Myanmar’s garment factories weather the energy crisis. It’s Not Good – Sourcing Journal

Myanmar’s garment factories are still operating despite local reports that power outages and rising fuel prices have pushed them nearly all to the brink of insolvency, experts told the Sourcing Journal.

Not that they aren’t feeling the pressure, said Sofia Nazalya, senior human rights analyst at global risk intelligence firm Verisk Maplecroft. Between the disruptive effects of the military coup and the Covid-19 pandemic, supply in the beleaguered Southeast Asian nation was already in a precarious position. A fuel shortage that leaves garment makers running on fumes could be the ‘last straw’ for Western brands that continue to source from Myanmar after the ousting of Aung San Suu Kyi’s civilian government. last year.

“While the fuel crisis is causing a similar supply chain disruption in most Asian garment manufacturing hubs, the ongoing humanitarian and political crisis in Myanmar is likely to tip production in favor of other hubs. stronger clothes,” Nazalya said. “Bangladesh and India, also affected by high fuel prices, face supply chain disruptions but are better placed to weather the fuel crisis.”

For the brands that did not move from Myanmar, citing fears that the withdrawal would further worsen the situation for workers, business remains business as usual. Suppliers to Primark, for example, are still able to maintain operations despite fuel issues, a spokesperson for the retailer told The Sourcing Journal. Likewise, H&M’s supply base is “operating normally at the moment,” the fast fashion supplier said. Bestseller, Next and Inditex, which also produce in the country, did not respond to requests for comment.

For union activists, a complete halt to garment operations in Myanmar would be almost a relief. The brands should have left a long time ago due to the deteriorating human rights situation under military rule, said Christina Hajagos-Clausen, director, textile and clothing industry, IndustriALL Global Union .

Human rights groups aren’t the only ones worried. In December, ACT (Action, Collaboration, Transformation), another multi-stakeholder initiative that seeks to improve living wages for garment workers, ceased all activities in Myanmar after IndustriALL’s local affiliate, the Workers’ Federation Industry of Myanmar (IWFM), said it could no longer operate freely under the current circumstances. The following month, the U.S. Departments of Commerce, Homeland Security, Labor, State, and Treasury, as well as the Office of the U.S. Trade Representative, issued a warning to businesses about the “increased risks” associated with business activities that could benefit the military. regime.

The “bad reasons”

Last month, the Ethical Trade Initiative, a multi-stakeholder organization whose list includes many of the aforementioned retailers, went from urging its members to re-evaluate their sourcing relationships in Myanmar to advising them to refrain from making additional investments. “for the moment”. Companies, he added, should continue to “meaningfully engage” with local and international unions regarding their presence in Myanmar.

“Whether [brands] are being forced to leave now because of power shortages, it will be, shamefully, for the wrong reasons – but at least it will hasten the end of the dictatorship, which is showing a complete failure to keep the country going, even by his own low standards,” added Hajagos-Clausen.

Khaing Zar Aung, president-in-exile of the IWFM, said she had heard nothing about the closing of factories. She said there was no longer any rule of law in Myanmar and if factory owners faced cash flow problems, they would only shift the burden onto their workers. Labor rights violations, including underpayment of wages and forced overtime, are increasing at a staggering rate. Trademarks, she insisted, do not protect workers’ rights by remaining. Instead, they profit off the backs of the poor because the concept of due diligence in Myanmar is just a pipe dream.

“They will discuss with me: they will stay in Myanmar because they are worried about the workers who are women, who are vulnerable,” said Khaing Zar Aung. “But do they really worry about them? I say NO.” Brands like H&M, she argued, have done little to protect jobs. According to International Labor Organization estimates, more than 250,000 jobs have evaporated in the first half of 2021 alone. Brands also didn’t care about jobs when they halted sales in Russia following the invasion of Ukraine, she pointed out.

Meanwhile, pro-democracy activists like her have targets painted on their backs, especially now that the junta has vowed to execute those who oppose its rule. More than 5,600 civilians have been killed in Myanmar since the coup began, the Institute for Strategy and Policy in Myanmar reported in May. At least 3,107 of them were killed after being named “Dalans”, or military informers, the organization added.

H&M said it was monitoring the situation in the country closely and would refrain from making any decisions on its long-term presence there “at this stage”. Primark offered a similar response, saying it is awaiting the results of the Ethical Trade Initiative’s human rights impact assessment before determining its next steps. These will align with the UN Guiding Principles on Business and Human Rights, which “underpin the way we work in all of our sourcing countries,” a representative said.

But if brands really cared, they would work with unions to support and fund workers instead of legitimizing the junta, Khaing Zar Aung said. “But they don’t. Why? Because they see they can make a profit. Many garment factories, she said, are in cahoots with the army, which is called in when there is a dispute with the workers. As long as these manufacturers can violate workers’ rights, they will not close, she added.

“The Return of Forced Labor”

Earlier this month, No Sweat and Global Women’s Strike, the organizations coordinating the Myanmar Military: Never in Fashion campaign, took to the streets outside the London flagship stores of H&M, Primark and Inditex-owned Zara to protest against what they call the “inaction” of these brands to listen to what unions in Myanmar are asking for and take action.

“When we contacted these brands, we were either greeted with silence or received replies explaining that they cannot withdraw from Myanmar because they want to protect their workers from unemployment,” said Jay Kerr, manager. of the T-shirt campaign and project at No Sweat, Sourcing Journal said. “While that sounds benevolent, it’s dishonest. We’ve seen during the pandemic that brands are canceling contracts and refusing to pay suppliers when their profit margins are affected. The reality is that the actions of the military have caused a wave of union busting, workers’ rights [being] discarded by employers.

Wage levels have plummeted, with reports that some workers are earning as little as $1.95 a day, Kerr said. “That’s practically the international poverty level for people working full time,” he said. “The unions even hear of cases of forced labor back. All that [is] beneficial to the brand’s bottom line. Lower wages and longer hours mean cheaper products, and the civil war and unstable situation, with no independent union oversight, means they can wash their hands of all responsibility for the conditions in which their clothes are products.

Kerr said he believed some form of furlough scheme for Myanmar garment workers was easily affordable for these multinational companies. For the 30 brands that were part of ACT’s program in Myanmar, furloughing the 140,000 garment workers they were responsible for in the country would cost them around $3.5 million each. Last year, Inditex raked in $3 billion, while H&M and Primark made profits of over $1 billion each.

“These brands have the money on their own to fund such a program, they just have to have the will to do it,” he said. “If they really cared about their workers, they wouldn’t ask them to work for poverty wages, or potentially forced labor conditions, risking their lives in factories under martial law without proper union representation. They would seek ways to protect them from the ravages of war and brutal military rule, and use their enormous financial power to help restore democracy.

Khaing Zar Aung fears Myanmar’s fate will be forgotten in the torrent of geopolitical conflicts that have gripped the world. But the battle for democracy in her homeland has bigger implications for human rights everywhere, especially as totalitarian regimes in Russia and China gain ground, she said.

“If the EU and other democratic nations ignore [what is happening in Myanmar]then we will all lose,” added Khaing Zar Aung.

Michael O. Stutler