Indian factory workers protest after ‘H&M cancels orders’ leaving 1,000 jobless

Company ‘was clearly aware that they were reducing orders leading to the shutting down of the factory,’ says New Trade Union Initiative general secretary Gautam Mody

James Crump
Wednesday 24 June 2020 19:33 BST
Factory workers protesting outside a factory in Srirangapatna
Factory workers protesting outside a factory in Srirangapatna ((The News Minute - YouTube))

More than 1,000 workers in a garment factory in India lost their jobs without warning, reportedly after H&M cancelled their orders amid the coronavirus pandemic.

Sacked workers are still protesting outside the Euro Clothing Company factory (ECC-2), owned by Gokaldas Exports, in Srirangapatna, Karnataka, weeks after the factory was shut down.

When the factory closed at 5:30pm on Saturday 6 June, an announcement was reportedly made informing workers that the 1,200 staff members were to be laid off immediately.

The announcement confirmed that the workers would be paid half of their remaining wages and that the factory would no longer be operational, according to The News Minute.

A notice at the factory read: “The management of the company has decided to lay off the workers at Srirangapatna plant with effect from June 8, 2020, in the interest of the plant and also to save the employment of the workmen.”

The notice, from the manager of the factory, said the sudden closure was due to the global effects of the coronavirus pandemic.

“The adverse circumstances prevailing in India, as well as the countries where overseas buyers are located, has resulted in overseas buyers cancelling their orders or withdrawing their orders and there is uncertainty about the market conditions,” it read.

Gokaldas Exports also released a statement, that read: “The lay-off is due to reduction and cancellation of orders from its customers based out of key markets consequent to the Covid-19 pandemic.”

The New Trade Union Initiative (NTUI) general secretary Gautam Mody told the Independent that protesters started demonstrating against the decision on 6 June, and have continued to do so every day since.

One of the workers, 28-year-old Shobha, told the Independent: I’ve worked in this factory for 9 years and we’ve been producing for H&M for more than 6 years. We built up the factory and the brand and just one fine day they layed us off with no notice. They’ve left our families to starve.

“There are no other jobs to be had in this small town.”

Local trade unions, alongside labour department official, MV Roopa, claimed that the factory was closed without the one month notice period, that is legally mandatory, according to the Telegraph India.

According to the general secretary, “the process of layoff is illegal because the ECC-2 did not follow the procedure laid out under section 25 M of the Industrial Disputes Act, which states that in an establishment that employs more than 100 workers the employer needs to get prior permission from the government in a specified format to lay off its workers.”

Mr Mody said that after some machinery was removed from the factory on 30 May, officials from the Garment and Textile Workers Union (GATWU), spoke to factory management, but there was no indication that the removal was related to lay-offs.

They spoke to factory management on the morning of 6 June, but were again not made aware of the upcoming closure.

The local trade unions met factory management again on 8 June, to try and resolve the issue and get the workers their full pay, but an official from GATWU told the Independent that no progress has yet been made.

Ms Roopa told The News Minute: “We held meetings with the officials on Monday but they said that they cited the same reason for laying them off, that is, due to lack of orders in view of the Covid-19 crisis.

“The labour department has now issued a notice to the company against this decision.”

Mr Mody added that the discussions are at “a complete impasse. The supplier refuses to budge and H&M is incommunicado. H&M is bound by a global framework agreement with IndustriALL Global Union which it is unwilling to even bring to the table.”

Gokaldas Exports has 20 factories in the area, but the plant in Srirangapatna was the only one that it closed.

Mr Mody claimed that the factory suddenly shut down after H&M cancelled its orders.

The general secretary wrote: “H&M did not commit to the order status even after being informed by GATWU on 1 June. Even as GATWU sought a meeting with the management, H&M allowed the management to proceed with the factory closure while asking the union to meet with the management.”

“During the meeting, the management informed GATWU that payments of old orders were still due.”

Mr Mody added: “H&M is the only MNC (manufacturer) for which ECC-2 has been manufacturing in 2020. In 2019, ECC-2 manufactured almost 90% production for H&M.

“Therefore, H&M was clearly aware that they were reducing orders leading to the shutting down of the factory.”

After a video of the protesters circulated on social media on Monday, H&M said it was attempting to resolve the conflict.

H&M replied to a tweet that criticised the factory closure, and said: “The drop in customer demand due to Covid-19 will inevitably impact suppliers, however we are placing orders with this supplier and we fully stand by our responsible purchasing practices.

“We are in dialogue with the supplier and the trade unions to resolve the conflict peacefully.”

On Tuesday, an H&M spokesperson told The Independent: “Covid-19 has caused an unprecedented situation for the whole industry. The drop in customer demand will inevitably have an impact on production levels, in particular when a country has been in lockdown for a long period, as is the case with India.

“However, at this point, our orders at this specific supplier are on similar levels as during the same period last year. We are also fulfilling our payments for goods in accordance with contracts, on time and at the originally agreed price.”

The spokesperson added: “The supplier wants to lay off workers at one of its units (out of 20 in total) and the conflict between the supplier and the trade unions is about different interpretations of the national law. We are in close dialogue with both parties to help them resolve the conflict peacefully and reach an agreement that is acceptable to both parties.”

In response to H&M’s claims, Mr Mody told the Independent: “H&M claims are mere words. Workers have been out on the picket line for 18 days and there hasn’t been any demonstrable action from H&M.”

Mr Mody added that he thinks “the actions of the supplier are patently illegal and H&M has nothing to say on this. Which law allows the supplier not to pay wages or to lay-off without notice? H&M is in effect party to the union busting through its silence.”

He claimed: “H&M must take full responsibility of the situation and require Gokaldas to immediately place orders specifically at ECC-2 and live up to its commitment that it has made to the international community to ensure jobs are not lost in their supply chain.”

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