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17.11.2020

KfW: EUR 20 million for textile workers affected by the Corona pandemic

  • Rapid assistance to more than 200 000 people affected

Many hundreds of thousands of textile workers in Bangladesh are at risk of sliding into poverty as a result of the outbreak of the Corona pandemic. According to EU estimates, about half of the four to five million workers in the sector have either been laid off or made redundant since spring 2020 – in some cases without social security to back them up. To mitigate the dramatic economic consequences, the EU is now redirecting its existing sector budget support to Bangladesh. From now on, around EUR 90 million is to be channelled into a new government programme to finance wage substitution benefits for workers made redundant in the textile sector - including the leather and shoe industries – or at least to provide a short-term interim solution for workers who have been dismissed. German Financial Cooperation (FC) is now increasing these EU funds by EUR 20 million.

  • Rapid assistance to more than 200 000 people affected

Many hundreds of thousands of textile workers in Bangladesh are at risk of sliding into poverty as a result of the outbreak of the Corona pandemic. According to EU estimates, about half of the four to five million workers in the sector have either been laid off or made redundant since spring 2020 – in some cases without social security to back them up. To mitigate the dramatic economic consequences, the EU is now redirecting its existing sector budget support to Bangladesh. From now on, around EUR 90 million is to be channelled into a new government programme to finance wage substitution benefits for workers made redundant in the textile sector - including the leather and shoe industries – or at least to provide a short-term interim solution for workers who have been dismissed. German Financial Cooperation (FC) is now increasing these EU funds by EUR 20 million.

"The textile sector," says KfW office manager Anirban Kundu, "is the backbone of the economy in Bangladesh. The export share of the textile industry alone accounts for 86% of the economy, and the total trade volume is around USD 40 billion. If it is doing badly, the whole country is doing badly."

The corona pandemic is therefore causing enormous disturbances in the sector. Many orders were cancelled and goods already produced were often not taken. "Even though the situation has eased somewhat in the meantime," Kundu continues, "things remain critical - not least because of increased price pressure or because orders have not reached the previous level." As a result, the people affected find themselves in an emergency situation that threatens their very existence. Some employees on leave of absence only receive wage substitution benefits for the first 45 days. Dismissed employees who were not previously employed for a certain minimum period of time do not receive any support at all.

Still many workers on leave even though production resumes
In April 2020, the Bangladeshi government launched four economic support packages totalling around EUR 7.3 billion to mitigate the impact of COVID-19 on the economy. With the emergency aid now launched at short notice, the German Federal Ministry for Economic Cooperation and Development (BMZ) is topping up the existing EU sector budget support of EUR 93 million by up to EUR 20 million. This grant to the national budget for 2020 not only makes it possible to re-finance wage substitution payments for released textile workers, but also provides support, at least in the short term, to those who are particularly hard hit by a dismissal: for example mothers who do not receive benefits after the birth of a child, or those women and men who have been employed by a company for less than a year.

From November onwards, they are to receive the equivalent of around EUR 30 per month, initially for a maximum of three months, and possibly more. To ensure that this money reaches its destination, it will be transferred electronically to the bank accounts of those concerned via appropriate government platforms. The relevant export associations in the textile sector provide monthly updated figures on the number of workers released or dismissed.

"Subsidy does not release employers from their obligations"
Some 215,000 workers benefit directly from the payments through the German contribution alone, but indirectly almost four times as many benefit from them: Not only the family members, but also the communities where the textile workers live, as well as transport companies, street traders and other local service providers. Without this rapid support and the resumption of production, lasting economic damage to Bangladesh's already small and fragile economy can be expected. But Anirban Kundu also makes it clear: "It is by no means the intention to release employers from their legal obligations to continue to pay wages. Rather, the aim is to ensure that the emergency aid reaches workers who are no longer entitled to statutory continued payment of wages, so that they can at least make up for some of their misery."

 

 

12.05.2020

TEXTILE INITIATIVES INVITE GOVERNMENTS AND ENTERPRISES TO ACT

In a joint declaration, ten initiatives and organizations working for better working conditions in the textile industry call on governments and textile companies to take urgent action in the corona crisis.
End of April, the initiatives presented a common vision for social security and responsible entrepreneurship in this crisis.
 
In the joint statement AGT, amfori, Better Buying, Fair Labor Association, Fair Wear Foundation, ETI Norway and ETI UK, IDH, the Partnership for Sustainable Textiles and Solidaridad expressed deep concern for the health and livelihoods of millions of workers in the clothing industry and their families.
 
Covid-19 is having a devastating impact on the global textile industry. Most factory workers earned too little to care adequately for themselves and their families. As social security systems are lacking in many countries, the current crisis has hit these people particularly hard.

In a joint declaration, ten initiatives and organizations working for better working conditions in the textile industry call on governments and textile companies to take urgent action in the corona crisis.
End of April, the initiatives presented a common vision for social security and responsible entrepreneurship in this crisis.
 
In the joint statement AGT, amfori, Better Buying, Fair Labor Association, Fair Wear Foundation, ETI Norway and ETI UK, IDH, the Partnership for Sustainable Textiles and Solidaridad expressed deep concern for the health and livelihoods of millions of workers in the clothing industry and their families.
 
Covid-19 is having a devastating impact on the global textile industry. Most factory workers earned too little to care adequately for themselves and their families. As social security systems are lacking in many countries, the current crisis has hit these people particularly hard.

Workers need aid funds
In their letter to the governments in the producing countries, the initiatives and organizations appeal to protect the incomes and health of the workers and to support employers in this task: “The factories must pay wages and salaries on time to ensure the workers who remain actively employed. "

If factories have to close temporarily, it should be a top priority for all concerned to support the workers directly or to help them access financial ressources. This is the only way they can bridge the time while they cannot work.

Governments of the importing countries and multilateral organizations should also act now. In addition to providing support for retail and brand companies, they should also provide aid funds for people in the producing countries.

Seven of the ten initiatives and organizations are member-based and represent around 2,000 retail and brand companies that are currently facing immense challenges. Despite the dramatic situation, companies are required to comply with their due diligence requirements and to find solutions together with their business partners. The declaration contains a list of important points that textile companies worldwide should consider.
This includes:  

  • Companies should support factories to implement the necessary security measures to reduce the risk of infection.
  • Orders that have already been completed and are in production should be paid in full if possible.
  • Companies are advised to avoid the termination of planned orders.
  • They should be flexible when factories have to change delivery times and / or change payment methods.
  • They should not end business relationships without first looking for alternatives with their local partners.

Rehearsal for the future
Urgent action is now necessary in the crisis. But long-term systemic improvements in textile supply chains should already be considered and shaped. Fair payment and partnership-based cooperation between retailers, brands and suppliers should become the “new normal” after the crisis and are just as important as social security.    

"The current situation also offers the opportunity to make social security systems more sustainable so that times of unemployment do not immediately threaten the existence of workers," the statement said. The initiatives and organizations are also working on additional recommendations to support companies and other actors in the post-crisis period.

The text of the declaration is available for separate download.

Source:

Partnership for Sustainable Textiles