NEW YORK – Aggressive sourcing practices by apparel brands and retailers are squeezing suppliers in Bangladesh, hitting margins and leading to low wages and poor working conditions. An extensive twelve-month survey of factory owners coupled with research on raw materials prices found that in Bangladesh, since Rana Plaza, the price paid by lead firms to supplier factories has declined by 13 per cent. “The cause of this decline cannot be linked to the price of cotton or exchange rate fluctuations … rather it is related to a retailer and brand pricing squeeze on supplier factories, whose profit margins decreased by 13.3 per cent from 2011 to 2016,” say the researchers.
The paper, written by the hugely respected author Mark Anner, centre director at the Penn State Centre for Global Workers Rights, says that gains since Rana Plaza have been “severely limited in regard to wages, overtime hours, and work intensity in part due to the sourcing practices of the brands and retailers that sit at the top of global supply chains.”
It adds that a “partial exception is in the area of associational rights, where, in the a aftermath of Rana Plaza, pressure from the European Union, the United States, and international organisations resulted in minor pro-union labor reforms. These reforms, combined with the tenacity of workers and their organising efforts, resulted in an increase in the number of recognised unions. However, in recent years, union growth has once again stagnated, indicating the need for continued international pressure and for an expansion of the capacity of garment sector unions.”
The report claims that one area where gains for workers have been dramatic is in building safety, thanks to the huge gains made by the binding Accord on Fire and Building Safety in Bangladesh.
The most concerning aspects of the report are with regard suppliers being squeezed on price and lead times – with implications for workers. The report says: “The hyper-competitive structure of apparel global supply chains has contributed to a buyer-driven sourcing squeeze that has pushed down prices, shortened lead times, and contributed to low wages, health and safety concerns, and violations of freedom of association rights.
“Lead firms have also significantly pushed their supplier factories to make products more quickly as part of a trend toward speed to market and fast fashion. On average, lead times declined by 8.14 per cent between 2011 and 2015. This has increased a pattern of forced overtime and work intensity.
“This price squeeze has contributed to declining real wages and an increase in workers’ rights violations since Rana Plaza. Real wages have dropped by 6.47 per cent since the wage increase of December 2013, and – based on data provided by the Labour Rights Indicators – violations of workers’ rights to form unions, bargain, and strike increased by 11.96 per cent between 2012 and 2015.”
Full paper here: http://www.sacw.net/article13694.html