Welcome to Business Outlook
Related Articles
Garment, footwear and construction sectors have suffered the biggest economic hit during the Covid-19 pandemic with supply chain disruption as the top challenge, according to a latest report.
An estimated 68 per cent of the surveyed garment members reported that their revenue has decreased ‘significantly or critically’, it said.
The report styled ‘Covid-19 Impacts on Businesses’ was launched on May 26 by Sedex, one of the world’s leading ethical trade membership organisations.
Sedex conducted the survey on 469 suppliers from the garment sector across 51 countries, mostly in Bangladesh, China, India and Turkey.
It also studied sectors like chemical, pharmaceutical, retail, cleaning, wholesale and fishing.
The report disclosed that customers are supportive during the pandemic.
“Countries like India (88 per cent) and Bangladesh (77 per cent) have been particularly impacted,” it said.
Only 10 per cent of the respondents have seen an increase in revenue, it found.
With many unit struggling to stay afloat, closures and reduced work have devastating impacts on jobs and income for most workers in garment and textile sectors.
Of those with more labour than work (56 per cent), the most common option for managing this was reducing the number of shifts per worker (46 per cent executing this option) with 31-per cent suppliers reducing headcount.
Some 25-per cent businesses will temporarily close and 21 per cent stop workers coming in to work during this period, according to the report.
“This makes for particularly grim reading in an industry where workers earn extremely low incomes,” the report cited.
With little to no margin for savings, many garment and footwear workers look set to face extreme poverty, it mentioned. Timely collaboration between retailers and governments is critical for managing the impacts of COVID-19 on the millions of people affected.
A total of 30-per cent respondents also reported experiencing labour shortages.
Companies are taking proactive steps to fix this crisis with recruiting more workers (42 per cent) and using contract labour (27 per cent).
With almost 70 per cent of those experiencing labour shortages looking for new workers, the likelihood of poor recruitment practices is exacerbated in times of crisis. Hiring child or forced labour may increase, the report has found.
“We urge brands to work collaboratively with suppliers to deliver products to agreed and workable timelines to avoid possible critical issues.”
A quarter plans to increase overtime, which may pose significant health problems for workers in an industry already characterised by extremely long working hours. Negotiations with buyers on extending timelines so that orders can be met with existing workers are a key option for 40 per cent of respondents.
Sedex strongly advises buyer organisations to allow for flexibility and additionally provide fair prices.
Only 38 per cent of the respondents in the garment sector stated that their customers are supportive over this time. This reflects the picture in factories worldwide, where many companies are closing and millions of jobs are being lost resulting in vulnerable situations and health risks for those affected.
When asked about most helpful measures by buyers to suppliers, 67 per cent of the respondents requested for avoiding cancelling orders.
Fifty-six per cent sought better payment terms, 49 per cent improved forecasting and planning, 48 per cent longer production timelines and no late delivery fees during this period.
(FE)
