The COVID-19 crisis has significant consequences for the global textile and apparel industry and poses immense challenges for companies in the sector and their employees.
In the first stage of the COVID-19 outbreak particularly China was affected. In many places, production was temporarily stopped. As China is an important producer of raw materials for textile production, this has led to material shortages in other countries, for example in Myanmar and Cambodia. As a result, a number of production locations already had to shut down or completely stop production.
In the current second phase, shop closures in countries of consumption - such as here in Germany - are threatening the existence of numerous fashion companies and retailers. The goods that are already in stock in the shops cannot be sold. At the same time, running costs have to be paid, which causes financial shortages as there is a lack of income.
To counteract liquidity problems, some brands and retail companies have already cancelled current orders and/or are holding back new orders. This, in turn, also drives garment factories into an existential crisis. Goods already produced are not accepted while factories have already stocked new material for new orders. Ultimately, this also has an impact on companies in the deeper supply chain, such as spinning mills and wet-processing units.
The situation is further complicated by the fact that the coronavirus also spreads in the countries of production. This means that measures must be taken to reduce the risk of infection for workers in the production plants. In some countries, such as India, the government has already ordered production to be stopped for a certain time period. Since most production countries lack governmental safety nets, the loss of wages and compensation payments for many workers is leading to a loss of livelihood.
Wage and social benefits: there is a risk of loss of wages and dismissals
When factories go bankrupt due to cancelled or missing orders, workers do not receive their wages, nor any severance pay.
Workers face the threat of dismissal or loss of wages if they themselves fall ill, if production is stopped or decreased due to lack of orders, or if factories have to be closed by government regulations.
Even if factories are required by law to continue paying workers during this period, this is not always the case in practice.
In many producing countries there are no social safety nets to compensate for this loss of wages. All this has led to social unrest on several occasions in the past.
In many countries it is common practice to pay by piecework. In contrast to payment per hour, workers receive a fixed amount per item of clothing produced. If they cannot work, they do not receive a wage.
Temporary workers are particularly threatened by this situation - they are often the first to be dismissed.
Health and safety: the risk of infection is high
The risk of infection in production facilities is high: workplaces often only have a short distance between them, many workers meet at the same time during shift changes and often there are no sanitary facilities for hand-washing. Particularly in the case of piecework by quantity, there is a risk that workers do not take the time to wash their hands, even if there are wash basins or sanitary facilities.
Workers often lack reliable information - they do not know what the spread of the virus means.
It is likely that many workers infected with COVID-19 will continue to go to work with little or no symptoms - especially if they don't have their own health insurance or if the state doesn't pay for testing. This promotes the spread of the virus.
Workers often have no health insurance. In case of illness they cannot afford treatment.
In some countries public transport is suspended. As a result, many migrant workers from rural areas are stranded at train or bus stations, with no income and no place to live. This is especially dangerous for women.
Sometimes it is up to the factories themselves to decide whether to close temporarily (for example in Bangladesh). Despite the high health risk, many workers feel forced to continue working to secure their income.
Working hours: production losses are compensated by excessive overtime
In factories where there have been production losses, these may be offset by excessive overtime as soon as orders are placed again.
The same applies to production plants where sick leave has to be compensated by other workers. Or in countries that are already recovering from a major outbreak, such as China.
The Textiles Partnership offers its members support by means of regular updates and exchanges in order to jointly evaluate current developments and identify synergies. The Secretariat is in close contact with other initiatives to gather information and promote joint actions to help mitigate the negative effects of the COVID 19 outbreak.
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