The fashion sector is always haunted at the prospect of yet another allegation from social activists or laws passed against its dubious sourcing practices, leaving the sector defensive and running for cover. These are not without reason as for decades the fashion sector has exploited underdeveloped countries’ cheap labour forces for financial gains, at the expense of mostly women and children. The garment industry, a significant source of employment, provides jobs to around 94 million workers globally. 

While trends vary by region and country, nearly 60 per cent of garment workers globally are women, reaching nearly 80 per cent in some regions. Although completely illegal in most countries, according to International Labour Organisation (ILO), around 11 per cent of the readymade garment industry workers worldwide are children. 

Fast fashion had deteriorated the labour rights situation even further as it continuously looks for the cheapest source – giving unscrupulous RMG manufacturers a field day as they lure in people eager to find employment with false offers of a better livelihood.  Sofie Ovaa, global campaign coordinator of Stop Child Labour at UNICEF explains, “There are many girls in countries like India, Cambodia and Bangladesh, who are willing to work for very low prices and are easily brought into these industries under false promises of earning decent wages.”

Weak anti-slavery laws a bane

Meanwhile many countries have passed anti-slavery laws for compliance. For example, Canada has the ‘Fighting Against Forced Labour and Child Labour in Supply Chains Act’. But there are questions if the law is really effective and how robust it is. Going by the lax law, it hardly comes across as a fight for betterment that a first world economy would uphold and turns out to be more a moral code of conduct that should be followed. This Act does not make it mandatory for large Canadian companies that are outsourcing from various developing and under-developed economies where the chances of labour exploitation are on the higher side. It is entirely at the discretion of these organisations to choose to follow the Act as an ethical guideline or not. 

Similarly, the State of California has very weak and vague disclosure laws that enable large importers to carry on doing business with dubious suppliers, as do Australia and the UK. What is surprising is that in these countries, the movement towards ending labour exploitation in the fashion industry is led by individuals and groups of the public rather than their governments. 

Popular high street brands continue using child labour

Shocking as it may be, the list is a long and disturbing one as these are much-loved labels – H&M, Zara, Uniqlo, GAP, Nike, Aldo, Aeropostale, Urban Outfitters, Primark, Walmart and Forever 21, Victoria’s Secret and La Senza to name some of the many. Whilst most of these brands often espouse social causes such as sustainability, LGBTQIAA+ rights, etc., when it comes to speaking out about child labour, they remain vague. 

Child labour has been advantageous for the readymade garment and textile sector because most of the tasks involved require low skill and according to industry experts, little fingers pick better cotton because they don’t damage the fluff! According to SOMO, the Netherlands-based independent research company, the worst offenders happen to be Egypt, Uzbekistan, Pakistan, India, Bangladesh, Thailand and China. One can’t of course put the blame squarely on brands exploiting children for financial gains – the fashion supply chain is nearly impossible to control as of date because of the multiple sub-contractors in it who fly below the radar and buyers don’t have any idea about them. 

In April 2023, cotton yarn prices stood at $5,651 per tonne (CIF, Italy), down -9.8% from the previous month. The import price displayed a consistent decline, with August 2022 marking the highest growth rate at 14%, reaching a peak of $7,772 per tonne. However, from September 2022 to April 2023, average import prices remained stagnant.

Diverse price trends across nations

Significant price disparities were evident among major cotton yarn providers. Egypt commanded the highest price at $9,706 per tonne in April 2023, while Spain offered some of the lowest rates at $3,348 per tonne. Spain experienced the most growth from April 2022 to April 2023 (+0.8%), while other primary suppliers observed declines.

Variability in Italian cotton yarn import prices by type

The price of cotton yarn not intended for retail sale, containing 85% or more cotton, stood at $6,181 per tonne, while yarn with less than 85% cotton was priced at $3,370 per tonne. Notably, price fluctuations were notable based on product type, with retail-ready cotton yarn showing a slight growth rate (-0.6%) compared to falling prices of other items.

Italy's fluctuating cotton yarn imports

Italy's cotton yarn imports surged to 5.6K tonnes in April 2023, a 7.2% rise from March 2023. This growth was most pronounced in September 2022, with a 101% increase compared to the previous month. While the April 2023 imported cotton yarn value was $32M (IndexBox estimates), overall imports saw a notable decline. The exceptional 66% m-o-m growth in September 2022 marked the highest rate.

Dominant cotton yarn imports by type in Italy

In April 2023, Italy's prime import was cotton yarn (other than sewing thread), with 85% or more cotton content, accounting for 77% of all imports (4.3K tonnes). This significantly exceeded imports of cotton yarn with less than 85% cotton content, at 973 tonnes. Between April 2022 and 2023, imported cotton yarn not intended for retail sale declined at an average monthly rate of -3.6%. Other types displayed varying growth: cotton yarn (other than sewing thread), less than 85% cotton, not for retail sale (+0.7% per month), and retail-ready cotton yarn (+13.8% per month).

Germany has expressed firm support for the revival of negotiations concerning a free trade agreement between the Philippines and the European Union (EU). The German ambassador to the Philippines, Andreas Michael Pfaffernoschke, emphasized the nation's keen interest in exploring new business opportunities and fostering bilateral ties. The envoy noted the potential for increased exchanges of skilled workers and collaboration on various fronts.

Promising Prospects Ahead

Andreas Michael Pfaffernoschke, the new German ambassador to the Philippines, lauded the initiative to reopen discussions on a Philippines-EU free trade agreement. He underscored the significance of mutually beneficial economic prospects for both nations, including strengthened people-to-people relations. The exchange of skilled workers and expanding business avenues could further enhance ties between Germany and the Philippines.

Collaboration Beyond Trade

President Ferdinand R. Marcos Jr. and Ambassador Pfaffernoschke have extended their collaboration to areas beyond trade and investment. They have pledged to work closely on climate change mitigation and adaptation efforts. This collaboration underscores the shared commitment of both nations to address pressing global challenges and work towards sustainable solutions.

Trade Ties in Numbers

In the past year, Germany retained its position as the Philippines' 12th largest trading partner, 10th biggest export market, and 15th import supplier during January-October. The bilateral trade volume between the two countries amounted to $4.7 billion, encompassing $2.8 billion in exports and $1.9 billion in imports. Moreover, Germany stands as the Philippines' primary trading partner within the EU.

In a dynamic move, Germany reaffirms its support for reinitiating talks on a Philippines-EU free trade agreement, poised to invigorate trade relations and foster collaboration on multifaceted fronts.

A recent survey found that over 80% of consumers in the UK, France, and Germany expect the economic downturn to last more than a year. In response, more than 90% of shoppers are changing their spending habits.

Specifically, consumers are spending less (54%), eating out less (49%),  purchasing fewer non-essential items (51%), shopping with less expensive brands (44%) and limiting spending on clothing, footwear, and accessories (54%) 

Consumers are also more likely to shop with retailers that offer exclusive community discounts (63%). This is especially true for students (89%), healthcare workers (81%), and teachers (73%).

Loyalty programs are also becoming more popular, with over 70% of consumers interested in joining programs that offer exclusive benefits. In particular, 7 out of 10 consumers within identity-based communities are more loyal to brands that offer exclusive advantages.

These findings suggest that consumers are becoming more price-conscious and are looking for ways to save money. Retailers that can offer exclusive discounts and create emotional connections with consumers will be well-positioned to succeed in the current economic climate.