H&M Cuts Bangladesh Jobs at ‘Worst Possible Time’
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H&M Group picked the “worst possible time” to cut jobs in Bangladesh, with news spreading Wednesday that 46 of the 450 employees in the Swedish retailer’s Dhaka office were given notice on the eve of the Eid al-Adha festival.
“It is unfortunate timing, and where is the compassion?” a local entrepreneur who asked not to be named told Sourcing journal. “This is the worst possible time to lay off people, just before the festival time.”
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Many observers called out H&M Group CEO Helena Helmersson’s visit to Dhaka to meet with Prime Minister Sheikh Hasina in June, which local industry representatives described as a positive encounter. “H&M claims it is promoting sustainability, but taking care of people is the foremost principle of sustainability which they are violating,” an industry insider said, describing the terminations as “brutal.”
H&M is one of Bangladesh‘s biggest apparel buyers, sourcing from more than 250 factories and purchasing rouhgly $3 billion worth of product a year, according to industry analysts.
The Monki owner confirmed the cuts on Wednesday.
“We can confirm that 46 of our colleagues are impacted and that we are doing our best to support them during this challenging time,” an H&M spokesperson told Sourcing Journal. “During the process we have—and are following—local laws and regulations and we are ensuring that the rights of our colleagues are respected.”
Another manufacturer who asked not to be named said that this was part clearly of a bigger cost-cutting plan to deal with the global economic slowdown. Many large retailers, he said, were consolidating their sourcing strategies to work with bigger manufacturers, mitigate risks and improve quality control.
Previously, the fast-fashion company had laid off 101 employees in Bangladesh December 2020, during the Covid-19 pandemic.
At that time, H&M Bangladesh country manager Ziaur Rahman said the company was responding to a rapidly changing climate. “Though this may bring some difficult decisions, they are necessary to strengthen our position in the competitive landscape,” he said.
Many find the cuts to be a tough pill to swallow.
“H&M is a big fast fashion brand. They have earned a huge profit through buying cheap products with cheap labor from Bangladesh and other countries. I think they should take responsibility and take care of their staff,” said Taslima Akhter, president of Bangladesh Garment Workers Solidarity.
Brands and retailers never share profits with those lower on the totem, she said, adding that the burden of any crisis falls on rank-and-file workers.
“They should take responsibility and have an emergency fund to fight the crisis period,” she said.
Last week, H&M said sales measured in local currencies for its March-May quarter were “flattish” compared with the average analyst forecast for a 1 percent gain.
“With the second quarter behind us we can conclude that we have taken a number of further important steps towards our goals. We increased sales in many markets despite reduced purchasing power and unfavorable weather conditions compared with last year. The summer collections have been well received and the third quarter has got off to a good start,” Helmersson said at the time.
But there is some good news for Bangladesh.
Results for the country’s financial year, announced on Monday, showed clear progress. Apparel exports for the full fiscal year through June 30, showed year-on-year growth of 10.3 percent, at $46.99 billion, up from last year’s $42.61 billion.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that higher value items helped fuel the expansion. “New markets such as Japan, Korea and India have been contributing to increase nontraditional markets’ share,” he said.
Knitwear continued to perform well, accounting for $25.73 billion, while woven garments commanded $21.25 billion.
The apparel sector increased its share of the export basket, now accounting for approximately 84 percent of Bangladesh’s record $55 billion exports. The second largest export—leather and leather goods— accounted for $1.22 billion, down from last year’s $1.24 billion.
Home textiles slipped to third place, declining 32.47 percent to $1.09 billion.
Despite the strong headwinds, including energy and power shortages, inflation and falling foreign exchange reserves in the country, the apparel sector continued to find its way forward, according to manufacturers who said they’re squeezed on all sides from higher raw materials to soaring energy costs.
