Over the last six weeks, the fragile network of organisations that sustain hard-won human rights protections in fashion’s supply chains has begun to unravel; another victim of the Trump administration’s slash-and-burn approach to government.
The crisis started in January, when the President signed an executive order freezing foreign aid, kneecapping labour groups that promote advocacy work and offer a semblance of social security for millions of garment workers around the world.
Last week, the US government indicated almost all of those funds would not be reinstated, though legal efforts to challenge the cuts remain ongoing. Thousands of NGOs were sent letters informing them their grants were terminated, including organisations that play a major role defending human rights in the fashion supply chain. In total, the government said it axed nearly $60 billion in funding.
The US is the world’s biggest donor, but it’s not the only one pulling back. Governments in Europe are also slashing development spending, as more money in the region is earmarked for defence, and politics in many countries shift to the right.
The abrupt cuts over the last few weeks have already had drastic consequences for humanitarian efforts around the world and jeopardised decades of work building fragile protections for workers in the fashion industry.
“It is a huge concern for the industry,” said Nate Herman, senior vice president of policy at the American Apparel & Footwear Association. “We have a ways to go, but we have made a lot of progress on protecting workers and improving labour rights over the last two decades and all that work could now go backwards, and go backwards pretty quickly.”
A New Race to the Bottom
For nearly two years, UK-based nonprofit Labour Behind the Label had been working with legal centres in Pakistan, documenting cases of abuse and supporting workers in resolving disputes over issues like unpaid wages and excessive overtime. But in January, money it was receiving from the US Department of Labour to fund the programme was frozen. Work stopped and hasn’t resumed since.
“That is a scenario we’ve seen repeated across unions and NGOs we work with,” said Labour Behind the Label’s policy lead Anna Bryher. “The US funding decline is going to weaken the vital infrastructure that exists around worker rights in quite a significant way.”
We have made a lot of progress on protecting workers and improving labour rights over the last two decades and all that work could now go backwards, and go backwards pretty quickly.
The garment industry employs millions of workers, most of them women, and many living in precarious circumstances with little to no social safety. Complex and opaque supply chains mean serious abuses often go undetected unless brought to light by advocacy groups, many of whom say their ability to work has now been crippled.
Aid has effectively subsidised fashion’s human rights efforts for decades. Many large brands rely on initiatives like the International Labour Organisation’s Better Work programme to provide training and support. Funding from Western governments, often funnelled through larger nonprofits, buttress trade unions and advocacy work.
Now, in manufacturing hubs from Asia to Central America, programmes that provide workers with healthcare, access to legal assistance and dispute resolution, as well as education and training have ground to a halt, according to insiders, many of whom spoke on condition of anonymity because of the ongoing uncertainty and sensitivity of the situation. Protections against serious abuses like trafficking, gender-based violence and forced labour are under threat. Legal cases pushing to make brands accountable for incidents of wage theft at suppliers during the pandemic face new challenges, with no money to pay lawyers.
Nazma Akter, a former child labourer and prominent workers’ rights activist in Bangladesh, said in a social-media post that her organisation has lost roughly 30 percent of its funding as a result of the cuts to US aid. Awaj Foundation, which supports over 600,000 workers in the major garment-producing country, has had to shut offices and cut staff. The hit to civil society comes at a critical moment for Bangladesh, where a rare opportunity for labour reform has opened up in the wake of a revolution that overthrew the country’s autocratic leader Sheikh Hasina last year
The Solidarity Center, the largest US-based international worker rights organisation and a central player in efforts to support garment workers around the world, has taken its website offline to reduce costs in the wake of the aid freeze. “We appreciate your understanding and hope to restore the site in the future when we can access our resources,” a message on the landing page reads.
In February, labour advocacy group Clean Clothes Campaign posted an urgent call for support to social media, warning its “existence is under threat.” The organisation receives funding from the Dutch government, which is also cutting aid. Last month, it said it would reduce spending by €2.4 billion ($2.6 billion) by 2027. Funding for issues like gender equality will be terminated, while grants for climate action and civil society will be reduced, it said.
“The flow chart of the impact here is incalculable and won’t be that easy to turn back,” said an expert at an international aid group who was not permitted to speak on the record. “It creates this enormous vacuum where… anything the international community used to look at how supply chains are policed; all the groups that proved that data are on the cusp of being eliminated.”
Political Risk
The funding upheaval comes at a precarious moment. The industry’s track record on human rights was already under assault in the wake of the pandemic, which prompted an upsurge in issues from wage theft to gender-based violence. In the years since, inflation has compounded financial pressures on workers and a shift towards greater authoritarianism has given rise to an often violent crackdown on labour rights in many major manufacturing countries.
Efforts to toughen up regulation and make big brands more accountable for abuses in their supply chains are also flagging. The European Union is in the process of reworking a suite of progressive human rights and climate policies in an effort to cut red tape and boost the bloc’s business competitiveness. Last month, it put forward a proposal to substantially water down pioneering due diligence regulation that would have required brands to keep tabs on working conditions right the way down to raw material level and imposed hefty penalties for noncompliance.
Women or people of colour make up the overall majority of our supply chains… It’s not a DEI thing. It’s just a reality on the ground.
“It’s chilling seeing what’s happening in Brussels right now,” said Ryan Heman, director of forced labour and human trafficking at philanthropic organisation Humanity United, which deploys tens of millions of dollars each year to promote peace, protect marginalised workers and create accountability in global supply chains.
For business, the concern is that the rapidly shifting political order creates more instability and risk. For decades, Western governments have used foreign aid to buttress their own interests and security by promoting democracy, prosperity and skills abroad. Its decline leaves companies more exposed, both reputationally and politically.
The risk is that manufacturing countries will become more unstable and companies will face more uncertainty, said the AAFA’s Herman. They will also lose a measure of support in ensuring conditions in the factories they work with are up to par. Brands “need to be going in knowing that programmes are no longer there and be vigilant,” he added.
Funding Gaps
How labour groups will fill the billion-dollar void left by funding cuts is unclear. Many expect they won’t, causing lasting damage to the sector. Competition for grants from philanthropic organisations is already fierce and will only increase with the reduction in government dollars.
“I absolutely am concerned about partners who are losing a portion of funding that I can’t make up,” said Humanity United’s Heman. The organisation has put together an emergency response fund to try and support partners affected by the cuts, while also expediting planned grant payments and allowing more flexibility in how they are spent. “We’re fully recognising this is barely a drop in the bucket,” Heman said. “This is absolutely going to harm civil society for years.”
The sector was already suffering from a funding shortfall, with major donors turning attention to other issues in recent years, insiders said. Certain topics that are viewed as increasingly politically sensitive, like diversity, equity and inclusion and climate justice are becoming more difficult to raise funds for, they added.
“We’ve had donors tell us to stick to education work; it’s a lot safer than political advocacy,” said Ayesha Barenblat, the founder and CEO of human rights advocacy nonprofit Remake.
Within fashion’s supply chain, projects that target gender-based violence and sexual harassment — particularly relevant issues for fashion’s largely female workforce — appear especially vulnerable.
“Women or people of colour make up the overall majority of our supply chains; that is who you’re targeting,” said Herman. “It’s not a DEI thing. It’s just a reality on the ground.” Projects may look to circumvent the political debate by rebranding as promoting worker empowerment or health, he added.
Brands could step in to provide more funding, but the ongoing market uncertainty means belts are already tightening. Moreover, not all organisations accept funds from industry because of the potential conflicts of interest it creates.
“If civil society and labour organisations take the hit, the economics of ethical interventions is just not there,” said Barenblat. “Who is to put money into taking on this industry when we know the inequities continue to get worse?”
For more BoF sustainability coverage, sign up now for our Weekly Sustainability Briefing.
