Primark has pledged to assist factory workers during the coronavirus crisis after establishing a fund to cover the wages component of orders that have been cancelled.
The fast-fashion retailer closed its entire store estate on March 22, due to the global Covid-19 health crisis, which has resulted in the loss of sales of 650 million pounds every month.
The company asked suppliers to stop production as it already had some 1.6 billion pounds of paid-for stock in stores, depots and in transit. All of this stock has been paid for under its normal 30-day payment terms, added the retailer.
In addition, Primark has explained that extended payment terms have also been offered to suppliers to enable Primark to take and pay for further stock ready for shipment, despite the fact that it can’t sell the stock while the stores remain closed as the business has no e-commerce platform.
In a company statement, Primark said that it was committed to paying the wages of workers who were producing Primark orders that have now been cancelled.
The retailer said: ”Primark is concerned about the impact of workers engaged in production on further orders that Primark will now not be taking – that is, goods in production that were due for shipment in the month following cancellation of orders.
“Accordingly, Primark is today announcing it will fund payment of the wages that relate to this product, taking into account adjustments for government support packages provided in each country. This action will cover orders from the following countries: Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam. In consultation with external stakeholders, the Primark Ethical Trade team will explore mechanisms to ensure that this money reaches workers.”
Primark to cover wages of factory workers following order cancellations due to Covid-19 closures
Primark also notes that it has been working closely with the United Nation’s International Labour Organisation (ILO) in order to collaborate with governments, international financial institutions, development banks and others in a position to make available “medium and longer-term financing to pay the wages and benefits of workers along with economic support to the garment industry”.
Paul Marchant, chief executive of Primark, added: “Every one of our stores around the world is closed. With a backlog of stock in stores, depots and in transit, we have had to make the very difficult decision to cancel orders for future stock. Finding a way to ensure that workers in our supply chain in these countries are paid has been a priority over the past two weeks and we are pleased that this fund will provide relief to these workers.
“Our focus now is to work with the suppliers, factories, trade unions and NGO’s in these countries to make sure wages for the orders we have cancelled are paid to the workers.”
Rosey Hurst, founder and director of Impactt, specialists in ethical trade, said: “These are unprecedented times which call for unprecedented action. We are absolutely delighted to see Primark putting its shoulder to the wheel of reducing impacts of covid-19 on the most vulnerable in its supply chains. This move will enable Primark and its suppliers, working together, to make a significant contribution towards supporting workers as we all weather this global storm together.”
Image: courtesy of Primark