Workers owed billions in unpaid wages and severance
During the COVID-19 crisis, brands cancelled over £12 billion worth of orders, leaving suppliers to foot the bill and workers unpaid. Although many brands have now committed to paying for their orders, this does not guarantee that workers wages will be paid. During the pandemic, cancelled orders and delayed payments have caused uncertainty in supply chains and disrupted the flow of cash, ultimately impacting workers’ wages. National lockdowns and temporary factory closures resulted in many workers furloughed with reduced pay, or even losing jobs without the severance pay they are entitled to. Millions of workers in the global garment supply chain have not been paid their full wages or have lost their jobs without adequate financial compensation during the COVID-19 pandemic.
How much are workers owed?
Workers globally are still owed at least £2.46 to £4.46 billion for the first three months of the pandemic alone. As the primary profit makers in the value chain, brands must take responsibility. The people who make our clothes have been earning poverty wages for decades, leaving them no savings to lean on during the crisis. The impact of this has been that many hundreds of thousands of workers have now gone into debt, and had to stop paying for urgent costs such as rent, health care, schooling for kids, and cut costs on food. Garment workers and their families are now going to bed hungry with no hope for their future.
What must brands do?
Brands need to ensure workers in their supply chains get paid. Brands can publicly show that they are committed to safeguarding the livelihood of their workers by publishing a statement of wage assurance on their website. This commits brands to ensuring that their workers are paid what they are owed, both during the pandemic and beyond, by joining a severance guarantee fund that will make sure workers are no longer left penniless if their factory goes bankrupt.
Read more about how workers in global supply chains, especially those of Primark, H&M and Nike, have had their livelihoods affected by the pandemic and join us in calling on brands to #PayYourWorkers.
What is the Severance Guarantee Fund?
In addition to providing immediate income support for workers, we are calling on brands to negotiate an enforceable agreement to support stronger social protections for workers related to unemployment and severance benefits, in line with the relevant ILO conventions, through the establishment of a Severance Guarantee fund.
The purpose of the Severance Guarantee Fund is to pay severance and outstanding wages in cases where employers have gone insolvent, or otherwise have terminated workers and can’t be compelled to pay. The Severance Guarantee Fund will also mitigate the devastating consequences of unemployment for workers in the future by financially supplementing or strengthening government social protection programs for unemployment or severance benefits. Brands and retailers would contribute to both funding streams through a fee, based on volume sourced from each country, and employer fees would be a percentage of their wage bill in each country. This should be part of a larger effort to establish more sustainable and resilient industries in the near future, consisting of supply-chains with better planning and pricing models, which includes a costing model that covers fair payment schedules, and financial space for living wages, safe factories, and social benefits.
Brands must pay their workers what they are owed and ensure future social security
Brands have a responsibility under the UN Guiding Principles of Business and Human Rights to respect the human rights of workers in their supply chain. This includes making sure that workers are paid their legally owed wages and severance, whether there is a pandemic or not. Brands must ensure that they pay their workers what they are owed throughout the pandemic and contribute to a fund to ensure that workers are no longer left penniless if a factory goes bankrupt in the future. Garment workers should not have to pay the price for the pandemic.
We are calling on ALL brands to:
- Pay up for the orders they placed prior to the pandemic.
- Make a public commitment to ensure that workers are paid throughout the pandemic.
- Protect their workers in the future by establishing and contributing to a severance guarantee fund.