Pandemic recovery for whom? Global South garment workers face wage theft as companies rake in profits

Garment workers in Asia have lost out on millions of dollars in wages since 2020, even as ‘Big Fashion’ corporations including Nike are raking in mega-profits for their owners and Wall Street, a new report has found. Trade unions have launched the #FightTheHeist campaign to resist this 

February 28, 2023 by Tanupriya Singh
Garment workers wage theft report
Garment workers in Bangladesh. Image for representational purposes only. (Photo: via Global Labor Justice) 

COVID-19 has been held responsible for a major setback to decades-long global advances in addressing socio-economic issues like poverty, hunger, and disease response. As countries went into lockdown in 2020, the brunt of the subsequent job and wage losses fell on the working class, particularly the vulnerable sections in the Global South. 

Three years into the pandemic, as the world’s rich have managed to expand their wealth, the workers whose labor has created these gains have been left in the lurch.

New research produced in collaboration by the Asia Floor Wage Alliance (AFWA) and Global Labor Justice-International Labor Rights Forum (GLJ-ILRF) has revealed the extent of this wage theft in the garment sector, particularly in the Asian supply chains of US-based ‘Big Fashion’ corporations—Nike, VF Corporation, and Levi’s. 

In 2021, the AFWA released a report titled ‘Money Heist,’ based on a survey of 2,000 garment workers in Bangladesh, Cambodia, India, Indonesia, Sri Lanka, and Pakistan. As companies including Nike rushed to cancel their orders from factories in the Global South, millions of workers were laid off or fired. 

Across the 189 factories surveyed by AFWA in 2020, workers lost at least an estimated USD 164 million in wages.

Meanwhile, the Knight family, which is the second largest shareholder in Nike Inc., paid itself USD 74 million in dividends on their company stock between March and May 2020 alone. 

Not only did people lose out on wages, eight in 10 of the fired workers surveyed stated that they had not been paid severance benefits, seven in 10 fell into poverty, and debts doubled as many workers were left unable to afford food or rent. 

In 2021, while workers were struggling for survival, Nike reported that its annual profits had soared by 196%, the largest increase in the company’s history. Nike is not alone, AFWA noted. Rather, as the pandemic reaches its three-year mark, the companies of ‘Big Fashion’ are locking in their highest profits in over 10 years. 

In 2022, the AFWA revisited 41 factories from its original survey to determine if conditions had improved for workers. It presented its findings in a new report titled ‘Big Fashion and Wall Street Cash In On Wage Theft,’ released on February 27.

Millions in stolen wages in the pockets of shareholders

The new report found that nine in 10 factories had not resolved wage claims dating back to 2020, representing a total of USD 71 million. 22 factories were not paying workers their owed overtime and eight factories were not paying their workers minimum wages or owed benefits. 

The report suggests that the total potential wage claims for Nike, Levi’s, and VF Corp in just the six countries surveyed in 2022 could amount to USD 427 million. 

Not only have these companies given millions in dividends to their owners, they have continued to authorize multi-billion dollar stock buyback programs, “a legal form of stock manipulation that is widely considered [to be] bad for the economy and for workers,” the report says. 

“Corporations use stock buybacks to inflate their share prices…cutting the number of shares that represent the total value of the company and therefore making each share worth more,” AFWA explained. In turn, Wall Street benefits from buybacks because big Wall Street firms, including Blackrock and Vanguard, have a controlling stake in companies and can drive buybacks. 

Instead of investing profits towards wages, “corporations are extracting wealth from companies and from their workers to create shareholder value for the already powerful and wealthy.” 

With the present share buyback authorizations, ‘Big Fashion’ companies could pay back the workers in the factories surveyed by AFWA a thousand times over. Nike could do it nearly two thousand times. 

The report has been released with the launch of the campaign ‘Fight the Heist’ to demand that ‘Big Fashion’ companies engage with workers for a “systematic investigation of COVID wage theft claims,” to end payouts and stock buybacks for billionaires until all garment workers are paid their lost wages, and that they transform their global supply chains to ensure that workers are paid a living wage. 

20 unions from Cambodia, India, Indonesia, Pakistan, and Sri Lanka representing garment workers along Nike’s supply chains also submitted a complaint against Nike to the US State Department through the Organization of Economic Co-operation and Development’s (OECD) First Instance mechanism, detailing “severe human rights impacts” including impacts on social security and gender discrimination.