Inditex is Getting Out of Myanmar
Inditex is in the process of a “phased exit” from Myanmar, in accordance with global trade union IndustriALL’s call for disinvestment, a spokesperson told Sourcing Journal.
As such, the Zara owner will continue to reduce the number of “active” manufacturers that it contracts in the Southeast Asian nation, where the military has been locked in an increasingly bloody civil war with armed ethnic groups and anti-coup protestors since 2021.
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The move comes as the retail titan was named as a buyer at Hosheng (Myanmar) Garment Company, a Yangon-based factory where seven union workers were fired at the start of June. Their alleged offense: Demanding a wage increase from 4,800 kyats ($2.29) to 5,600 kyats ($2.67) per day, according to The Irrawaddy, a news outlet run by Burmese exiles living in Thailand. Five of them were subsequently arrested and hauled off to a junta interrogation camp, a witness told the outlet on Tuesday. Another two, the person said, are in hiding.
Hosheng, a Chinese-owned facility in the Thardukan Industrial Zone, did not respond to a request for comment.
Such heavy-handed tactics are far from new, said IndustriALL. In the two years since the semi-democratic government’s ouster, more than 300 union members and activists have been thrown into jail. The junta has banned nearly all unions, “effectively” wiping out the fundamental right of freedom of association.
“The military getting involved in a strike and workers being arrested yet again show that freedom of association is impossible in Myanmar,” said IndustriALL general secretary Atle H?ie.
The Delegation of the European Union to Myanmar urged on Tuesday for the “immediate” release and reinstatement of the workers, as well as an “end to arrests of all those who are peacefully exercising their right to freedom of association and expression.”
“We call on all concerned to operate in accordance with the ILO Declaration on Fundamental Principles and Rights at Work,” it said in a statement posted on Facebook. “This includes respecting fundamental human rights, including freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labor; the effective abolition of child labor; the elimination of discrimination in respect of employment and occupation, and a safe and healthy working environment.”
The European Union is a key funder of the Multi-Stakeholder Alliance for Decent Employment in the Myanmar Apparel Industry, or MADE in Myanmar. The project, designed to promote responsible business practices in the country also known as Burma, has drawn brickbats, including from IndustriALL, for promising to promote social dialogue and collective bargaining under conditions where they cannot survive.
“Employers take advantage of the political situation to deprive workers of their rights,” H?ie wrote in a letter, dated April 18, to European Council president Charles Michel, EU Commission president Ursula von der Leyen, EU ambassador Ranieri Sabatucci and others. “Serious violations of human rights and labor rights continue in Myanmar.”
The letter echoed the Ethical Trading Initiative’s assessment from last year that it “wasn’t possible” for responsible businesses to apply normal human rights due diligence in Myanmar. Inditex is a member of the multi-stakeholder group.
“The main industrial zones producing garments, leather, shoes, and bags are under martial law,” H?ie said. “There have been numerous incidents of military intervention and repression of worker protests. Workers have been kidnapped, soldiers have been used to intimidate workers, threatening their lives, and workers have been laid off under pressure.”
By replacing “legitimate” unions with Workplace Coordination Committees comprising workers’ representatives vetted by employers, H?ie said, MADE in Myanmar provides both employers and junta with “propaganda designed to create the impression that social dialogue exists.”
“The EU should without hesitation put an end to the MADE in Myanmar project, which only serves to legitimize the country’s illegitimate government,” he added.
Ranieri previously told Sourcing Journal that the EU acknowledges and is “immensely concerned” about deteriorating labor conditions in Myanmar but that the option of not doing anything will only cause massive unemployment and further exploitation of workers.
“As a responsible partner of Myanmar, we believe that we should all try to stop this negative trend as best as we can,” he said. “We do believe that through the MADE project, we can mitigate and hopefully improve overall labor compliance in Myanmar. The project target group is the garment workers and the project will work with all stakeholders of goodwill to address the significant challenges workers are currently facing.”
Khaing Zar Aung, the exiled president of the Industrial Workers Federation, an IndustriALL affiliate, said she’s asking the EU, as well as the European Chamber of Commerce in Myanmar, to work toward the release of Hosheng’s former employees, as well as guarantee the safety of its remaining ones. But they have limited powers, she said.
“These international and internal organizations completely ignore the interference of the military in labor disputes and the retaliation from the employers,” she said. “They have no leverage to stop it to protect workers.”
The EU Delegation told Sourcing Journal those efforts are already taking place.
Inditex, for its part, said that events at Hosheng represent a “severe breach” in its supplier code of conduct, specifically in relation to freedom of association, which it dubbed non-negotiable.
“As a result, we have decided to block the possibility of our suppliers working with this factory,” the representative said. “In addition, we have urged this manufacturer and their related supplier to take all immediate actions to prevent and remediate any harm to the workers’ rights that might have taken place.”
Because the world’s No. 1 apparel maker by revenue doesn’t publish a list of its suppliers, but shares them with a select group of organizations, including IndustriALL, it’s unclear how broad its Myanmar footprint is. But Hosheng isn’t its only Burmese supplier to face allegations of misbehavior. Watchdog group Business & Human Rights Resource Centre has questioned Inditex about multiple allegations of abuse in its supply chain, including shuttering without compensating workers, failing to pay overtime, excessive production targets, verbal abuse and child labor.
As recently as March, Inditex said it was performing a “continuous and reinforced due diligence process” in its Myanmar factories, including implementing specific corrective action plans to “support factories in the managing of any type of improvement area identified.”
In pivoting away from Myanmar, the Spanish giant is in growing company. Other fashion businesses that have exited or are in the process of exiting the country include Aldi South, C&A, Mango, Primark, Marks & Spencer, Tesco, Uniqlo owner Fast Retailing and Muji parent Ryohin Keikaku.
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