This article was originally published on Thred Media.
US and European fashion companies have rejected over $16 billion worth of exported clothing and goods since the pandemic hit earlier this year, according to recently published import data from the Center for Global Workers’ Rights and the Worker Rights Consortium.
Not only does this mean that suppliers in countries like Cambodia, Myanmar, and Bangladesh have had to seriously cut back operations or close them entirely, but it also exposes the glaring economic imbalance between western nations and much of the rest of the world with regards to the fashion industry.
The huge financial losses were a result of cancelled orders or companies refusing to pay for clothing that had been requested before COVID-19. Lockdown measures and a total shutdown of retail stores earlier this year has resulted in huge drops in profits across the board. The UK is expected to lose 25% of all business this year, while US apparel sales could fall by half by the end of 2020.
A sudden shrink in sales means significantly less demand for new items, which in turn causes suppliers to scramble and eventually dissipate.
The current system for most clothing imports in the US and Europe puts all of the pressure on poorer countries to pay for employers, factories, and materials, and buyers usually don’t have to pay anything until products ship months later.
It’s basically a two-way commitment, except wealthier nations buying in bulk don’t have to honour contracts until the items are made and transported. Dropping out at the last minute — which seems to have happened en masse this year — causes a huge amount of damage to the most economically vulnerable nations.
Even more frustratingly, it seems that some top clothing brands, such as Kohl's in the US, have been paying out huge dividends to shareholders while cancelling existing orders from Bangladeshi and Korean garment factories.
The resulting fallout has been eye-wateringly extreme. Over a million garment workers have been furloughed or fired as a result of cancelled and refused orders, and many have stated they’ve not received pay in two months.
Many big labels are reportedly guilty of not honouring contracts and fulfilling previously requested orders. According to the Guardian, Topshop, Walmart, Urban Outfitters, and Mothercare have all rejected big bulk purchases that are either finished or in production.
The pandemic has exposed a systematic imbalance that isn’t sustainable for the long-term future, especially as lockdowns and international disease emergencies are likely to become even more common.
We cannot continue to allow the fashion industry to operate in a way that leaves the poorest out of work and prioritises the pockets of rich investors — huge brands and companies should be forced to honour purchasing commitments, even if they suddenly decide they don’t need them several months down the line.
Failing that, more needs to be done to prepare for outbreaks like COVID-19. It’s unethical for the wealthiest western companies to be in complete control of the supply chain when they’re ultimately most well equipped to deal with economic fallout. Renewed insurance policies or new legal binding contracts could help to secure finances for suppliers without them suddenly falling short of pay with no warning.
Consumers also need to demand more from brands and push them to honour their “sustainably sourced and produced” marketing slogans that are always nonchalantly touted everywhere. If fashion companies truly cared about their employers and products they would prioritise helping the poorest of their suppliers before investors.
The good news is that not all big companies are ignoring the financially vulnerable. According to the Workers Rights Consortium, labels such as GAP, H&M, and Zara have all now reversed their previous decisions and are fulfilling previous order contracts. Keep in mind though that they were driven by outside pressure from worker organisations and media outlets – it didn’t come off their own backs.
So, it’s time to push for all fashion labels to help out supply workers and demand some serious change.