With the Accord agreement on Fire and Building Safety in Bangladesh set to expire in the next three months, the Bangladesh garment industry once again faces the risk of natural and human disasters like the Rana Plaza Factory disaster in 2013. The Accord on Fire and Building Safety was signed by 200 European brands and retailers like Inditex, H&M and Primark, labor unions and Bangladeshi factory owners in 2013. As per New York Times, the agreement made periodic inspections at Bangladesh apparel factories mandatory for their owners. Factory owners also had to collectively contribute funding for safety training and some factory improvements. Any companies that violated the terms could be fined or expelled from the group.

The agreement was originally set to expire on May 31, 2021. However, brands and union’s demands for a replacement deal led to an extension of the expiration date to August 31. Yet, the future of the Bangladesh garment industry looks uncertain as it struggles to monitor its annual $34 billion apparel exports.

Global pioneer of worker safety

The world’s second largest garment exporter, Bangladesh houses nearly 4,500 export facilities. These facilities employ over 4.5 million people making them highly vulnerable to fire and electrical hazards. In the last five years, Bangladesh fixed 120,000 such hazards with the help of the Accord agreement. Nearly 200 factories with two million workers lost their contracts due to poor safety standards after 38,000 inspections. The Accord was thus known as a pioneer of global worker safety and auditing in the industry. The agreement ensured garment manufacturers made the required changes in factories besides improving their supply chain transparency, says Michael Posner, Professor-Ethics and Finance, Stern School of Business, New York University. The agreement went through a period of transition in the last 12 months with the Ready Made Garments Sustainability Council proposing a new framework excluding key elements of the Accord such as individual brand accountability and monitoring by third-party auditors. Monitored by BGMEA, the agreement aims to give more power to trade unions, says Christy Hoffman, General Secretary, UNI Global Union

New agreement minimizes brand accountability

However, Christina Hajagos-Clausen, Director-Textiles and Garments, IndustriALL, alleges, the proposal by brands is motivated by their desire to include more American brands such as Walmart in the agreement. The proposal minimizes individual accountability by enticing North American retailers to contribute towards collective safety monitoring, adds Hajagos-Clausen said. It reduces the overall credibility of the program, making it impossible to be used as a blueprint for worker safety globally, she says further.

A boon for Bangladesh workers

Bangladeshi factory workers are however, looking forward to this agreement. The pandemic has devastated the country’s apparel sector with factories losing orders worth $3.5 billion. Investments needed to meet safety standards have already squeezed profit margins of small and size garment factories. Order reductions and cancellations are further adding to their financial constraints. They also face the uphill task of upgrading their factories to new COVID-19 related safety measures.

Though Bangladesh has launched many initiatives, it still has a long way to go in terms of worker safety, says Posner. The country has over 5,000 garment factories, of which only 2,500 factories are covered by the Accord and Alliance. The remaining factories continue to operate in unsafe conditions. A successor to Accord is thus the need of the hour, adds Posner.

Its glamorous side cannot hide the fact that much of fashion industries shine comes from the hard work and toil of 65 million workers employed in thousands of garment factories across South Asia. As a 2019 ILO report highlights, garment factories in South Asia employ around 75 per cent of all garment workers worldwide. However, most of them face ethical, environmental and sustainability issues, said Designer Derek Lam to the Women’s Wear Daily.

Introspecting supplier treatment

The WWD report says, there has also been a upsurge in violence against the Asian American and Pacific Islander community in some of these factories. To change this balance of power between brands and suppliers, brands need to introspect on their behavior with suppliers, observes Joni Simpson, Senior Gender Specialist, ILO-Asia and Pacific. They need to create sustainable conditions for workers, she adds.

Consumers too have been urging brands to be more transparent in their operations. Johnson Yeung, Regional Urgent Appeal Coordinator, Clean Clothes Campaign East Asia Coalition says, the industry employs some of the most vulnerable, marginalized, poor neighborhoods and communities in South Asia and they need to be made accountable for workers well-being. Pandemic fuels labor abuses in Asian factories

Most countries in the Asia Pacific region are politically unstable and lack proper infrastructure. This makes them more vulnerable to labor abuses by Western companies. When the pandemic hit some of these countries, brands cancelled orders and deferred payments for orders already delivered. This made it difficult for factory owners to pay workers. As per Clean Clothes Campaign research, workers are currently being paid only 2 to 5 per cent of the clothing made by them.

The fashion industry mainly employs low-cost, low-skilled laborers. Roughly 80 per cent of them are women, reports ILO. The Asian and the Pacific countries employ 35 million women workers in the garment, textiles and footwear sector, notes Simpson. Some of these workers are underage making them vulnerable to sexual exploitation by supervisors and other male counterparts, he adds.

Need for organized change

Addressing some of these atrocities, a report by global risk consulting firm Verisk Maplecroft says, the pandemic has worsened the risk of modern slavery in some of Asia’s manufacturing hubs. COVID-19 led disruptions are fuelling labor and human rights abuses in Asian garment factories leading to a drop in their rankings, adds Sofia Nazalya, Human Rights Analyst, Verisk.

The industry really needs to make an organized change in its method of functioning says, Yeung. It needs to stop being profit-oriented and focus on improving supply chain transparency. It can improve their workers’ conditions by ensuring fair wages, giving them an opportunity to voice their opinions and implementing a code of conduct in factories. This will enable the industry to lift e workers out of poverty and provide them with a real life.

Data released by Cambodia’s General Department of Customs and Excise shows, the country’s apparel exports in Q1 FY21 declined 6.43 per cent to $1.775 billion compared to $1.897 billion exports during the corresponding period of last year. As per Textile Today, Cambodia exported garments worth $7.420 billion in 2020, a 10.24 per cent decline over previous year’s exports. To boost exports, the Cambodian government has announced eight rounds of financial support programs.

According to these programs, the government will provide $40 per month to each worker, while factory owners will pay an additional $30, taking workers’ total monthly pay to $70. One of the reasons for the decline in Cambodia’s exports was a decline in international demand. However, the country hopes to increase exports in the second quarter with opening of lockdowns in the US, UK and other European countries. The Asian Development Bank forecasts the Cambodian economy will grow 4 per cent this year and 5.5 per cent in 2022, as the economic recovery in major trading partners boosts demand for Cambodia’s exports.

Growing demands from the construction and automotive industry is fuelling growth of global textile staples market, says a Global Market Insight report. It says, staples are mainly used in apparel, interior flooring, upholstery, filtration, medical and construction industries. As per Textile Focus, growth in this market is likely to be fuelled by growing concerns about worker’s safety in various industries owing to rising accidents and deaths. These staples are used for manufacturing personal protective clothing for industries and their employment has augmented with stringent government regulations and expected to propel textile staples market.

Medical industry has shown rapid growth in the use of textile staples for wound care and preventing chronic wounds due to properties such as biocompatibility, flexibility and strength. Automotive and transport sectors use these staples for making seat covers, roof, carpet and door liners.

The global textile staples market is dominated by Asia Pacific. North America led by the US also has a substantial share with fast paced economic growth and infrastructure development. Europe, led by Germany has moderate share in textile staples market owing to well established and flourishing automobile industry hosting giants that includes Audi and Volkswagen. The share of Middle East and Africa is expected to increase with demand of protective clothing due to stringent government regulations for workers.

The fashion industry is known to emit 10 per cent of the world’s carbon dioxide. This is more than the carbon dioxide emitted by international flights and maritime shipping combined. One of the ways these emissions can be reduced is by doubling the number of times a garments are worn, says a Sifted report. It states, doubling the number of times an item is worn can reduce its carbon emissions by almost 44 per cent. This number can be further increased to 70 per cent if consumers lease their garments instead of buying them. Over the years, well-known startups like Rent the Runway have emerged to help US consumers rent their desirable clothes. Clothes leasing platforms like By Rotation and La Mas Mona have also been helping UK and Spanish consumers explore the fashion rental market.

White label services for warehousing and logistics

To cash in on this growing $1.26billion fashion rental market, fashion startups are launching white label services to help manage the washing, dry cleaning, repairing and reshipping of clothing items. One such white label fashion rental platform launched in the UK is Zoe.

Launched by entrepreneur Isabella West, Zoe provides the complete rental services for brands including warehousing, reverse logistics and managing wastes. The platform charges a commission for these services depending on the number of services employed by brands. Zoa currently services two menswear retailers; Rathbones Tailor and Cameron Ross besides also working with UK-based reverse logistics provider ReBound Returns.

US startup CaaStle provides fashion rental services in the UK in partnership with men’s suit maker Moss Bros. Similarly, Infinite Play Rental leases technical sportswear in France. Launched by athleisure giant adidas, the platform used software from Paris-based startup Lizee. The company provides rental technologies such as RFID tags to both retailers and logistics providers.

Rentals help retailers profit margins

According to France-based logistic e-commerce provider Lizee, fashion rentals boost retailer’s profit margins. It enables them to earn almost €300 by renting a garment eight times at a third of the price, it adds.

Providers of SaaS services are urging rental service providers to convince big retailers to venture into the fashion rental market. Other factors supporting the growth of fashion rental is the increasing demand for sustainable fashion amongst consumers, says West. Sixty per cent consumers are opting sustainable garments while 36 per cent have already shifted to online shopping, she adds. West expects the fashion rental market to grow 250 per cent in coming years.

Brands can also explore fashion rentals through the SaaS software, says Anna Belez, Co-Founder Lizee. The software enables brands to learn many new things about their products and materials. However, its adoption involves a complicated process of quality control, merchandize planning and innovative software solutions, adds Linda Ahrens, Co-founder, Unown-a German fashion rental platform.

Belez believes, with their innovating thinking Gen Z can help speed up adoption and change perception towards fashion rentals.

US’ announcement to impose on sanctions on Ethiopia and its opponents from the Tigrav People’s Liberation Front have led to widespread protests in Addis Ababa

As per Business of Fashion, both the parties have been fighting a war in Tigray since last November, which prompted the US to take wide-ranging action, according to an African Business report.

Within the Tigray region, the already-troubled Mekelle Industrial Park has remained shuttered throughout the war, with suppliers for brands including H&M and Calzedonia halting operations for fear of workers’ safety. However, the conflict has not caused any major impact on Ethiopia’s garment industry as the majority of manufacturing parks are based outside Tigray.

The US sanctionswon’t necessarily impact the ability of global fashion brands to manufacture in Ethiopia. However, the ongoing unrest, coupled with a second delay in holding parliamentary elections, is likely to drive global investors out of the country.

British Retail Consortium (BRC) has warned that the British retail sector may have to face multiple store closures if the government fails to extend a moratorium on aggressive debt enforcement.

BRC said two thirds of British retailers have been told by landlords they will be subject to legal measures to recover unpaid rent from July 1 when the moratorium ends.

Many UK retailers deemed "non-essential" had to close their stores during multiple COVID-19 lockdowns over the last 15 months, accruing total rent debt of 2.9 billion pounds ($4.1 billion), the BRC said

Around 80 per cent of tenants said some landlords have given them less than a year to pay back rent arrears. Without government intervention, the end of the moratorium could see thousands of shops close, said Helen Dickenson, CEO, BRC. She urged the government to allow the rent arrears built up during the pandemic to be ringfenced and the moratorium on repayment of these debts to be extended to the end of the year.

Yarn traders in Pakistan have urged Prime Minister Imran Khan to remove additional customs duty and regulatory duty on synthetic yarn and turnover tax on yarn traders to maintain competitiveness of the textile industry in international markets. Pakistan Yarn Merchants Association (PYMA) officials say such measures would normalize trade and industrial activities and give a boost to exports.

Hanif Lakhany, Vice President, Pakistan Chambers of Commerce and Industry (FPCCI) added, soaring yarn prices in local markets are increasing production cost of textile sector significantly. He urged the government to withdraw the 1.5 per cent turnover tax imposed on yarn traders and restore the previous tax rate of 0.1 per cent to help the financially stressed yarn traders to get back on feet.

Farhan Ashrafi, Vice Chairman, PYMA requested the Prime Minister to play an effective role in saving the textile industry and similar small and medium enterprises (SMEs) from total collapse. He urged the government to issue immediate directives for abolishing the additional customs duty and regulatory duty on synthetic yarn.

Riju Jhunjhunwala, Chairman and Managing Director, RSWM, one of the largest manufacturers and exporters of synthetic and blended spun yarns says, yarn prices are expected to remain stable during the second COVID-19 wave induced lockdowns this year. Jhunjhunwala says, export volumes are pretty much at the levels witnessed previously. Though domestic demand has fallen substantially, factories are running at 85 per cent capacity as manufacturers have diverted some of the domestic capacity to exports markets.

Clothing mills are already in a production mode. Hence, it will be easier for manufacturers to ramp up their capacities this time, adds Jhunjhunwala. The diverting of orders from China by big companies in the US and other global markets will create a huge demand for Indian products, he adds.

Jhunjhunwala expects demand for casualwear to grow while demand for formal wear is expected to dip globally. RSWM is also trying to change its product mix to cater to new demand by expanding denim capacity from 20 lakh meters a month to 27 lakh meters, he informs.

In a report titled ‘Spinning Around Workers’ Rights, the Centre for Research on Multinational Corporations (SOMO) and Arisa, an independent human rights organization, have accused Tamil Nadu spinning mills of encouraging forced labor in factories. The report surveyed 725 workers, including 284 women, in 29 spinning mills between October 2019 and January 2020. It also conducted additional research into sourcing relations and trade flows, using trade databases and publicly available supplier base information. Around 15 of workers were interviewed in October last year to understand the impact of COVID-19.

The report used 11 indicators developed by the International Labor Organization (ILO) to assess the working and living conditions of workers in these spinning mills. It found majority of workers had been given wrong information about their prospective jobs during the interview process. They were also receiving reduced pay cheques against what was confirmed during recruitment. The report claims to help enable structural improvements to employment, working, and living conditions for workers in the Indian textile and garment industry.

However, Siddhartha Rajagopal, Executive Director, Texprocil and K Selvaraju, Secretary General, SIMA, accuse the report of generalizing incidents. They plan to conduct awareness camps on the new labor codes, take up a third party audit at the mills on labor compliance and educate the mills on labor compliances.