LONDON: Lidl, Zara’s parent company Inditex, H&M, and Next are claimed to have paid clothing suppliers in Bangladesh during the pandemic less than the cost of production, according to a report by the University of Aberdeen and UK-based fair trade campaign group Transform Trade.
Of the 1,000 factories in Bangladesh producing garments for the retailers, 19 percent of Lidl’s suppliers, 11 percent of Inditex’s, 9 percent of H&M’s, and 8 percent of Next’s said they were producing at less than the cost of production.
The majority of suppliers to those four brands, as well as Tesco and Aldi, told researchers that they were still being paid at the same rate from March 2020 to December 2021.
Despite rising raw material prices and the need to implement COVID-19 mitigation measures, factories reported that they were unable to pass on additional production costs to buyers during the pandemic.
Moreover, the report discovered that larger retailers buying from 15 or more factories were more likely than smaller retailers to engage in unethical practices such as delaying payments or canceling orders.
Such practices impacted suppliers’ employment conditions, with nearly one in five factories struggling to pay the country’s legal minimum wage.
“This research is a wake-up call,” Fiona Gooch, a senior policy adviser at Transform Trade, said.
Gooch added: “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.
“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.”
In a response published within the report, Lidl said it “takes its responsibility towards workers in Bangladesh, and other countries where our suppliers produce, very seriously and is committed to ensuring that core social standards are complied with throughout the supply chain.”
The company “completely” refuted that it was paying its suppliers the same or less than prior to the pandemic.
“As part of our corporate due diligence, we continuously and systematically review potential risks such as human rights violations in the supply chains of our own-brand products and take remedial action where necessary,” it said.
Although Primark admitted to having to cancel some orders during the pandemic, when nearly all of its stores were forced to close for a period of time, it stated that in April 2020, the company established a wages fund in excess of £22 million ($27 million) with the aim of supporting suppliers’ ability to pay their workers.
A Tesco spokesperson told The Guardian: “We are committed to fair and transparent partnerships throughout our supply chain, and we worked closely with our clothing suppliers to support them through the challenges of the pandemic. To ensure that they could continue to pay their workers fairly, we did not cancel any orders, did not penalize late deliveries, and honored our payment terms in full.”
Meanwhile, H&M declined The Guardian’s request for comment.
