In Bangladesh’s apparel industry, more than one million garment workers have already been laid off or furloughed as a result of order cancellations due to coronavirus fallout, research shows.

According to a report published by Penn State University’s Centre for Global Workers’ Rights and the Worker Rights Consortium (WRC), more than one million garment workers in Bangladesh have already been fired or furloughed or temporarily suspended from work, as a result of order cancellations and the failure of buyers to pay for those cancellations.

Bangladesh’s garments sector employs over four million workers.

When orders were canceled, 72.1% of buyers refused to pay for raw materials such as fabric, etc. already purchased by the supplier, and 91.3% of buyers refused to pay for the cut-make-trim cost (production cost) of the supplier, said the report.

As a result of order cancellations and lack of payments, 58% of factories, surveyed in the report, shutdown most or all of their operations, it added.

It shows the devastating impact order cancellations have on businesses and workers.

It further illustrates the extreme fragility of a system built upon decades of such malpractices where buyers squeeze down on prices paid to suppliers. These lead to factory closures, unpaid workers with no savings to survive hard times, and a government with such low tax revenue that it has very limited ability to provide meaningful support to workers and the industry.

As per the report findings, suppliers – in the survey – reported that 98.1% of buyers refused to contribute to the cost of paying partial wages to furloughed workers, required by law, and 72.4% of furloughed workers were sent home without pay.

Meanwhile, 97.3% of buyers refused to contribute to the severance pay expenses of dismissed workers, also a legal entitlement in Bangladesh. Four out of five workers were dismissed without their severance pay, it showed.

Despite the fact that many brands have “responsible exit” policies – where they commit to support factories in mitigating potential adverse impacts to workers should they decide to exit – they failed to keep their end of the commitment, showed the research.

The survey findings – presented in this report – depict the most comprehensive evidence to date on the depth of the crisis in Bangladesh. The essential dynamics presented here are evident in garment-exporting countries worldwide, it added.

Suppliers, for their part, must ensure that payments received from these buyers are used to cover all legally mandated wages and benefits, including severance payments to dismissed workers, the research recommended.

Meanwhile, the government of Bangladesh must continue to mobilize all the resources at its disposal to subsidize suppliers and provide wage support to all workers during the crisis, it added.

Meanwhile, Bangladesh Knitwear Manufacturers and Exporters Association First Vice President Mohammad Hatem, talking to Dhaka Tribune, said the report is baseless and has “no logic behind such findings.”

He further claimed that there is ill motive behind the publication of the report as they do not have any knowledge of one million workers being let go.

Government last week announced a Tk5,000 crore bailout package for export-led industries in Bangladesh but industries require more stimuli to survive the current Covid-19 pandemic fallout.