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Poor Business Dealings Of Big Fashion Brands Driving Poverty Wages: Oxfam

The business practices of big Australian fashion brands are part of a system of entrenched inequality that has been laid bare by the coronavirus crisis and is keeping the women who make our clothes trapped by poverty wages, ground-breaking research released by Oxfam today has revealed.

The reportShopping for a Bargain, has exposed a system of poor purchasing practices – including aggressive price negotiation, inaccurate forecasting of orders, short lead times and last-minute changes to orders – that is having a profound impact on the lives of workers.

Oxfam Australia Chief Executive Lyn Morgain said the research, conducted with Monash University, was the first detailed investigation of its kind. It examined the purchasing practices of 10 leading fashion retailers operating in Australia – Best&Less, Big W, Cotton On, H&M Group, Inditex (Zara), The Just Group, Kmart, Myer, Mosaic Brands (Noni B) and Target Australia – that source their clothes from Bangladesh.

 “The research reveals unfair purchasing practices are pressuring factories into adopting poor working conditions and paying unacceptably low wages,” Ms Morgain said.

“It found that these poor purchasing practices of brands are making it impossible for factories to increase wages, despite many of the same brands making public commitments to ensure the payment of living wages. Instead, wages are trapping workers – mainly women – and their families in a cycle of poverty.”

The research involved more than 150 surveys and 22 in-depth interviews. The results of the surveys with factories and brands were used to develop a comparative rating of purchasing practices, representing the score the brand gave itself against that given by the factories from which their clothes are purchased.

H&M Group performed well in terms of an overall rating by factories of 3 out of 4. Big W, Kmart and Target Australia all rated 2.5 out of 4 by factories, followed by Cotton On, Inditex (Zara) and Myer with ratings of 2 out of 4. The survey results show that factories rated The Just Group and Mosaic Brands as the worst performers on 1.5 out of 4, while Best&Less had the biggest discrepancy between the self-rating of tof the brand and the factory rating, at 3.5 compared to 2.

Some of the many alarming findings of the research include:

  •  Brands claimed they never or rarely terminate a relationship or switch factories because of price, but 100% of factories surveyed reported that brands always terminate their relationship or switch factories if suppliers are unable to meet the buyer’s demands for a lower price
  • Eight out of 10 factories surveyed reported that brands often apply high-pressure negotiating strategies to reduce price. Of those, 57% of respondents reported that in order to secure a reduced price, brands would tell factories about the prices they were offered by other factories, and 40% of the respondents reported that brands told factories to “take it or leave it” on pricing.
  •  Four out of 10 factories said they had accepted orders at a price below what it costs them to produce the clothes safely and ethically.
  •  Six out of 10 factories reported accepting other orders at low prices when order volumes fell short of the brand’s forecast.
  •  Seven out of 10 factory respondents reported that to deliver orders that exceeded forecasts on time, they set steep production targets for workers and required them to work excessive overtime.

Ms Morgain said the research was conducted in the months before the global pandemic – and its findings were shockingly laid bare as the coronavirus crisis hit and major Australian brands cancelled orders, in some cases delaying payments or seeking discounts for clothes already made.

 “Almost overnight, hundreds of thousands of garment workers were stood down without pay during the pandemic, leaving them facing the risk of extreme poverty,” Ms Morgain said.

Ms Morgain said over the past three years, 12 major retailers had responded to Oxfam and its supporters by making public, credible commitments to ensuring the women who make our clothes are paid a living wage – that is, enough money earned in a standard week to cover basic essentials including food, housing, healthcare, clothing, transport, education and some money for unexpected events.

 “The commitments made by brands, while yet to be implemented, are enormous steps in the right direction,” Ms Morgain said.

 “But this report shows that unless brands agree to improve the poor purchasing practices that are driving down wages, their commitments to ensure the payment of living wages risk becoming mere lip-service.

 “Oxfam is calling on Australian brands to develop and publish responsible purchasing policies and to ensure that labour costs are ‘ringfenced’ in negotiations with factories – that is, separately calculated to ensure the payment of living wages to workers. And brands that are lagging behind need to take the step of making a public, credible commitment to living wages.

 “With just one month today until Christmas, shoppers should demand big brands end this cycle and do better in the way they do business – in turn giving real meaning to their commitments to end poverty wages for the women making our clothes.”

 The Shopping for a Bargain report can be found here:

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