when contract performance is merely impractical or economically difficult rather than truly impossible,” she told DPA.

A company would also need to prove that the problem it is facing was unforeseeable, she said. “In my opinion one could argue that the risk of pandemics was not unknown in recent years and was not unforeseeable. Brands should have prepared.”

C&A spokesman Jens Voelmicke told DPA that the company now intends “to accept all goods that have left the factory” and “take delivery of as many orders as commercially viable to enable manufacturers to pay workers their wages”.

The letter cancelling all orders “was an immediate measure”, he said. “Since then we are entering in talks with our suppliers to find individual, flexible solutions.”

More than 110 factories employing about 96,000 workers have applied to the Cambodian government to suspend production because of the pandemic, said Ministry of Labour and Vocational Training spokesman Heng Sour, adding that the government was urging factories to hold off from closing entirely.

Prime Minister Hun Sen announced last week that the state would offer suspended workers $40 while factories will provide an additional $30, which is less than he had promised earlier this year.

The notice came after the Garment Manufacturers Association in Cambodia said factories would soon be unable to pay suspended workers the $38 Hun Sen had initially proposed.

Even at the best of times, most of Cambodia’s 800,000 garment workers – who earn a monthly minimum salary of $190 – have to work overtime to make ends meet, said Centre for Alliance of Labour and Human Rights (Central) executive director Moeun Tola.

In Myanmar, around 20,000 migrants returned home from Thailand last month after losing their jobs due to factory closures.

And 684 workers who made products for H&M, Next and others were fired last week after bosses at the Yongan garment factory in Yangon said buyers had cancelled orders.

Myint Thet Lae, one of the laid-off workers and president of the factory’s labour union, said the orders were cancelled after bosses announced production would stop from April 5 for several weeks to prevent the spread of the virus.

“They said they tried negotiating with the buyers and the buyers didn’t want to continue. That’s why they’re firing us,” she told DPA.

A Next spokesman said the retailer last month committed to honour orders that were due on or before April 10. That gave suppliers enough notice to finish most of what was already in production.

H&M did not immediately respond to a request for comment, but HRW said the company has committed to pay the agreed prices for goods already produced or in production.

The pandemic shows there is an urgent need for social safety nets and worker protections in developing countries, HRW’s Kashyap said.

For now, brands should work with governments, donors and financial institutions to help workers through the crisis, she said. “The very least they can do is abide by their original contracts.”



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