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H&M to ‘phase out’ operations in Myanmar after more allegations of worker abuse | CNN Business

London/Hong Kong

H&M has decided to stop operating in Myanmar after an increase in reports of labor abuses in the country’s garment factories.

The world’s second-largest fashion retailer told CNN on Thursday that it had been “very closely monitoring the latest developments in Myanmar and we see increased challenges in conducting our operations in accordance with our standards and requirements.”

“After careful consideration, we have now made the decision to phase out our operations in Myanmar,” a company spokesperson said.

The Swedish clothing retailer’s decision could affect tens of thousands of workers in Myanmar, which has been rocked by a military coup in February 2021.

Until March, H&M supplied 41 factories with almost 42,000 workers in the country, according to company figures. The chain says it does not directly own any factories, but instead subcontracts production to independent vendors.

his retirement It comes after new accusations published by the Business and Human Rights Resource Center (BHRRC), a worker advocacy group.

The organization has been tracking cases of alleged labor and human rights abuses against garment workers in the country for years. It said on Wednesday that it had documented 212 suspected cases affecting at least 108,000 workers between February 2021 and February 2023.

Since the military took power two years ago, Myanmar’s garment sector “has seen substantial job losses and underemployment, along with a proliferation of labor rights abuses against its largely female workforce,” says the BHRRC.

According to the group, the affected workers “are employed in 124 factories that produce for at least 47 global fashion brands and retailers,” including the owner of Zara, Inditex, Marks & Spencer, Primark and H&M.

All the companies have issued statements on Myanmar recently, saying they are working to leave the country out of concern for the workers on the ground.

The BHRRC said it had found that wage deductions and wage theft were major problems, linked to more than half of the reported cases. Forced and “often unpaid” overtime was linked to 42% of the cases, he said.

In addition, “gender-based violence and harassment, including verbal, psychological and physical abuse, and pregnancy discrimination, are widespread,” the nonprofit organization said in its report.

“(Our) tracker recorded multiple instances of women being threatened and unfairly fired for not meeting production targets,” he said.

According to BHRRC, the number of complaints has nearly tripled in the course of a year.

“Things are getting worse for garment workers, and fast,” the organization said.

H&M told CNN that “all cases raised in the BHRRC report are being followed up and, where necessary, remedied through our local team on the ground and in close cooperation with relevant stakeholders.”

The company’s shares fell 1.1% in Stockholm on Thursday after news of its decision to halt trading.

The retailer joins other global companies cutting ties with Myanmar, including be protected, TotalEnergies and Chevron.

Within the garment industry, Inditex, Marks & Spencer and Primark had already made the decision to halt their operations in Myanmar, according to BHRRC.

His announcements came after a separate evaluation by another nonprofit group, the Ethical Trading Initiative.

Last September, he launched a scathing report which also found “evidence of widespread forced labor” as well as “high rates of forced and excessive overtime combined with financial penalties for refusing to work, high rates of harassment and abuse, and workers paying for recruitment and jobs.”

Those findings forced some retailers to immediately announce their exits.

In September, Primark saying the report “makes very difficult reading and shows that there has been a significant deterioration in the situation in Myanmar.”

“This poses significant challenges to our ability to ensure the standards we require to protect the safety and rights of the people who make our clothing and products,” the British fast fashion chain said.

“In light of this, we believe our only option is to start working towards a responsible exit from the country.”

A month later, Marks & Spencer too saying the assessment had shown that it was “impossible” for their standards to be upheld.

“We do not tolerate any human rights abuses anywhere in our supply chain and we are now working towards a responsible exit from Myanmar,” he said in a statement at the time.

Inditex confirmed to Reuters last month that it would stop supplying the country. The company did not immediately respond to CNN’s request for comment.

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