H&M, Zara among brands accused of treating Bangladesh suppliers unfairly, paying less than their cost

During the pandemic, Lidl, Zara's owners Inditex, H&M, and Next are alleged to have paid Bangladeshi apparel suppliers less than production costs, making it difficult for factories to meet the nation's minimum wage requirements. In a survey of 1,000 clothing manufacturers throughout the nation, 19% of Lidl suppliers, 11% of Inditex, 9% of H&M, and 8% of Next stated that they supplied clothing to UK stores, as reported by the Guardian. 

Nearly two years after COVID-19 was declared a global pandemic, the majority of suppliers to these four brands as well as Tesco and Aldi told researchers they were still getting paid at the same rates, despite growing raw material and manufacturing expenses in the nation.

In a study conducted by the University of Aberdeen and the UK-based fair trade campaign organisation Transform Trade, also known as Traidcraft Exchange earlier, over half of Primark's suppliers indicated they had not seen a rise in payment rates, and just over a third stated orders had been cancelled.

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According to their study, which looked at the period from March 2020 to December 2021, larger companies that source from 15 or more factories had a higher likelihood of using unethical tactics, such as: payment delays or order cancellations, as opposed to smaller ones. These bigger businesses were participants in the UK's Ethical Trading Initiative, an association of businesses, NGOs, and unions established to enhance connections with suppliers.

Senior policy adviser at Transform Trade, Fiona Gooch, who spoke to the Guardian, advocated for a fashion watchdog to supervise relationships between suppliers and shops selling more than £1 billion worth of goods annually, just like the Grocery Supply Code of Practice does.

“This research is a wake-up call,” she said. “We need a fashion watchdog to stop unacceptable purchasing practices of the clothing retailers benefiting from large consumer markets, along the same lines as existing protections for food suppliers.

“Only when suppliers are able to plan ahead, with confidence that they will earn as expected, can they deliver good working conditions for their workers.”

In a statement within the report, Lidl said it had “committed itself to ensuring minimum wages in its supply chain and to ensuring the sustainable pre-planning of the production of textile goods”.

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It added: “Lidl takes its responsibility towards workers in Bangladesh, and other countries where our suppliers produce, very seriously and is committed to ensuring that core social standards are complied with throughout the supply chain.”

Next said it “completely refutes the suggestion that its suppliers are being paid the same (or less) than before the pandemic”. The company said it had gone on record about rising supplier costs and its profit margins had remained stable while prices for customers had gone up, indicating it had paid suppliers more.

Inditex in its defence said that it has taken part in international initiatives to promote the garment sector, particularly manufacturing employees.

Primark acknowledged that it had been obliged to cancel certain orders when virtually all of its stores had to close for a while due to the pandemic, But, it claimed to have made an effort to help employees. “In April 2020, we established a wages fund in excess of £22m with the aim of supporting suppliers’ ability to pay their workers, and from which Bangladeshi suppliers with garment orders due to be handed over to us within 30 days of the cancellation would have received payment.”

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