Buyers more concerned about prices than factory conditions

Some 52 percent of the apparel suppliers said the prices paid were often lower than the production costs. Photo: Star/file

By Star Business Report
May 5 2019 (IPS-Partners)

(The Daily Star) – Most of the western buyers are more concerned about the prices of garment items than the working conditions in the factories they source from, according to a new study by the Human Rights Watch.

Per unit price was the main concern for 78 percent of the apparel buyers from Asia, found the study by the New York-based non-governmental organisation.

Only 42 percent of the buyers take working conditions at the contractors’ factories into consideration in selecting the suppliers, the study also said.

Some 52 percent of the apparel suppliers said the prices paid were often lower than the production costs, while 81 percent said they agreed to such terms to secure future orders.

According to suppliers, 75 percent of the buyers across different sectors were unwilling to adjust prices when the statutory minimum wages were raised.

Even among the willing buyers, there was on average a 12-week time lag before they adjusted prices, the study said.

Moreover, low purchase prices and shorter times for manufacturing products, unfair penalties, and poor payment terms by the brands exacerbate risks for labour abuses in factories.

Often, bad purchasing practices directly undermine the efforts brands are making to try to ensure rights-respecting conditions in factories that produce their wares, said the study that was prepared based on interviews with workers and experts in some Asian countries including Bangladesh.

“They squeeze suppliers so hard financially that the suppliers face powerful incentives to cut costs in ways that exacerbate workplace abuses and heighten brands’ exposure to human rights risks.”

Many brands demand their suppliers maintain rights-respecting workplaces, but then incentivise them to do the opposite, the study said.

“The HRW report rightly identifies speed to market as a concept that reduces lead times for us,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Indeed, the brands with poor sourcing, poor forecasting practices and shorter lead times add to the woes of garment manufacturers.

“Suppliers often get pressured by buyers’ hard negotiating practices,” Huq said in an email reply to The Daily Star. The prices brands pay to suppliers can undercut factories’ ability to ensure decent working conditions.

This story was originally published by The Daily Star, Bangladesh