Campaigners have called for a fashion watchdog to be set up to stop the “unacceptable purchasing practices” uncovered by researchers, who named High Street shops Zara and Primark as among those treating suppliers unfairly.
In a survey of 1,000 Bangladeshi manufacturers, researchers found large brands paying below the cost of production, with the majority of factories selling to the largest retailers paying the same prices despite the cost of raw materials increasing.
In the research by the University of Aberdeen and charity Transform Trade, published on Sunday, report authors said the suppliers named 1,138 brands they had contracts with in February 2020 and of those 37% were reported as having engaged in unfair practices.
More than half of suppliers said they had suffered unfair purchasing practices, including cancellations, failure to pay, delays in payment and discount demands, with knock-on effects including forced overtime and harassment.
Fiona Gooch, senior policy adviser at Transform Trade, described the findings as a “wake-up call”.
“We need a fashion watchdog to stop unacceptable purchasing practices of the clothing retailers benefiting from large consumer markets, along the same lines as existing protections for food suppliers,” she said.
“Only when suppliers are able to plan ahead, with confidence that they will earn as expected, can they deliver good working conditions for their workers.”
Zara, the report said, had 90 factories producing for the brand in March 2020.
Researchers said 31% of factories reported cancelled or partially cancelled orders, 27% had price reductions, 10% had orders which the firm refused to pay for while in transit or production, and 30% had reported payment being delayed for at least three months.
Meanwhile, Primark, which had 35 factories working on products according to the report, cancelled or partially cancelled orders from 34% of surveyed factories, reduced the price of orders at 20%, and 11% of factories reported payments being delayed.
The study, called Impact of Global Clothing Retailers’ Unfair Practices on Bangladeshi Suppliers During Covid-19, also said large numbers of firms were reported to be buying from factories facing rising costs for raw materials and nearly one in five were struggling to pay the Bangladeshi minimum wage of £2.30 per day.
Larger brands buying from many factories were engaging in unfair purchasing practices more often than smaller brands, the supplier survey said, and every brand buying from 15 or more factories was reported to be engaging in at least one of these practices.
The survey also found that post-lockdown, garment factories cut a quarter of their workforce, which report authors said suggested up to 900,000 workers could have lost their jobs.
Making clothing has become Bangladesh’s most important manufacturing sector, accounting for 20% of its GDP. Employing around four million workers, more than 12 million are dependent on the sector for their livelihood, researchers said.
Ms Gooch said when “retailers treat suppliers badly by breaching previously arranged terms, it’s workers who suffer”.
“If a retailer fails to pay the agreed amount, or delays payments, the supplier has to cut costs some other way, and this is frequently passed on to their workers, who have the least power in the supply chain,” she said.
“Reports of being rehired on worse pay and conditions, bullying and unpaid overtime are the predictable result. We need a fashion watchdog to regulate UK garment retailers, along the same lines as the existing supermarket watchdog.”
Supermarkets have the Groceries Code Adjudicator, a watchdog which enforces a statutory code of practice which bans certain unfair purchasing practices by large retailers towards their food and groceries suppliers, irrespective of location.
A Primark spokesman 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 garment industry”.
“The unprecedented nature of the pandemic meant all our stores across the world were forced to close. At the time, and with no online presence, we had no way of knowing how long this would last for,” the spokesman said, and added it was for these reasons the company took the “incredibly difficult decision in March 2020 to cancel all orders which had not yet been handed over to us”.
All orders which had been handed over were paid within 30 days and there were no payment delays or renegotiation of prices in connection with these, the company said, and through 2020 it set up several initiatives to “support suppliers and their workers”.
The company said compliance with its code of conduct was mandatory when working with Primark, and the firm is a founding member of the Action Collaboration Transformation initiative.
In the report, Inditex, which owns Zara, said it had “devised a strategy for supporting those workers early on in the pandemic” and “guaranteed payment for all orders already placed and in process of production and worked with financial institutions to facilitate the provision of loans to suppliers on favourable terms”.