The impact of Covid-19 on the Bangladeshi garment sector
The impact of Covid-19 on the Bangladeshi garment sector
a cura di Dott.ssa Laura Palazzetti
Covid-19 pandemic has surely had a worldwide tremendous impact on the global garment supply chains, especially in developing countries where the garment sector plays a pivotal role in the country’s economy. This article will analyse the impact of clothing retail and brands lockdown on businesses and workers in Bangladesh, where the textile business is the number one industry, accounting for 80% of the country’s exports and ranking as the second largest individual country[1] for apparel manufacturing in the world behind China. The International Labour Organization predicts that approximately 25 million jobs will be lost worldwide as a result of Covid-19[2]. Within this scenario certain groups of workers are facing worse consequences. Hence, people in less-protected and low-paid jobs, particularly in those countries considered more vulnerable to the lack of a structured social-labour rights.
Let’s start with some number to frame the current situation upon the country. Today’s data show that the Bangladeshi economic lost rises up to $3.16 billion and affects 2.26 millions of workers[3].
An online survey administered between March 21 and March 25, 2020 shows this trend[4]. Workers in Bangladeshi factories sew clothing for some of the world’s biggest fashion brands. The country’s apparel industry played a pivotal role in the economic growth in recent years, contributing about 84% of Bangladesh’s export revenue[5].
Nowadays, the companies’ actions do not stay isolated to a particular market anymore. The closure of retails and shops all around the world, specifically in the developed countries, pushed the factories to remain closed and send workers home. In a manufactories-oriented market as the Bangladeshi one, it means leaving the people in starving conditions. As highlighted by Dr. Adam Coutts[6], “these workers have been forgotten. The covid crisis really shows how expendable multi nationals and governments consider these workers”.
The crisis of the garment sector in Bangladesh has been facing three crucial and catastrophic scenarios. Firstly, the difficulties to purchase the raw materials to start and continue the productions. Secondly, there has been the difficulties for buyer late payments and finally, the buyer cancellations of the ongoing orders. The essential connection between global markets is a fact and undoubtedly a governmental decision tremendously affects the economic stability of a country on the other side of the world.
On January 23, 2020, the central government of China imposed a lockdown in Wuhan and other cities in Hubei in an effort to quarantine the centre of an outbreak of Covid-19 disease. From that, other areas faced lockdown soon afterwards, drastically impacting on the export of Chinese raw materials, crucial for the Bangladeshi garment factories. According to the report[7], more than the 90% of the Bangladeshi suppliers faced delays in raw material orders from China and almost half of these have been reported that on one hand, the price of the materials suddenly increased, on the other hand, worldwide buyers have been refused to adjust their payments in response to the materials price increase[8].
Furthermore, the Survey Report shows that buyers delayed the payments. 10.9% of Bangladeshi suppliers experienced delays of 1 to 10 days in payments. Yet, the majority experienced longer delays of the contractually stipulated payment terms and conditions. Other sources[9] report that some buyers are pushing back payments by 30 days or even more.
The scenario got worse by the end of March when some buyers decided to cancel or put on hold both the orders already in process and the future ones. As largely reported by Bangladeshi newspaper and several interviews, a significant amount of orders were already completed and ready to be shipped. Hence, the suppliers had already entirely covered the production costs, exasperating the impossibility to pay the employers and the management fees. Many buyers[10] invoked the major force clause to avoid to honour their contractual obligations to pay[11]. Many theories are growing about the legitimacy of it. Clearly, even if International commercial contracts generally contain precise and elaborate provisions in regard of parties’ non-performance behaviour, pandemics are reasonably not specifically included in those clauses[12]. Yet, accordingly to Article 7.1.7 of the Vienna Convention for International Commercial Contracts[13], “non-performance by a party is excused if that party proves that the non-performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences”.
According to the fashion law expert Alan Behr, this appears to be “an unjustified use of the force[14] majeure clause since most force majeure clauses do not specify pandemics as a reason for failure to pay. More importantly, according to Article 7.1.1 of the Vienna Convention for International Commercial Contracts, force majeure claims should apply to the party with the most relevant contractual obligation[15], which in this case would be the Bangladeshi factories producing items, not the buyers that have agreed to pay for them”[16]. How the Covid-19 will impact the judicial analysis of force majeure clauses going forward remains to be seen. However, the consequences of this crisis is envisaging damages far more direr on millions of workers in Bangladesh. Decades of western buyers squeezing down on prices paid to suppliers left the workers with no savings to survive and now it is crucial for buyers to amend purchasing practices to the aim to guarantee social sustainability. These changes include order stability that allows for planning, timely payments of orders and, above all, the full respect for workers’ rights.
[1] R. Suhrawardi, ‘Collapse Of Bangladesh’s Garment Industry During Coronavirus Leaves Its Workers More Vulnerable Than Ever’, March 30, 2020, Forbes. Available at https://www.forbes.com/sites/rebeccasuhrawardi/2020/03/30/collapse-of-bangladeshs-garment-industry-leaves-its-workers-more-vulnerable-than-ever-during–coronavirus/#36b5fd01f27e
[2] International Labour Organization, ‘COVID-19 and the world of work: Impact and policy responses’ March 18, 2020. Available at https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_738742/lang–en/index.htm
[3] BGMEA Bangladesh Garment Manufacturers and Exporters Association. Availbable at https://www.bgmea.com.bd
[4] M. Anner, ‘Abandoned? The Impact of covi-19 on Workers and Businesses at the Bottom of Global Garnment Supply Chains’, published on the March 27, 2020, Center for Global Workers’ rights in Association with the Worker Rights Consortium
[5] ‘2019 in Review: Bangladesh Textile and Apparel Industry’ , January 5, 2020. Available at https://www.textiletoday.com.bd/2019-garment-sector-experiences-peaceful-environment-export-slows/
[6] Dr Adam Coutts is a Research Associate in the Department of Sociology, Senior Research Fellow at Magdalene College, University of Cambridge and an Affiliated Researcher at the new Bennett Institute for Public Policy.
[7] Ibid. – on the garment sector
[8] Please see Figure 3a and 3b, Center of Global Workers’ Rights source
[9] Abdulla, Hannah. “Rise in Payment Delays Weighs on Bangladesh Factories.” Just-Style, March 17, 2020 and Mares, Radu. “Covid-19:Labour Rights in Global Supply Chains- Impact and Responsabilities”. Raoul wallenberg Institute, April 15, 2020
[10] For instance, Primark and Matalan cases. Several news articles, one of them available at https://www.theguardian.com/global-development/2020/apr/02/fashion-brands-cancellations-of-24bn-orders-catastrophic-for-bangladesh and Basak, Abir, ‘Bangladesh’s RMG to collapse if fashion brands do not support during COVID-19 pandemic’, April 4, 2020. Available at https://www.textiletoday.com.bd/bangladeshs-rmg-collapse-fashion-brands-not-support-covid-19-pandemic/
[11] Young, Vicki M., “Thinking about Canceling on Your Factory? Here’s What You Need to Know.” Sourcing Journal, March 23, 2020.
[12] Ibid.
[13] Available at
[14] Cited in Young, Vicki M., “Thinking about Canceling on Your Factory? Here’s What You Need to Know” Sourcing Journal, March 23, 2020.
[15] International Institute for the Unification of Private Law, UNDROIT Principles 2010, Article 7.1.7 (Force Majeure). Available at https:// www.unidroit.org/instruments/commercial-contracts/unidroit-principles-2010/404-chapter-7-non-performance-section-1-non-per-formance-in-general/1050-article-7-1-7-force-majeure
[16] M. Anner, ‘Abandoned? The Impact of covi-19 on Workers and Businesses at the Bottom of Global Garnment Supply Chains’, published on the March 27, 2020, Center for Global Workers’ rights in Association with the Worker Rights Consortium
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