Thursday, August 27, 2020

Ethiopian sweatshops and cancelled orders

The largest childrens' wear retailer in the US has cancelled millions of dollars worth of clothing orders from suppliers in Ethiopia because of the coronavirus pandemic, pushing companies into debt and leaving employees facing pay cuts. The Children’s Place is one of four leading US apparel brands sourcing goods from Ethiopia, alongside PVH, JC Penney and H&M. In its annual report last year, TCP cited Ethiopia as a “key sourcing region”. The Worker Rights Consortium said at least seven factories in Ethiopia were producing clothing for TCP stores, employing about 15,000 workers.

The Children’s Place (TCP), which has more than 1,000 stores in the US and 90 around the world and had a turnover of $2bn (£1.5bn) last year, cancelled orders from Ethiopia in March and delayed payments by six months for orders completed in January and February. Ethiopian suppliers claim that TCP has demanded retroactive rebates on products that had been shipped before the crisis. They said the company cited the force majeure clause (which frees companies from contractual obligations in the case of certain extreme events) in its contracts as a reason not to pay, due to Covid-19.

Suppliers said the cancellations have had serious consequences for their businesses. Some producers said they have been unable to pay their lenders due to the cancellations, which has left them crippled with debt after already buying raw materials and paying workers. Others have said the cut in orders was enough to wipe out their profits for the year. One supplier told the Guardian his company had lost its credit line after losing nearly $1m because of contract cancellations.

 “We are a company with 95% women workers. Some of the workers are mothers,” the supplier said. Asked what the company could do legally to recoup the hundreds of thousands of dollars lost, the supplier responded: “How do you fight such a big US corporation? They have endless pockets.”

Scott Nova, executive director at the Worker Rights Consortium, said: “We understand that The Children’s Place faces real financial challenges during this time. But this just represents a small fraction of their total cancellations globally. There are other brands, like PVH and H&M that have stepped up to pay. So can TCP, and they should.”

Ethiopian workers are the lowest paid in the global garment supply chain. Most of the country’s garment workers are young women who have migrated from poor rural areas.

According to a report by the NYU Stern Center for Business and Human Rights, the minimum wage for Ethiopian garment workers is $26 a month, compared with $95 in Bangladesh and $326 in China.

'Aida', 20, who has worked for a factory that produces clothing for TCP for three years, said her wages had been cut from $26 a month to $10 since March. 

“I am afraid I am going to lose my job because of the crisis and get expelled from my house when I can’t afford to pay my rent. Since the factory has stopped providing transportation I get up earlier and walk to work. It takes me around 50 minutes to get to the factory. The days I skip meals has become more frequent … I used to eat vegetables but now I usually consume only cornflour meals.”

'Tamru', 22, who works at the same factory, usually makes $27 a month, working nine hours a day, six days a week. He must pay for his own housing. Since orders were cut, the company stopped supplying buses to transport workers to the factories, and his wages have been cut in half. He told the Guardian that this had made buying basic food unaffordable.

“I can’t eat whenever I want to eat,” he said. “I sometimes skip dinner. I walk from home to work every day because the factory has stopped providing transport service and I can’t afford to pay for a bus. My work is so exhausting, I never sit, and the pay is very small to cover my expenses.”

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