// Primark establishes a fund to cover the wages component of orders that have been cancelled
// This will cover the wages of overseas workers who were producing Primark orders that have now been cancelled
// Primark has already asked suppliers to stop production amid the global lockdown of its store estate
Primark has pledged to cover the wages of overseas workers who were producing orders that have been cancelled as a result of the Covid-19 pandemic.
The value retailer established a fund to cover wages of its factory workers in countries such as Bangladesh, Cambodia, India, Myanmar, Pakistan, Vietnam and Sri Lanka.
Primark has already cancelled orders after the escalation of the coronavirus pandemic led to the temporary closure of stores.
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Primark said it has already paid £1.6 billion for stock in its shops, distribution centres and in transit, under its standard terms.
The retailer also expects to lose £650 million in sales a month following lockdowns ordered by governments worldwide designed to combat the spread of the infection.
Primark sales’ blow is exacerbated by the fact it does not trade online like many of its high street competitors.
The retailer said it offered extended payment terms to suppliers to cover “further stock ready for shipment”.
However, because of the impact on overseas factory workers producing orders that were due for shipment next month and will now not be taken, Primark said it would “fund payment of the wages that relate to this product, taking into account adjustments for government support packages provided in each country”.
”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,” the retailer said in a statement.
”Accordingly, Primark is today announcing 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 the following countries: 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.”
It added: “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.”
Primark chief executive Paul Marchant said: “Every one of our stores around the world is closed. With a backlog of stock in stores, in 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 NGOs in these countries to make sure wages for the orders we have cancelled are paid to the workers.”