57% of Inditexs factories are located near its headquarters in Spain

57% of Inditex's factories are located near its headquarters in Spain

Spanish fashion giant Inditex, which owns the Zara fashion chain, is to pay its Spanish workers their full salaries until 15 April, just-style has been told – including those in its domestic factories. 

"They are the only company that hasn't laid off workers," says Angeles Rodriguez, a coordinator for Inditex and other Spanish retailers at trade union Comisiones Obreras, who has been attending coronavirus-related meetings at the company, which is one of the world's largest fashion retailers. "Everyone else, including El Corte Ingles, have presented ERTES" or mass temporary layoffs or furloughs in Spain. 

Rodriguez adds Inditex will pay all Spanish workers 100% of their salaries until 15 April, at which time it will re-evaluate compensation. "We understand they will also guarantee European salaries until then and are probably doing the same globally because when they do something, they do it for all [around the world]."

Earlier this month the retail group said it had temporarily closed 3,785 stores in 39 countries because of the coronavirus pandemic, taking a EUR287m (US$316m) hit to inventories.

Over a dozen factories 

Rodriguez spoke to just-style as Spain reported that new coronavirus deaths climbed to 7,340 as 85,195 people were infected – making the country the third-worst hit globally. A BBC report on Monday, however, quoted government officials as saying the virus's transmission appears to be slowing. 

Inditex, which owns the Zara, Pull & Bear and Bershka chains, among others, operates 13 garment plants in Spain that employ around 23,000 people including logistics and non-store staff. GlobalData estimates 57% of Inditex's factories are located near its headquarters.

All these workers will receive some pay even after 15 April, three days after Spain is due to end its lockdown, which is newly extended to 12 April, Spanish newspaper El Confidencial reports, adding that retail workers will be furloughed. 

Meanwhile, Inditex founder Amancio Ortega, who is one of the world's richest people, has also received kudos on social media for donating around 800,000 doctor's masks and 75,000 protection gowns, joining a chorus of other Spanish multinationals helping tackle the shortage of personal protective equipment (PPE).

Factories make gowns and masks 

Whatever happens, Inditex is rushing to help the government confront the crisis, quickly restructuring its production hub in Arteixo in La Coruna autonomous region to churn out masks, gowns and gloves, say union officials. 

The need is huge, according to Cristina Estevez, Rodriguez's counterpart at other leading union UGT. She adds roughly 2 million medical workers in Spain need protective gear.

"We are working with the Ministry of Industry, Trade and Tourism to see what companies can offer raw materials to make medical apparel and equipment," she says. "There is a huge wave of solidarity and even workers who have been laid off are looking for ways to make masks or build groups that can make medical apparel."

Grim outlook 

Estevez says Spain's government has offered to pay up to 70% of the salary of laid-off workers, with employers offering to contribute the other 30%. The state's subsidiaries are expected to last around six months, but most retailers say they won't be able to contribute their portion beyond the end of March – two weeks after Spain's lockdown measures began on 14 March. 

Estevez says roughly 230,000 workers could be left without any assistance as Spain's economy slips into recession amid the virus's economic toll.

"There are many small and midsize merchants that are not getting the 30% contribution and will face great difficulties," she concludes. 

However, it is unclear what Inditex's stance is with regards to workers in its supplier factories overseas. 

Retailer H&M Group is thought to be the first – and only – retailer to have agreed to pay its suppliers for orders that have cancelled once the goods have been produced or are in production.

There are also mounting calls for the fashion industry to re-think how it does business in light of the impact of Covid-19, with supplier factories, who generally operate on paper-thin margins and have far less access to capital than their customers, already taking an extreme hit.