"‘Step Up and Pay’: Factory Layoffs Pushing Workers Back to the Brink", 16 December 2022

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As consumers in Vietnam’s two biggest markets feel the bite of high inflation and rising energy costs, weakening their discretionary power, orders are down 30 percent to 40 percent from the United States and 60 percent from Europe, according to the Vietnam General Confederation of Labour.

Since September, more than 470,000 workers, including those who make clothing, footwear and furniture, have found themselves working fewer hours in the last four months of the year, while another 40,000 have lost their jobs altogether, the trade union center said.

Pouyuen Vietnam Co., a Nike supplier, has asked 20,000 workers to take alternative Saturdays off from December to February due to plummeting business, local media reported. In November, Taiwan-owned Footgearmex Footwear Co. announced that it would be laying off two-thirds of its Ho Chi Minh City workforce, or 1,200 workers, due to a “drying up of orders and financial issues.” Ty Hung Co., another Taiwanese shoemaker, let go of 1,185 people earlier this month.

Over in Indonesia the same month, PT Panarub, an Adidas supplier, fired 300 workers with only half of their legally owed severance, according to the Worker Rights Consortium. Another 1,500 layoffs are in the works, the workers’ rights group said. (Adidas said that any downsizing will follow both local laws and its own workplace standards, while PT Panarub did not respond to a request for comment.) Workers in Sri Lanka, which has also seen apparel orders plummet by 20 percent to 30 percent, are also facing a “crisis” as a slew of factories shutter, emergency relief allowances dry up and proposed legislation threatens to erode labor protections, according to a webinar held this week by War on Want, a London-based anti-poverty charity.

In October, five apparel companies in the Philippines—Globalwear Manufacturing Inc., Feeder Apparel Corporation, Mactan Apparels Inc, Metro Wear Inc. and Vertex One Apparel Phils, which are all owned by Taiwan’s Sports Center International—issued joint retrenchment notices for 4,485 workers. The problem, their announcement said, was that the world was “on the brink of global recession, with higher-than-expected inflation and the global financial conditions are becoming tighter.” Typhoons, the fallout from the Covid-19 pandemic, supply chain bottlenecks, spiraling gas prices and the war between Russia and Ukraine have “shaken not only our financial health but as well as having unstable operations,” it added...

Muller said she’s seeing an uptick in brands delaying orders, canceling altogether or exacting unilateral discounts from suppliers who can “hardly afford to produce goods at the prices the brands are asking.” Many brands, struggling to shed inventory, are asking for orders to be held and shipped indefinitely, which means suppliers won’t receive their payments until deliveries conclude.

“What we have also seen is that brands are being careful of not ‘canceling’ an order but in practice delaying them indefinitely in order to avoid the public outcry over the billions of unpaid orders during the start of the Covd-19 pandemic,” she said. “This is disingenuous behavior and serves as a stark reminder that the bottom line for brands is profit at all costs.”

Brands are also failing to take into account the surging cost of production, including massive inflation increases of almost 100 percent in countries such as Sri Lanka, Muller said. In certain parts of Leicester in the United Kingdom, garment workers and their families make up 75 percent of food bank clients. In Asia, workers are “desperately trying” to buy enough food to stave off starvation. Meanwhile, brands continue to rake in profits, enough to plot expansions or “hoover up” smaller e-tailers. They might even be actively diverting orders from wholly owned or unionized factories to suppliers that underpay wages, she added.

“Increasingly, garment workers are once again paying the price of a business model which is driven by greed and excessive profits and based on the exploitation of low-paid workers,” Muller said. “Workers will have little choice but to step up protests in garment production countries—even at the risk of government repression which we see in response.”

Indeed, worker protests, fueled by desperation, have ramped up in frequency. Earlier this week, at least 10 workers from New Line Clothing Factory in Bangladesh were injured during a demonstration over delayed wages. (The factory did not respond to an email seeking comment.) A similar scene unfolded in November when several hundred Olio Apparels workers demanded four month’s worth of unpaid wages. (Olio Apparels also did not respond to a request for comment.) In neighboring Sri Lanka, 1,500 Brandix Koggala workers took to the streets to protest a reduced bonus payment. Orders at the factory have fallen by 40 percent, its general manager said...