Corona and global supply chains

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Anu Kultalahti |

Fierce competition for the cheapest price has meant that in the global supply chains, many workers have been living hand to mouth for years. When they have been paid wages that are insufficient for a living, it has also been impossible for them to put away some savings for the rainy day. In many countries, the public safety net is virtually non-existent and in particular those workers who are engaged in informal employment, may not even be entitled to social security. Now the diminished demand in consuming countries due to the coronavirus, and travel and other restrictions in the producing countries in an attempt to contain the spread of the virus have forced workers into an even tighter corner.

Suppliers will not be compensated for the orders that have already been made

The Bangladeshi garment manufacturers association has published figures according to which international buyers have cancelled orders from the Bangladeshi manufacturers worth three billion US dollars. According to media reports some companies, such as the fast fashion brand Primark, have in this situation utilized force majeure clauses in their contracts which means that their suppliers will not be compensated for the orders that have already been made. In Bangladesh alone, the garment industry employs approximately four million people whose income is now at risk. Some have already been sent home without a wage or severance pay. Income from garment exports is so important for the country that in the midst of the coronavirus crisis, the garment sector is being considered a critical industry which means that the authorities have not ordered garment factories to shut.

Both the Bangladeshi garment manufacturers association and trade unions have, on the one hand, appealed to international buyers not to cancel their orders at this time and, on the other hand, to the country’s authorities that they order garment factories to shut down. The Bangladeshi Prime Minister has announced a bailout to export oriented industries but the companies consider the package inadequate. Some companies, such as H&M, are committed to paying their suppliers for orders that have already been made and for orders that are in the process of being made. The problems of Bangladesh's garment sector are present in other countries, such as Cambodia and Myanmar, and most likely in other industry sectors, too.

In India, a three-week lockdown has been announced in an attempt to contain the spread of the coronavirus. As a consequence, most workplaces and factories around the country were closed at a very short notice. The authorities have recommended the employers not to lay off workers and continue to pay workers their full wage during the shutdown. However, in for example the city of Bangalore in the state of Karnataka, local trade unions have confirmed that garment workers have been told that when the factories reopen, they must “compensate” the employer by working overtime and on Sundays. This is going to be hard for the workers many of whom already work 12 hours a day, six days a week.

Tea plantations have begun to persuade workers to return to work

In India, tea plantations were also closed when the emergency measures were announced In the Nilgiris tea production area in the state of Tamil Nadu, it is currently a peak season for tea. Unlike in the major tea growing regions of Assam and West Bengal where tea plantations still remain shut, tea plantations in the Nilgiris region have begun to persuade workers to return to work as agricultural sector workplaces are allowed to continue operating despite the lockdown in place. According to information received by Finnwatch, at least the workers at the Chamraj Estate, which belongs to the United Nilgiri Tea Estates and from where tea is brought also to Finland, workers have been asked to sign a paper, which claims to relinquish the employer of responsibility should workers fall ill. Based on local media reports, similar practices are in use at other plantations too. So far, the locally recruited employees of the estate have not agreed to the terms proposed by the employer and hence they have not returned to work. However, the plantation’s migrant workers who have less bargaining power than the local recruits have returned to work. At least some of the tea workers in the Nilgiris region have also not been paid wages for the days when they have not been to work due to the lockdown. The workers feel they have no other option but to start working soon even though the employer is not providing them even with basic health precautions such as masks and sufficient hand wash facilities.

United Nilgiri Tea Estates is both a Rainforest Alliance and Fairtrade certified supplier to the Finnish tea houses Forsman and Nordqvist as well as international brands, including Twinings, Tetleys, Yorkshire Tea, Typhoo, Ringtons and Marks & Spencer. Last year, Finnwatch published a report about working conditions at the plantation. United Nilgiri Tea Estates is one of India’s top tea exporters.

Migrant workers are among the most vulnerable groups elsewhere too. In Thailand, restrictions and the announcement of closing down the county’s borders made tens of thousands of migrant workers rush to the border crossing areas. Some of the workers, who remain in the country after the borders have been closed, are now without a job and income. In the food industry and the medical glove industry, which remain in operation, migrant workers have access to limited information as official communications about the coronavirus are only available in the Thai language.

Unlike in the case of most consumer goods, the demand for medical supplies and protective equipment has spiked. Most of the worlds medical gloves are made in Malaysia. Finnwatch has last reported about serious human rights violations in Malaysia’s gloves industry in the last autumn. The European Union delegation to Malaysia has sent a letter to the Malaysian Minister of International Trade and Industry in which the country is, on the one hand, praised for its measures to restrict the spread of the coronavirus but in the other hand, encouraged to ensure that the glove factories remain in operation 24/7.Although in order to manage the increased orders, glove manufacturers are now recruiting locally, the labour force in the gloves industry is mostly migrant workers. They live in crowded dormitories in which maintaining safety distance and social isolation are not possible. The EU letter pays no attention at all to the situation, or the rights, of the migrant workers.

The risks caused by the current crisis must not be transferred to the workers

Even though the corona crisis is causing financial problems also to the buying companies, they often have bigger margins of profit than their suppliers. The risks caused by the current crisis must not be transferred to the workers who often are already in a vulnerable position. Buyers must participate in their suppliers’ costs of responsible business conduct, for example, by paying for their orders at the originally agreed price. In order to meet their responsibility to respect human rights during the coronavirus pandemic, companies must also ensure that:

  • their suppliers and other business partners provide safe working environment to their workers, in which it is possible to observe official recommendations about gatherings of people, social distancing and washing hands. Workers must be provided with reliable and up-to-date information in their own language about hygiene and other recommendations which enable them to protect themselves from the coronavirus infection as well as the necessary personal protective equipment. Measures that are just for show that take up resources but do not help to contain the spread of the virus must be avoided. Instead, resources should be channelled to where they truly help to make a difference. Finnwatch has for example received information according to which in some factories, workers coming to work have their temperature taken even though such measures are unlikely to help reduce the spread of the virus. 
  • workers who live in company provided accommodation or dormitories can observe the same recommendations. This means making sure workers’ living quarters are less crowded.
  • when it is necessary to temporarily shut down workplaces, for example in order to protect workers health or to implement official orders, the income of all workers, including those in informal forms of employment is guaranteed. If workers must be let go, they must be given the appropriate severance pay or other compensation.that workers who fall ill or must be quarantined, can take paid sick leave.
  • that despite emergency measures, decent working hours are respected and workers’ freedom of association is not limited beyond what is absolutely necessary in order to contain the spread of the coronavirus. 

The corona crisis has made it clear how the long global supply chains are full of risks and extremely vulnerable to disruptions. For workers in the global value chains, the competition for the cheapest price in the value chains mean meagre salaries and inability to be prepared for emergency situations. For the producing countries, it means tax income that is insufficient to provide their citizens much of a social security net. In the aftermath of the crisis, human rights challenges in the value chains must be addressed with determination. The most important tools for this task are national and EU level mandatory human rights due diligence legislation, strengthening of labour rights clauses in trade agreements and socially responsible public procurement.

This current crisis has also offered a glimpse into what the impacts of an ecological crisis could look like from the viewpoint of workers in the global supply chains. Efforts to address the climate crisis and the biodiversity crisis must be continued. At the same time, it must be ensured that the workers who are currently dependent on unsustainable levels of consumption are provided a just transition to a low-carbon circular economy. 


Anu Kultalahti

Anu on tutkija Finnwatchin Ihmisarvoisen työn tutkimusohjelmassa. Ohjelmassa keskitytään järjestäytymisvapautta, työaikoja, elämiseen riittävää palkkaa ja työturvallisuutta koskeviin kysymyksiin yritysten alihankintaketjuissa kehittyvissä maissa.

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