Fashion brands are shifting their sourcing strategies in response to converging crises – from economic setbacks to climate breakdown and conflict. The knock-on effect of instability in demand and orders are leading to factory closures, job losses and unpaid wages for workers. These choices by brands – shifting sourcing strategies, abrupt cancellations and cost-cutting contracts – come at a significant human cost, disproportionately borne by workers across global supply chains. Through the heart of these issues runs a common thread: unfair purchasing practices and their devastating consequences for workers.

Workers continue to experience reduced work and layoffs

The Resource Centre’s ongoing monitoring indicates brands continue to shift orders for apparel and footwear to seek low cost and so-called resilient supply chains. Over the past nine months, we’ve seen a decrease in orders in major apparel sourcing countries including Bangladesh, Türkiye, Indonesia, Portugal, Philippines, Eswatini and Kenya, resulting in severe impacts for workers.

Factory closures and worker layoffs

The ripple effect of declining orders in certain sourcing countries is evident in factory closures and job losses across major production hubs. While it’s difficult to get a comprehensive picture of the scale of closures and layoffs, the cases we have tracked reveal the alarming human cost of these trends:

• In Türkiye, 15,000 companies closed in the first seven months of 2024, a 28% increase from 2023 according to the Union of Chambers and Commodity Exchanges of Turkey. Over 200,000 textile and garment workers reportedly lost their jobs in the year preceding April 2024, and in the Çorum Organized Industrial Zone, more than 1,000 workers were reportedly laid off.
• Indonesia recorded nearly 50,000 layoffs between January and June 2024 as factories closed down amidst reduced orders, a trend reported by regional labour organisations.
• In Portugal, our media monitoring reveals that decline in orders and high costs have resulted in collective dismissal of 1,549 workers, doubling 2023’s total. Approximately 11,000 workers reportedly faced layoffs, contract suspensions, or reduced hours in early 2024 due to rising labour costs and shrinking orders.
• In Kenya, 1,900 redundancies were reported in the Ashton Mombasa Apparel EPZ alone, as brands scaled back their orders.

Demand-side triggers: Weak demand and global instability in orders

The global fashion industry continues to grapple with unstable orders triggered by global economic recession, inflationary prices in western economies, high raw material and energy prices, and geopolitical disruptions. Between July 2023 and April 2024, the US recorded a 7% drop in apparel imports, while the EU recorded a 5.2% decrease between January and July 2024.

However, while the broader garment industry faces significant headwinds, major brands continue to make profits. McKinsey’s latest ‘State of Fashion’ report forecasts record profits for the fashion industry in 2024. While companies including Ted Baker and Esprit have filed for bankruptcy over the past six months, others - such as Inditex and Uniqlo - achieved unprecedented profits. Inditex, owner of brands including Zara, reported its highest-ever net profit of EUR €5.4 billion in 2024, reflecting a 30% increase from the previous year. Uniqlo parent company Fast Retailing reported a 9.5% increase in revenue to JPY ¥3.4 trillion and a 5.8% rise in operating profit to JPY ¥530 billion in FY 2024, both marking record-high performances.

Supply-side triggers: Escalating costs and pressures

Internal economic, political and climate change challenges in apparel sourcing countries are exacerbating order volatility. We are also seeing welcome increases in minimum wages in sourcing countries being met with a backlash from international buyers, who in turn move orders to  “cheaper” markets:

• Inflation in sourcing countries: In sourcing countries like Türkiye and Portugal, inflationary prices have significantly increased production costs. Türkiye’s inflation rate, exceeding 75% in early 2024, has pushed production costs 50-60% higher than competing Asian countries like Bangladesh and Vietnam. Similarly, Portugal has faced high inflationary pressures, leading to increased production costs affecting the garment industry. In North Macedonia, inflation reached 3.5% in October 2024, compounding already poor working conditions and low wages, further worsening the livelihoods of garment workers.
• Wage hikes: Portugal and Romania increased minimum wages by 40-48% between 2022 and 2024, welcome steps that nonetheless need support from employers and international buyers alike. In Türkiye, the monthly minimum wage hike to TRY ₺17,002  in January 2024, doubled from the previous year. In Romania, in two years (between June 2022- June 2024), the minimum wage has risen by 48% from RON 2500 to RON 3700.
• Energy costs: Soaring gas and electricity prices have increased operational expenses globally. In Türkiye, gas prices went up sevenfold and electricity prices have tripled since 2021. In Bangladesh, a severe gas shortage significantly impacted the textile industry in June 2024, causing production declines, factory closures, and reduced operating hours. Factories have reported production drops below 30% due to insufficient gas supply, leading to increased operational expenses, financial strain on suppliers, and reduced work hours or job losses for workers.
• Climate change events impacting production: Vietnam was affected by a typhoon in September 2024, causing widespread disruption in major industrial hubs including damage to factory buildings and damage to goods. The International Apparel Federation in September 2024 called on brands to avoid cancelling orders during climate emergencies, urging quicker payments to ensure economic stability for suppliers and workers. In August 2024, floods in Bangladesh severely disrupted production schedules and supply chains, affecting livelihoods of thousands of workers.

Sourcing strategies: Brands' cost-driven choices in dealing with demand and supply side triggers

The garment industry’s practice of shifting sourcing locations is not new - it is a pervasive and disturbing global trend, often resulting in mass layoffs, factory closures, unpaid wages and labour exploitation. Over the last six months, our monitoring reveals:

• Türkiye: Brands shifted their orders to countries with lower labour costs, such as Bangladesh or Egypt, where wages are approximately 75% lower than in Türkiye. Manufacturers in Türkiye have also moved sourcing: 130 Turkish manufacturing companies began production in Egypt over the past year, resulting in the loss of 90,000 jobs in Türkiye’s textile sector. This shift is part of a broader trend of cost-driven sourcing strategy, where brands have relocated due to rising inflation, high production costs and unfavourable exchange rates. Suppliers have reported a drop in new orders, including export orders, due to challenging demand conditions and high prices. Despite an increase in order appetite in target countries, orders continue to go to competitors because of price differences, further deepening the crisis for Turkish suppliers.
• Romania: As of September 2024, factories catering to luxury fashion brands such as Christian Dior, Gucci and Tod’s have experienced a severe decline in orders and have been forced to shut down. This is in part due to increases in the minimum wage, most recently in July 2024. While wages are still low by European standards, reports suggest orders have moved from Romania to cheaper sourcing hubs such as Tunisia and Morocco.
• UK: The garment sector in Leicester, UK, continues its sharp decline as brands withdraw due to increasing scrutiny over labour practices and rising labour costs. Manufacturers are exiting the UK as brands push for lower costs, shifting production to cheaper labour markets including Morocco, Türkiye and Tunisia. Continued order decline has compelled trade unions and campaigners to urge UK brands in October 2024 to source at least 1% of production locally.
• Bangladesh: Bangladesh’s garment industry is facing significant challenges following political upheaval in the country in July 2024. In August 2024, the Resource Centre reached out to the top 15 international buyers sourcing from the country and received responses from brands indicating that wages had been paid on time and order volume had remained stable. However, reports of order cancellations continue, including reports from Bangladesh’s interim government in September stating foreign buyers had cancelled 15-20% of clothing orders, leading to the indefinite closure of over 50 factories. Reports also suggest buyers are redirecting orders to India, Cambodia and Pakistan, accelerating a worrying trend of relocation. In a recent meeting between the Resource Centre and Bangladesh Garment and Industrial Workers Federation (BGIWF), Kalpona Akter (President, BGIWF) highlighted ongoing worker protests, with many struggling with unpaid wages and facing blacklisting by employers.

Climate adaptation in the apparel industry: Who is paying the price?

The apparel industry faces increasing pressure to adopt sustainable practices and adapt to the growing impacts of the climate crisis. However, the financial and human costs of these transitions are disproportionately borne by suppliers and workers, with brands often evading their responsibilities.

Environmental costs shifted to “suppliers”

The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) claims that “greening” factories - adopting international green building standards and implementing sustainable production practices - costs 20-30% more than conventional setups in Bangladesh. Despite this, brands:

• Fail to share costs: Our monitoring shows that brands are often reluctant to share  responsibility for environmental costs, with industry associations such as BKMEA urging brands to contribute to greening factories by paying a premium or sharing costs.
• Contribute to financial strain on suppliers: Suppliers have collectively lost billions of dollars by investing in green-certified factories, only for international buyers to continue sourcing without acknowledging these additional costs.

Garment workers often face heat stress and dehydration while striving to meet production targets in high temperatures. A production manager in India noted that “If brands are going to penalise us for delays, how can I create a better workplace for my workers?”...They set high targets, tight deadlines, penalised delays even in the most dire of circumstances, and refused to pay textile suppliers.”

How are brands responding?

From January to September 2024, the Resource Centre tracked 28 cases of alleged human rights abuses related to brand purchasing practices.

The cases we identified are global in scale and have impacted thousands of workers around the world, including in Indonesia, Portugal, the Philippines, Eswatini, Argentina, China, Estonia, Kenya, Bangladesh and Romania. The cases have been linked to 36 brands - both fast fashion and luxury - including H&M, Ralph Lauren, ASOS, MANGO, Michael Kors, COACH and Gucci, among others.

We asked all the brands identified to respond to the allegations. On the whole, most companies which confirmed they sourced from factories related to allegations said they had contacted the supplier or vendor to find out more information. Those which said they had stopped sourcing from the factory in question did not share any actions taken to address the issue. Brands have a responsibility to actively investigate the role their purchasing decisions have played in driving alleged abuses,  beyond checking in with suppliers, regardless of whether they are currently buying from a factory or not.

All allegations tracked over the nine month period were related to reductions in buyer orders. This led to workers facing mass layoffs, suspended employment, and unpaid severance and wages. Twenty-four allegations outlined worker layoffs, with 17 of these directly linked to either factory closures or suspended operations as a result of reduced orders. Cases include:

• In May 2024, it was reported that the Luenthai Philippines factory in the Philippines (allegedly or previously supplying brands including adidas, Dillard's, Fast Retailing, Michael Kors, Ralph Lauren, Tapestry and Victoria's Secret) retrenched 2,000 workers (60% of its workforce), due to a reduction in demand for its products that had persisted over two years.
• In Argentina, two Textil.com factories were closed due to a drop in orders, leaving 267 workers without a job and without their owed wages. In one of the plants, workers occupied the factory in protest. Textil.com has reportedly supplied brands including: Mimo, Grisino, Topper, Penguin, Cristobal Colon, 47 Street and Sporting.
• In one case in Bangladesh, Anzir Apparels factory, linked to six brands (MANGO, Lojas Renner, ALDI SOUTH, River Island, ASOS and C&A), reportedly closed due to a lack of orders. Out of the five brands which responded to our invitation, two stated they stopped sourcing from the factory in 2021, and one stated it had stopped sourcing from the factory over one year ago. This appears to corroborate reports from the factory, as outlined in The Business Standard, that they were compelled to close due to ‘dwindling orders from foreign buyers’.

Case in focus

Two of the cases in our tracker reported facing ‘price pressure’ alongside order reductions. The La Selezione factory in Romania, which previously supplied luxury brands Gucci, Dior and Tod’s, shut down in December 2023 due to a lack of orders, resulting in 152 workers being laid off. It has been reported that the factory closure was due to brands finding conditions in Romania ‘less advantageous’, in particular, the minimum wage increase.

The factory owner reported persistent poor purchasing practices, including 'progressively’ lowered prices, leading up to the factory's closure, which the factory owner states ‘effectively threw [La Selezione] out of the market’. When challenged by the factory regarding its lower prices, Tod’s reportedly responded that "Unfortunately your costs, and therefore your needs to work are far above our standards, and production planning, not me, has decided to make elsewhere the pairs that you have declared you cannot produce". Tod’s did not respond when the journalist invited the company to comment.

• Click here to see the latest allegations tracked by the Resource Centre, alongside company responses.

What next for brands?

It's clear that more work needs to be done to ensure that workers in supply chains are not impacted negatively by poor purchasing practices. International buyers must factor decent work into their costings and work with suppliers to ensure stable and fair ordering practices going forward.