Brands and retailers need to be aware of the financial strain on suppliers and the delays from manufacturing as a result of the coronavirus, a labour rights group has said, with communication key to mitigating the challenges the outbreak has presented.
The spread of the novel coronavirus, first reported in Wuhan, China, in December 2019, has become a monumental global health concern. Reports put the death toll at around 1,100 people with over 45,000 people globally infected, the vast majority of whom are in mainland China.
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As part of the Chinese Government’s containment efforts, at least 15 cities are under some form of mobility or travel restriction.
“Workers in China may not be able to return to work immediately following the end of the Lunar New Year break, which means that the normal operations of factories may be impacted by both labour shortage and supply disruptions,” the Fair Labor Association (FLA) says.
The official date for people to return to work in many provinces and cities in China was 10 February. Other areas like Hubei Province, which is the epicentre of the outbreak, are following stricter control measures, and people in those areas are not expected to return to work until 14 February.
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In a briefing, the FLA says buyers and suppliers should be aware of, and seek to mitigate, the potential risks that might arise, such as non-payment of wages to workers during this period, the financial strain on suppliers in China, and manufacturing delays in third countries due to the interruption of shipments of raw materials from China.
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By GlobalDataThe Government of China has provided notice to employers in China on how they should treat workers in this situation.
In particular, on the subject of wages, The Ministry of Human Resources and Social Security says: “For employees who have or are suspected of having pneumonia from infection by the novel coronavirus, and those in close contact with it, during the period of isolation and treatment or medical observation, as well as those who are unable to work normally as a result of government quarantine measures or other emergency measures, the enterprises shall pay their salaries for this period and must not end their labour contracts on the basis of articles 40 and 41 of the Labor Contract Law.”
The Ministry has also provided recommendations for companies that need to pause production, or where operations are halted or otherwise impacted:
1. Suppliers should follow the Ministry notice and continue to pay workers per the labour contract, even if work is suspended. Buyers should ensure their suppliers are meeting this requirement.
2. Buyers and suppliers should communicate with each other to understand whether changes or delays in production are expected. Given the enormity of the health crisis, buyers should strongly consider providing flexibility on delivery dates, payment terms, financial liability, etc. and continue to uphold responsible purchasing practices to mitigate negative impacts on suppliers and workers.
3. For buyers working with suppliers in third countries that rely on materials produced by factories in China, the same level of communication and flexibility afforded to suppliers in China should apply.
“Working cooperatively with suppliers, particularly when they are experiencing difficulties beyond their control, is not only a matter of compliance but also a key component of responsible sourcing and social responsibility and leads to enhanced protection for workers,” the FLA says.
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