A recent global analysis indicates the widespread usage of informal procedures inside Bangladeshi, Pakistani, and Indian garment supply chains, where the majority of workers lack official contracts.
Based on research by the Asian Floor Wage Alliance (AFWA), up to 92 per cent of workers in Bangladesh were found to be employed without formal contracts. The paper titled Threaded Insecurity: The Spectrum of Informality in Garment Supply Chains states that the rate is 90 per cent in Pakistan and 65 per cent in India.
These workers can be easily fired at the employer’s discretion, it also noted.
By focusing on Bangladesh’s 92 per cent of workers without contracts, the report particularly sheds light on the vulnerability of women who are often excluded from essential labour protections.
This lack of formal contracts denies them benefits and exposes them to a greater risk of rights violations, gender-based violence and harassment, it added.
Established in 2007, the AFWA is an alliance led by Asians that operates throughout consumer countries and regions that produce apparel. Their main concerns are low pay, discrimination based on gender, and restrictions on the right to form associations freely in the apparel sector.
The report centres on a crucial issue: informal employment in the official economy. It is based on research done between 2020 and 2024.
It presents a fresh paradigm for comprehending informality as a range of behaviours found both inside and outside of clothing supply chains. 23 labour unions and organisations from six different countries—Bangladesh, Cambodia, India, Indonesia, Pakistan, and Sri Lanka—were involved in this research project.
The report identified unequal power dynamics within buyer-driven fast fashion supply chains. Lead firms hold more power than supplier factories and the workers who produce their garments.
“Fast fashion lead firms choose to maintain unstable relationships with supplier firms, allowing them to bargain for shorter lead times at ever lower prices,” as mentioned in the report.
To meet these demands for speed and lower costs, garment factories increasingly rely on informal employment practices. This involves hiring contract labour and temporary workers, creating a vulnerable workforce susceptible to exploitation, it said.
The report detailed these practices from employing workers without contracts to outsourcing to unregistered production facilities and home workers. These practices perpetuate a cycle of vulnerability and exploitation imposed on a predominantly female workforce.
However, Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), disagreed with the report’s findings on the lack of written contracts.
According to him, there is “very negligible” informal employment in Bangladesh’s RMG industry, and export-oriented RMG manufacturers follow the right procedures.
He said that buyers frequently keep an eye on these factories.
Hassan did acknowledge the possibility of informal employment in factories that outsource work. In addition, he raised concerns about the study’s methodology and said the results were not accurate.