“Today is a glorious day for us,” Nobel Peace Prize-winning economist Muhammad Yunus told reporters as he touched down at Hazrat Shahjalal International Airport in Dhaka on Thursday, ahead of his inauguration as the head of Bangladesh’s interim government. “Bangladesh has created a new victory day. Bangladesh has got a second independence.”
Violence Breaks Out Over BGMEA Leadership
But the reality is more fragile for the beleaguered South Asian nation’s 4.1 million garment workers, who together contribute nearly 85 percent of Bangladesh’s $56 billion in annual exports. The country was already awash in chaos and uncertainty before former Prime Minister Sheikh Hasina’s dramatic resignation and flight to India in the turbulent final hours of Monday. The curfews and communications blackout her government had imposed in the preceding weeks in response to student protests over quotas in government jobs spawned profound manufacturing, banking and logistical disruptions that only exacerbated existing supply chain headwinds, including the still-simmering Red Sea conflict.
The unrest has left its mark, according to the Metropolitan Chamber of Commerce and Industry, Dhaka and Policy Exchange Bangladesh, which revealed Thursday that the country’s Purchasing Managers’ Index dropped by 27 points in July—its first contraction since the benchmark was launched in January—signaling “significant” declines in new orders, exports and supplier deliveries that were already on a downward trajectory.
Last month, the Bangladesh Garment Manufacturers and Exporters Association, better known as the BGMEA, said that the industry was shedding $150 million a day at the height of the curfews, which kept factories shuttered for five days. And Munir Mashooqullah, founder of apparel supply chain firm M5 Groupe, expects 15-to-25-day delays in deliveries—a lifetime for retailers gearing up for back-to-school season and Christmas—which could spell further trouble for future orders, though he noted that other sourcing countries have a smaller capacity than Bangladesh making it “hard to replace.”
“Many concerned retailers continue to keep a close watch on Bangladesh,” he said.
For garment workers, the issue is more acute. Most of them didn’t receive their July wages on Wednesday, according to Scott Nova, executive director of the Worker Rights Consortium, a Washington, D.C.-based labor organization. Because of what amounts to chronically low pay—Bangladesh has a 62 percent gap between minimum and living wages, according to The Industry We Want, a multi-stakeholder initiative that tracks social and environmental progress—many already live hand to mouth, with little savings and fewer social protections to speak of.
“The two big questions are how soon will people get paid and will they be paid the full months’ wages or will the factory owners dock their pay for the days the factories were shut down?” he said.
Miran Ali, vice president of the BGMEA and managing director of the Bitopi Group and Tarasima Apparels, said several days of bank closures—plus the fact that many are still struggling to come fully back online—have stymied factories’ ability to make payments.
“We’ve been working primarily on reopening factories and we’ve accomplished that,” Ali said. “From Sunday, which is our next working day, we will be starting to work on clearing the backlog of payments. This is not a problem of intentions and our trade union colleagues and our workers are well aware of the situation and we’ve asked them to be patient.”
The IndustriALL Bangladesh Council, which is made up of affiliates of IndustriALL Global Union, which represents some 50 million workers in more than 140 countries, said it has engaged with both the BGMEA and the Bangladesh Knitwear Manufacturers and Exporters Association, or BKMEA, to demand that all workers receive their wages for the curfew period, ensure that no worker is fired or harassed as a result of the ongoing situation, and to respect and protect the safety and rights of all workers and their families. The council also urged the interim government to “restore human rights and equity for victims of state violence” by improving wages and workplace conditions.
“Workers and their families have been severely affected by the recent unrest, blockades, and curfew,” A.M. Nazim Uddin, president of the IndustriALL Bangladesh Council, said in a statement. “Hundreds of thousands of precarious workers, including those in the garment, chemical, and shipbreaking industries, have lost their earnings in recent days. Commodity prices have also surged. We appeal to the government led by Dr. Yunus to restore and uphold human rights and to ensure the development of human-centered policies.”
As Bangladesh Names Interim Leader, Cargo Movement Is at a Standstill
The BGMEA, which is currently caught in a battle over its leadership , has said that buyer representatives have promised not to cancel orders or request discounts or chargebacks for falling behind schedule. H&M Group, Bangladesh’s largest buyer of apparel, told Sourcing Journal that it would not seek any price cuts due to delays under current circumstances, although it’s assessing the situation daily. A spokesperson for C&A said that delivery delays are expected, which the Belgium-headquartered retailer is managing “together with our supplier base.”
Other prominent buyers, including Gap Inc., Zara owner Inditex, Levi Strauss & Co., Puma, Calvin Klein and Tommy Hilfiger operator PVH Corp., The North Face parent VF Corp., Target and Walmart either declined or did not respond to requests for comment about late penalties. The Business & Human Rights Resource Centre, an international nonprofit, said that it, too, has reached out to brands, but responses and its analysis of them won’t be available until the end of the month.
Of the brands contacted, only H&M and Puma said that they have not changed their sourcing strategy in Bangladesh.
Shelly Heald Han, executive vice president and chief of staff at the Fair Labor Association, a multi-stakeholder organization whose members include Adidas, Uniqlo owner Fast Retailing and Patagonia, said that it issued an alert last week asking brands to stay in close touch with their suppliers.
“One important reason for this is to make sure that workers are paid for the public holidays that were declared by the government of Bangladesh during the recent unrest,” she said. “Looking ahead, we encourage all companies sourcing from Bangladesh to continue to place orders and support the workers and the suppliers during this time of transition.”
Han also noted the lesser-known risk faced by Bangladeshi workers who participated in solidarity protests in countries such as Jordan and the United Arab Emirates. She said she recommends that members sourcing from those geographies check with their suppliers and “watch for potential negative repercussions.”
Fashion supply chains are “human-led, labor-intensive socio-economic systems,” said Hakan Karaosman, associate professor at Cardiff University, chief scientist at Fashion’s Responsible Supply Chain Hub and chair of the Union of Concerned Researchers in Fashion. Canceling orders, suspending payments or demanding discounts can leave suppliers financially vulnerable, creating financial and psychological pressures that cascade onto garment workers, he said.
“Let us remember that the fashion industry is characterized by power imbalance, and that fashion brands are financially powerful thanks to garment workers,” Karaosman said. “This crisis emerges as a pivotal moment to channel the responsible leadership we desperately need. It is time to put garment workers front and center. It is our moral duty to protect them.”
Nova agreed that brands should maintain existing payment schedules rather than paying suppliers later if orders take longer to arrive.
“Suppliers’ expectations in this regard will affect the decisions they make about wages, so it is important for brands to make clear to suppliers now that they will not penalize them,” he said.
Bangladesh in Turmoil. What Comes Next for Apparel Production?
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