Following the global Covid-19 health crisis, Primark has announced that it has established a fund to cover the wages component of orders that have been cancelled.

Since March 22, Primark’s entire store estate has been closed, with the loss of sales worth £650 million every month. The company asked suppliers to stop production as it already had some £1.6 billion of paid-for stock in stores, depots, and in transit. All of this stock has been paid for under its normal 30-day payment terms, the company said in a media statement.

On top of that, extended payment terms have been offered to suppliers to enable Primark to take and pay for further stock ready for shipment. This is despite the fact that nothing can be sold while the stores remain closed. In addition, Primark is concerned about the impact of workers engaged in production on further orders that Primark will now not be taking – that is, goods in production that were due for shipment in the month following cancellation of orders.

Accordingly, Primark has announced that it will fund payment of the wages that relate to this product, taking into account adjustments for government support packages provided in each country. This action will cover orders from Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka, and Vietnam.

In consultation with external stakeholders, the Primark ethical trade team will explore mechanisms to ensure that this money reaches workers. Additionally, over the past two weeks, Primark has been working closely with the United Nation’s International Labour Organisation (ILO) in order to collaborate with governments, international financial institutions, development banks and others in a position to make available medium and longer-term financing to pay the wages and benefits of workers along with economic support to the garment industry.

“Every one of our stores around the world is closed. With a backlog of stock in stores, depots and in transit, we have had to make the very difficult decision to cancel orders for future stock. Finding a way to ensure that workers in our supply chain in these countries are paid has been a priority over the past two weeks and we are pleased that this fund will provide relief to these workers. Our focus now is to work with the suppliers, factories, trade unions, and NGO’s in these countries to make sure wages for the orders we have cancelled are paid to the workers,” Paul Marchant, CEO of Primark said.

“These are unprecedented times which call for unprecedented action. We are absolutely delighted to see Primark putting its shoulder to the wheel of reducing impacts of Covid-19 on the most vulnerable in its supply chains. This move will enable Primark and its suppliers, working together, to make a significant contribution towards supporting workers as we all weather this global storm together,” Rosey Hurst, founder and director of Impactt, specialists in ethical trade said.