Impactt recently hosted a high-level roundtable with human rights and ethical sourcing leaders from across sectors to explore what’s really happening behind the supply-chain headlines. With news dominated by tariffs, regulation, and automation, the goal was to cut through the noise and understand what these shifts mean for suppliers and workers on the ground.
From retail and energy to food, travel, and manufacturing, participants described how global turbulence is filtering down through their supply chains, reshaping orders, costs, and the day-to-day reality for workers. Despite the differences across sectors, one message was consistent: this period of disruption is exposing weaknesses but rewarding companies that stay close to suppliers and keep listening to workers.
The pressure is macro. The impact is human.
Supply chain management teams across markets have told our regional leaders that they are facing smaller, and more volatile orders with shorter lead times. Workers feel it first, through excessive or lost overtime, delayed wages, unpredictable shifts, and rising stress.
At the same time, they reported that compliance expectations are climbing. New due-diligence rules, reporting demands, and audit layers are all adding cost. Yet, buyers still expect suppliers to cut prices. The result is a growing squeeze, with suppliers being asked to invest in better systems and standards while earning less per unit.
In response, many shared they are turning to flexible or temporary labour and cutting costs wherever they can just to stay afloat. A factory manager in South Asia said:
We met every new audit ask and were still asked to cut price 10–15%,”
One global apparel brand reflected that their teams are,
having to justify every pound spent on responsible sourcing when the wider message is all about cost control.”
Another added,
We’re choosing to hold steady with our core suppliers rather than chase cheaper options — the relationships we protect now will be the ones that carry us through.”
China: the human face of “supply-chain shift”
Two themes dominated the conversation when it came to China: supply-chain shift and uncertainty. For Chinese factories, “de-risking” isn’t a strategy on paper — it’s a lived reality, reshaping jobs, relationships, and livelihoods every day. As foreign investment slows (down nearly 27% in 2024) and brands move portions of production elsewhere, many export-focused sites face shorter, smaller, less predictable orders. As our China leader told participants, one factory worker summed up the feeling on the ground:
Every time a brand leaves, a piece of our future goes with it.”
Paycheques tell the same story. While official wages have inched up, real incomes now depend heavily on overtime, often 40–50% of total pay. When orders fall and overtime disappears, take-home earnings can drop 10–15% overnight, widening the gap to a living wage.
If I don’t get overtime, my income drops 30–40%,” a worker in a Chinese shipyard told one of our teams recently.
Across manufacturing hubs, overcapacity and falling prices have squeezed margins to breaking point. As one supplier put it,
We’re not competing for profit anymore, we’re competing to survive.”
Many are keeping operations quiet, waiting for the market to turn, but the stress is visible in shorter contracts, uncertain hours, and rising anxiety on factory floors.
Automation adds another layer. In Zhejiang and Guangdong, factories are upgrading fast, but reskilling has not kept pace. Skilled technicians are in short supply and increasingly valued, and lower-skilled production workers are anxious. One team leader put it simply:
I still have a job, but I don’t know for how long.”
The lesson for buyers is clear: automation should be managed as a transition, not an instant replacement. Investing in suppliers’ HR and skills capability now will safeguard quality and capacity and preserve the trust and workforce resilience that underpin sustainable change.
Bangladesh: squeezed by shrinking margins
If China’s story is one of uncertainty, Bangladesh’s is one of pressure without protection. For years, the country has been a model for responsible sourcing progress, but in 2024 that progress came under strain. Factories are facing overlapping global shocks: price inflation, election-related unrest, and tightening buyer demands, all against a backdrop of static order prices.
Minimum wages rose to BDT 12,500 (around USD 105), but living costs have soared to nearly four times that level. As one sewing operator told our team:
Yes, my salary went up but my production target went up too.”
Workers are earning more on paper but often feeling poorer in practice. As our Bangladesh leader explained, by the time food, rent, and oil are paid for, many workers are skipping meals just to get by.
He also described how, for many factories, the gap between compliance and survival is widening. Buyers are asking for more disclosure, more reporting, more audits but prices haven’t moved
It’s an impossible equation. When compliance costs rise but prices fall, something has to give and it’s usually the worker. Protests over pay and layoffs are more frequent, and in some zones shipments have been delayed by political tension and road blockades. Workers say their biggest fear isn’t losing their job but unpredictability. One line supervisor put it simply:
Every year, it feels like our jobs are on the line.”
Automation and migration are reshaping the workforce in Bangladesh too. New cutting machines are arriving, but training lags behind. At the same time, thousands of migrant workers are returning from overseas with no jobs to come home to, adding further stress to households already stretched by inflation.
Yet resilience runs deep. Some suppliers are taking proactive steps, improving wage systems, piloting worker-welfare initiatives, and strengthening communication with worker representatives. These efforts need sustained support, not just more audits.
For buyers, the challenge is balancing ambition with affordability, finding ways to share compliance costs, invest in people, and keep worker voice alive without pushing factories past breaking point.
India: growth ambitions under strain
While global turbulence has created uncertainty, India still stands out as one of the fastest-growing major economies. Government reforms and production-linked incentives under the Make in India programme are generating investment and jobs. But beneath the macro success story lies a tougher reality for suppliers and workers: rising costs, shrinking orders, and growing informality.
In recent months, US tariffs of up to 50% on selected Indian goods have shaken major export sectors such as garments, leather, gems and jewellery, seafood, and chemicals. In hubs like Tirupur and Surat, export orders have fallen sharply. One cotton mill owner told our team:
I have five factories in Tirupur and Palladam, employing 2,000 people. We’re stuck with ₹60 crore of finished goods meant for the US. We’ve already shut down two factories and laid off 1,000 people.”
Small and medium suppliers are hardest hit. A footwear unit near Chennai now runs at half capacity; small foundries in eastern India have halted production. With orders volatile and margins squeezed, many suppliers are turning to contract and informal workers to stay afloat, eroding job security and social protections.
For workers, the impact is deeply personal. In Panipat, a textile hub in the north, one worker told us:
We used to have overtime every week, but now there are days when the machines are silent. Some of my friends have been sent home without pay, and we don’t know if they’ll be called back.”
In southern India’s seafood industry, wage cuts and unpaid days are becoming common. One shrimp farmer said his income had fallen from $350 to under $200 a month, leaving him unable to cover family expenses:
If I shut down my ponds, they’ll be ruined. But I can’t afford to sell any cheaper.”
Meanwhile, new labour codes, merging nearly 30 existing laws into four, promise simpler compliance and formalisation. Yet many observers fear they prioritise business growth over worker protection. Most of India’s 470 million workers remain informal, outside the reach of these reforms.
At the same time, India is working to diversify its trading partners, signing or negotiating free trade agreements with the UAE, Australia, the UK and the EU. These may open new markets, but the transition will take time — and workers in export-linked industries remain vulnerable in the interim.
Across sectors, the themes are the same:
- Job insecurity and layoffs as demand slows.
- Low earnings and delayed wages, driving indebtedness.
- Growing informality, heightening risks of forced labour and unsafe conditions.
Yet amid the disruption, there are also signs of adaptation. Larger suppliers are investing in skill development; some exporters are exploring domestic markets or regional diversification. The challenge is ensuring that progress doesn’t come at the expense of people.
For global brands, the signal is clear: long-term partnership, fair purchasing, and investment in skills are now strategic necessities, not CSR add-ons.
India’s growth story remains compelling, but resilience will depend on how fairly that growth is shared. As one factory manager in Delhi put it:
After September, we may have nothing left to do. What we need from brands now is partnership not pressure.”
Navigating turbulence: how businesses should respond to maintain momentum
During these turbulent times, many participants said that right now compliance asks are often the only ones gaining traction internally within European and North American headquarters. Budgets are tight and leadership attention is elsewhere, but teams are finding creative ways to use compliance momentum to keep responsible sourcing on the agenda and to build longer-term capability in the process.
Here’s what’s working:
- Tailor the message. There’s no single narrative that is a magic bullet. What resonates with one team can fall flat with another. The key is knowing what matters to each audience and framing responsible sourcing in their language.
- Make trade-offs visible. As one participant put it, you need to be very explicit with leadership about what you are pausing and the risk that comes with it “If you choose A, you’re not doing B–H and that could mean X, Y and Z.”
- Turn compliance into capability. When audit-driven initiatives are the only ones getting airtime, the opportunity is to reframe them, using compliance delivery to strengthen HR functions, management systems, and supplier partnerships.
But participants also recognised that these internal realities sit within a much larger reset. Global turbulence is redrawing supply chains faster than people and systems can adapt and the companies that succeed will be those that stay grounded in human realities while navigating the macro shifts.
- Geopolitical churn is rewriting sourcing maps. Trade wars and new international trade agreements are accelerating production shifts but risk moves too. Re-routing orders without listening to local contexts risks repeating the same vulnerabilities elsewhere.
- Technology is redrawing the skills map. Automation is advancing unevenly. Factories upgrading machinery faster than people can reskill are seeing growing anxiety and turnover. The leading companies are co-financing training to turn automation from threat to transition.
- The informal economy is expanding. As smaller suppliers struggle to survive, more work is happening off-payroll and out of sight. Due-diligence systems must evolve to capture this reality.
- Audit fatigue is forcing a rethink. Suppliers are saturated with duplicative asks. The next phase will reward companies that help build management-system maturity and measure outcomes, not just compliance.
The signal beneath the noise: in a year of volatility, compliance may open the door, but capability, communication, and partnership are what keep it open. Real resilience still depends on relationships and investing in skills, systems, and the people who hold supply chains together when everything else shifts.
At Impactt, we’ll continue to bring business and human rights leaders together to share intelligence and practical strategies through times of disruption.
If you’d like to explore how to apply these insights in your own supply chain — from responsible purchasing to supplier capability-building, please get in touch at info@impacttlimited.com.pacttlimited.com.
