in Global Garment Supply Chains

Typology Of Managerial Practices And Wage Theft In Global Garment Supply Chains

The manufacturing of garments, outsourced by brands, follows an intrinsic trend of movement towards regions with povertylevel minimum wages and low labour law enforcement regimes. Wage theft is a key feature of global garment supply chains that are driven by deeply entrenched management practices through which global apparel brands earn super-profits. These management practices orient global garment supply chains solely towards creating risk-free businesses for brands, by allowing them to use their power and leverage over their supply chains to transfer risks associated with manufacturing for volatile consumer markets to suppliers, and ultimately, workers in production countries. The broad management practices, starkly demonstrated during the pandemic, are to (i) unilaterally exercise cost-cutting decisions that affect suppliers and workers, (ii) refuse cost-sharing in the consequences arising out of the pandemic-induced recession, and (iii) leverage jurisdictional and governance weaknesses in production regions to shift liability.

During the pandemic-induced recession, brands unilaterally engaged in aggressive actions including order cancellations or reductions in new orders, demand for discounts, deferring of payments, refusal to pay, and demanding shorter lead times. This resulted in suppliers engaging in harmful employment practices that passed on the costs of such aggressive actions of brands to workers as extreme wage theft. During the recession, suppliers engaged in widespread layoffs of workers without payment and illegal terminations as a response to a contraction in their businesses.

These management practices modelled by brands within their supply chains have, therefore, resulted in a ‘cascade effect’ through which the unilateral and aggressive actions of brands towards their suppliers are converted into harmful employment practices towards workers in their supplier factories. The management decisions of brands, therefore, caused and contributed to the unprecedented wage theft experienced by workers in their supply chains, the majority of whom were women workers receiving poverty-level wages. Table 9.1 summarises the impact of brand actions on workers employed in their supplier factories across six countries during the pandemic-induced recession.

Most of the suppliers have long-term, dedicated relationships with brands and have made investment decisions, sometimes jointly, to build capacity for production based on the brands’ commitments. This is captured in the contract for manufacturing entered between suppliers and brands. Most of the suppliers exclusively produce for brands who have no production capacity of their own. In order to undertake