Eradicating labour exploitation in supply chains of the garment industry needs more than disclosure legislation and corporate social responsibility, as the root causes are embedded in their business models and wider structures of the market.
Fast fashion company Boohoo made the headlines of major UK and world news in July of 2020, following the undercover story by Sunday Times' investigators exposing below minimum payments to workers in one of its suppliers’ factories in Leicester, UK. The reporter uncovered that workers were being paid £3.5 per hour, while the minimum wage for workers above the age of 25 is £8.72. Reports were also made in connection to violations of Covid-19 related lockdown, where workers were required to come to work despite having symptoms of Covid-19. Inadequate hygiene and social distancing measures in factories were found, as well. Other media reported on labour conditions of the workers. Most workers are hired on part-time basis, while required to work full time, wages contained informal elements and the workforce is segmented, consisting largely of migrant and undocumented workers.
UK Government response to Boohoo scandal exposes problems with the modern slavery
In response to the Boohoo scandal, UK Home Secretary, Priti Patel, praised the undercover investigation for their discovery and stated:
“I will not tolerate sick criminals forcing innocent people into slave labour and a life of exploitation.”
The National Crime Agency (NCA) confirmed that they have been investigating Leicester's textiles industry over allegations of exploitation, although it did not comment on Boohoo’s case specifically. An NCA spokesman said:
"Within the last few days NCA officers, along with Leicestershire Police and other partner agencies, attended a number of business premises in the Leicester area to assess concerns of modern slavery and human trafficking."
These responses reflect the adoption of the modern slavery discourse, that frames many forms of exploitative practices (contemporary slavery, human trafficking, sexual exploitation, removal of organs, forced labour) in simplified, dualistic terms of perpetuators and victims. Thus, attention is on the individuals who, through the use of force or deception, compel others to a life of inhumane treatment. In such framing, government’s responses are deeply embedded in prosecution and criminalization. What gets omitted from such a narrative is the agency of people who are exploited. Sadly, following the Boohoo story through the news for several months, one can find scarce information about the motivation of the workers and almost no information about what happened to them after the news broke nation- and worldwide.
Another issue with criminalization is making companies accountable for crimes related to modern slavery. One way of holding the companies accountable is by requiring companies to be transparent about the measures they take to eradicate modern slavery from their supply chains. This approach is also known as disclosure legislation championed by UK's Modern Slavery Act. The Modern Slavery Act acknowledges that modern slavery offences take place in supply chains, and institutes provisions aimed at increasing transparency in supply chains. The Modern Slavery Act requires companies to prepare a slavery and human trafficking statement for each financial year of the organisation that should reflect the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business.
The premise behind the disclosure legislation is the belief in the market power of self-regulation. The proponents of neoliberal capitalism believe that once the market actors have all the information, they will make the appropriate choices. Therefore, if companies are made to publicize their efforts to combat modern slavery in their supply chain, consumers, investors, anti-sweatshop activists and other stakeholders can exercise their power to “punish” the companies who are socially irresponsible by refusing to buy their products or withdrawing their investment. Most scholars are doubtful about the consumers’ ability to drive the wide structural changes of the industries, and while anti-sweatshop movements have had some success, the wins have been short lived.
The case of Boohoo is just the most recent story about exploitative working practices in the UK
garment industry. Over the last decade there has been a number of similar undercover reports
( Fashion's dirty secret, 2010; Undercover: Britain's cheap clothes, 2017). University of Leicester professor
The garment industry is organized around buyer-driven commodity chains. In this type of organization, the industry is led, not by those who manufacture the products but, retailers and marketers, i.e. the greatest profits and assets are found, not in the production, but in the design and brand image. This structure, in which actual manufacturing has low profitability, leads to the use of outsourcing by major or lead companies, as a way to avoid labour unions and cut costs. At the same time, as brand image is what brings profits, lead companies are vulnerable to the loss of reputation, if and when their socially irresponsible behaviour is publicized.
The global economy, and especially supply chains and the outsourcing of garment production, are creating modern sweatshops where the majority of workers are exposed to exploitation. The garment industry is characterized by exceedingly low wages, extensive working hours and appalling working conditions. These working conditions are result of power asymmetries in the value chain, between lead companies and their supplier. The suppliers’ decisions about working conditions: pay, working hours, health and safety are highly influenced by the lead companies’ demands.
The Fast fashion industry is a business model in which big brands, like Boohoo, can operate just through online presence offering trendy clothes at speed and a cheap price. However, in order to quickly respond to market, fast fashion companies rely on geographical proximity between production and consumption, creating sweatshop conditions wherever they are present, not just in remote parts of global chain. Work in fast fashion industry is labour intense, often performed in hostile and unsafe working environment, with high levels of informalization and workforce segmentation. The lowest segment of fast fashion workforce, as seen from Boohoo case reports and earlier research evidence, is dominated by undocumented migrant workers, whose migration status makes them more vulnerable to labour exploitation.
This review of the basic features of thefast fashion business model suggests that forced labour and labour exploitation is an enduring issue that is not specific to individual companies operating in socially irresponsible ways – a few bad apples - but a result of the wider structural causes and the way supply chains are operated.
Boohoo’s vision, mission and social responsibility statements, all recognize the social impacts of the fashion industry. The company adopted clear policies on modern slavery and ethical suppliers conduct with the aim of creating a positive social impact throughout their supply chain. In response to the events in the Leicester factory, Boohoo claimed that they have a zero-tolerance policy toward modern slavery, and that the factory in question is not their direct supplier. This points to another problem of the UK’s Modern Slavery Act as it doesn’t require companies to report on their subcontractors (tier-2 suppliers) where most of the violations happens.
In the last ten to twenty years there has been a proliferation of private regulation setting standards of social conditions of production in supply chains. This private regulation may take the form of individual companies’ codes of conducts, collective standards, or certification programs. Especially in today’s globalized economy, corporate standards are seen as effective ways of addressing issues arising from complex global production, that can complement or fill the void of traditional national state or international regulation. However, many scholarly investigations into company-led initiatives have proven their limited effectiveness. The main shortcomings of such self-regulation are the lack of compulsion and accountability. Even for those companies that have implemented the highest standards in their codes of conducts, the achievement of financial goals will take priority.
In September of 2020 the independent investigation report was published revealing no evidence of any criminal offences committed by the company, despite confirming allegations about poor working conditions and low rates of pay. The report did point to the fact that Boohoo directors knew about the treatment of factory workers in Leicester as of December 2019 but failed to implement adequate monitoring and programs. The report states that no evidence was found connecting Boohoo’s purchasing practices to the increase Covid-19 rate, even though they did capitalize on not cancelling orders. The recommendations of the independent investigation revolved around increasing transparency and repositioning the narrative of its branding.
The story of Boohoo is the newest example of labour exploitation that is ever-present in the garment industry. However, this story may serve to remind us that the structure of global garment industry which relies on cheap and labour-intensive work, is present through global supply chain, from remote parts in the Global South, to garment industry hubs in the Global North. This opens the space for re-examining the assumption that forced labour is rooted in the challenge of governing labour standards in complex global supply chains, and that thus the solution lies in the disclosure legislation and corporate social responsibility in developed countries. As the case of Boohoo shows such an assumption may not be entirely true, and the offered solutions, such as increased transparency and re-branding, may not be enough.
Jelena Starcevic is a PhD candidate at the School of Labour Studies, McMaster University
This project is supported by the LIUNA Enrico Henry Mancinelli chair in Global Labour Issues at McMaster University, held by Judy Fudge, and by funding from the Social Sciences and Humanities Research Council.