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Comment: Coronavirus could see global supply chains grind to a halt

Simone Cipriani, head and founder of the Ethical Fashion Initiative at the UN’s International Trade Centre, tells us how the coronavirus crisis will impact vulnerable people along the supply chain – and what retailers can do to help.

As an industry, we are now bracing ourselves to face disruptions and restrictions that will directly affect us all in a massive, maybe even permanent, way. However, those burdens will not be equally borne. In highly industrialised countries, workers enjoy good degrees of social protection and can negotiate coping measures with their employers and the state.

But in many low labour cost countries, where employment conditions and protection are murkier, workers will simply bear the blunt of the burden, facing a reality of homelessness, disease and mortality.

While brands and retailers in the western world scramble to cope with the business implications of the coronavirus pandemic and impending recession, the social and human fabric of whole communities in less fortunate settings is set to be literally wiped out. Order cancellations could see supply chains grinding to a halt in developing countries. The alarming consequences could be increases in migration, terrorism, human and drug trafficking as the delicate social structure of those communities tears apart.

The reality of supply chains favours the virus, not the people working in them. Labour in many fashion sourcing centres are characterised by poor health and safety conditions, workers living in high density settings, weak public health systems and low wages, often not capable of covering the basic needs of workers and their families.

These factors all make mitigation measures against contagion difficult. Without a living wage, ordinary life is already difficult. Emergencies such as the present one are absolutely disruptive. It is no exaggeration to say that the lack of a living wage helps the spread of coronavirus makes mitigation measures against the pandemic almost impossible.

This disruption impacts actors all along the global value chains, from suppliers of raw materials and intermediate goods through to brands and retailers.

The pandemic has heavily hit brands and retailers who were about to market their summer collections. Huge rents for prime retail spaces are being paid for empty stores. Online retail is suffering as well: tons of product is piling-up in fulfilment centres waiting for trade flows to pick up again. This has a whiplash effect all the way along the value chain. As a result, unemployment rises and uncertainty spreads, everywhere.

If the lockdowns last more than two months, the industry will be forced to undertake more copying measures: pressure will be put on producers, often based in the weaker countries. Initially, they will have to play catch-up. Product development and production lead times will be shorter than ever. There is a danger that vulnerable employees will work even if sick, leading to a second wave of infections. If the main markets stay shut for longer orders will be cancelled and people all along the chain will lose their jobs.

Brands and retailers need to recalibrate their relationships with suppliers, basing them not on transaction costs but on relationships and the principles of ethical trade. This crisis will force us to press the reset button. Business as usual is no longer an option.

We must work together to help all the actors in the value chain survive the economic and social shocks that the pandemic will inflict. Micro, small and medium sized producers will be the first to fold, and their know-how and skills could be lost forever. Brands, retailers and large manufacturers must work together to support their smaller and weaker partners so that we can all survive.  

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