RMG buyers seek price cuts in new orders: Report

Workers are becoming more vulnerable as the pandemic persists

Staff Correspondent

30 April, 2021 12:00 AM printer

Around 65 percent of the suppliers have reported that their buyers demand lowering of prices as the market is affected by the Covid-19 pandemic, according to a report.

The price cuts that the buyers have demanded are bigger than they usually ask for year-over-year.

As a result, 56 percent of suppliers have been forced to accept some orders at reduced prices.

The report highlighted that Bangladeshi workers suffered a 35 percent pay cut during the lockdown month, many thousands of workers lost jobs and depleted their savings without having a safety net to fall back on.

The report, titled “The Weakest Link in the Global Supply Chain: How the Pandemic is Affecting Bangladesh’s Garment Workers”, was launched by Subir and Malini Chowdhury Center for Bangladesh Studies, UC Berkeley, in collaboration with the Institute for Human Rights and Business, with support from UNDP Bangladesh and the Government of Sweden on Thursday.

As Bangladesh’s second lockdown is underway, the findings of the report offer a cautionary tale on how brands and supply chains should respond.

K.M. Abdus Salam, secretary at Ministry of Labour and Employment, joined the event as the chief guest.

Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), and Dr. Kamal Uddin Ahmed, full-time member at National Human Rights Commission of Bangladesh, spoke as special guests. 

The report is drawn from in-depth interviews conducted between October 2020 and February 2021 with senior executives from international brands, Bangladeshi suppliers, representatives of the international civil society, and the Bangladeshi labour activists.

The report finds while the industry suffered from the closure of markets, suspended shipments, delayed payments, and a liquidity crisis, Bangladeshi workers, suffered what was in effect a 35 percent pay cut during the lockdown month.

Many Bangladeshi factories supplying to international brands consolidated their business, and some went under constraints.

According to the report, the suppliers reported that when the pandemic disruptions first hit earlier in the year, 77 percent had at least some of their orders cancelled without payment from buyers.

Currently, only 27 percent of these same suppliers say all or most of their orders have been paid in full.

The report also said 97.3 percent of the suppliers responded that the buyers did not agree to assist suppliers with severance pay costs when the workers were dismissed as a result of buyer in-process order cancellations.

Speaking at the event, K.M. Abdus Salam said that the government of Bangladesh has taken strong measures to ensure health safety in workplace, particularly in the RMG sector, to continue the production in the industry as well as to safeguard the welfare of the workers' group.

“With support from the government of Bangladesh, we have taken a number of steps in ensuring the safety of garment workers during the Covid-19 pandemic including the establishment of isolation centres, PCR lab among others” said Faruque Hassan.

While explaining the background of establishing the Readymade Garments (RMG) Sustainability Council (RSC), he also reiterated the commitment of the BGMEA in developing a green and sustainable industry. 

Resident Representative, Bangladesh of UNDP Sudipto Mukerjee emphasized the need to work together to recover from the pandemic impacts.

"We need a fundamental mind shift in terms of the role and responsibilities of the business sector.”

He added, “If we want to reverse pernicious trends that have offset much of the pre-Covid progress made in the implementation of the 2030 Agenda for Sustainable Development, we must commit ourselves to tackle the crisis head-on and to do so together.”