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11 Mar 2020

09/03/20 - Sharan Burrow, General Secretary of the ITUC, Phil Bloomer, Executive Director of Business & Human Rights Resource Centre

COVID-19 – time for governments, brands and employers to protect supply chain and precarious workers from hardship and infection

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As the economic and human rights impacts of the COVID-19 outbreak come into view, we are again seeing supply chain and frontline workers, alongside those in precarious and informal jobs, bear the worst impacts of a crisis. The ITUC and Business & Human Rights Resource Centre are receiving increasing and worrying reports of mass lay-offs without social protection; little or no sick pay for self-isolation; and service workers not receiving the same protective measures as customers.

Workers in Asia are reporting accelerating mass lay-offs through factory shut-downs, and slow-downs, as the epidemic worsens. There are reports of factories using COVID-19 shut-downs to dodge union disputes, and health workers left vulnerable to infection through inadequate precaution by employers.

Businesses also face contraction, with UNCTAD reporting the top 5000 transnational corporations revising their 2020 earnings down by an average of nine per cent. Automotive companies and airlines estimate shrinkage of over -40%, and energy and raw materials industries -13%.

The initial evidence points to a cluster of leading companies acting promptly to protect their own employees by offering flexible work options, and some committing to pay hourly and subcontracted workers their regular wages despite reduced demand for services. Equally, leading governments are adopting early measures to mitigate the hardship faced by sick or laid-off workers and their families – measures that are also likely to reduce disease transmission rates. But we are not yet seeing similar considerations offered lower down supply chains where many millions of workers, often predominantly women, eke out a livelihood and will usually be the main carers for the sick in their families and communities.

For instance, the Cambodia Labour Confederation reported last week that 33 factories have already temporarily halted production and suspended the contracts of over 17,000 workers. If raw material shortages worsen, hundreds more factories could close by the end of March affecting thousands of workers. This is exacerbated by reduced orders by buyers as the virus has spread to major export markets in Europe and the USA.

In response to closures, the Cambodian Government has announced that factories will be given tax holidays if they can demonstrate that their business has been affected by COVID-19 (or the EU’s Everything But Arms trade preference withdrawal), and that suspended workers will receive 60% of their pay, with 20% coming from the Government. This is a welcome move. But with most workers relying on overtime to even get close to a wage to live on, a 40% pay cut will worsen workers’ privation. Worse still, there is a considerable risk that factories won’t suspend production, but simply shut in order to avoid any payment of reduced wages.

In line with governments extending support to business, ITUC is calling on governments and international institutions considering vital stimulus packages to learn the lessons of the 2008/2009 financial crisis and design income support that working families need and business will benefit from, rather than merely bailing out banks and financial institutions. These would be moves towards the redesign of more sustainable and equitable economies.

Meanwhile, the most responsible brands that source from countries like Cambodia may be taking action to protect their supply chain workers, but so far very little has been said publicly. And for the less scrupulous brands, the supply chains are designed to ensure that companies can cut and run, passing the costs down to workers and manufacturers.

The same pattern is emerging across Asia, with reports of large numbers of factories threatening closure in Philippines, Myanmar (20 in Yangon as of last week), Bangladesh, and Sri Lanka (50 factories or more threatened with temporary closure as of last week). In these countries, both governments and brands are eerily quiet on the measures to be taken to protect workers from the epidemic and from worsening poverty.

Workplaces are frontlines in the battle against the spread of COVID-19. The ITUC is calling for urgent measures to ensure that workers who display symptoms can receive free health care and take sick leave without fear of losing their jobs or incomes. Equally, companies need to ensure a duty of care for all their workers, including migrant workers. In Vietnam, an estimated 5,000 workers at a stuffed-animal manufacturer staged a strike for three days over concerns that several of their Chinese co-workers were not being properly quarantined on return from their Chinese New Year. In Nepal, the government has issued an advisory to migrant workers not to travel for jobs in South Korea and the Middle East. Thirty-eight Nepali workers travelling to Bahrain via Dubai have been deported on the grounds that Nepal is designated as a country vulnerable to a disease outbreak by the WHO.

Gig economy workers, usually misclassified as ‘self-employed’, also face serious consequences, as one UK worker summed up: “If I catch something I’m screwed…Gig economy workers can’t afford to be ill. My bank balance is literally £4 something right now”. The danger lies in the possibility that workers in these circumstances will feel compelled to work with the virus, imperilling their own health and the health of those they come into contact with.

But there is also good news emerging. Hubei, the province at the centre of the COVID-19 epidemic in China, is scheduled to resume normal production on Wednesday 11 March. This gives hope to workers around the world that with adequate measures taken by governments, and with the full cooperation of employers and brands to protect their workers, this epidemic can be beaten – and while the unnecessary suffering of workers and their families is substantial, it could be temporary.