Retailers must sanction Leicester factories

This opinion piece by ETI's Martin Buttle first appeared in Retail Week on 24 January 2017

You’ve withdrawn from a factory because audits have found poor standards. You’ve instructed your other suppliers not to subcontract. Then a media investigation finds your product being made in the delisted workplace. And the workers are earning less than half the national living wage.

This is what happened to Ethical Trading Initiative members New Look and River Island when Channel 4’s Dispatches programme investigated the Leicester garment industry.

“If a retailer bulk-orders shirts made in a factory in Leicester for much less than £1.60 a finished garment, it’s likely to be too good to be true.”

For the past three years, ETI has been raising serious concerns about very low wages and poor working conditions in Leicester’s garment trade. We also know that most UK-based retailers are aware of this.

Even if they’re not, the maths should tell them. If a retailer bulk-orders shirts made in a factory in Leicester for much less than £1.60 a finished garment, it’s likely to be too good to be true.

But first, some history.

The Midlands used to be one of the powerhouses of global apparels manufacturing. Then, in the 70s and 80s, with the rise of Bangladesh and China, garment manufacturing fell into decline.

Bad practice continues

A rump of small-scale local manufacturers remained. They cut corners and poor practice crept in.

Now, with the demands of fast fashion and increasing global wages and shipping costs, the Leicester garment industry is resurgent.

“In 2014, a group of leading brands approached us expressing concerns about conditions in their Midlands supply chains.”

Regrettably, bad practices continue.

They are almost the norm in an industry of predominantly small producers. Eighty-five per cent of Leicester’s garment factories employ fewer than 20 staff.

In 2014, a group of leading brands approached us expressing concerns about conditions in their Midlands supply chains. Our research commissioned from the University of Leicester confirmed they were right to be worried.

The university found systemic abuse. Wages of £3 an hour, an almost complete absence of employment contracts, excessive and under-reported hours, sometimes gross health and safety violations and limited enforcement of labour regulations and standards.

Taking action

Subsequently, we set up a working group of concerned companies, unions and NGOs.

They are liaising with local partners such as the Leicestershire Enterprise Partnership. They’ve made links with the union, Community, as well as ACAS. They’ve introduced an initiative called Fast Forward.

This is a collaborative company-led programme to improve legal and ethical labour standards in suppliers’ factories, which is combined with forensic auditing techniques and a worker helpline.

Furthermore, they’re consolidating their supplier base – in some cases drastically – and are trying to build trusted relationships.

“I also understand the frustration of the ETI members named in the programme. Both River Island and New Look had acted to address issues.”

Yet three years on, as Dispatches shows, not enough has changed. Meanwhile, leading retailers are increasingly frustrated.

Here’s the rub. UK household brands sourcing from Leicester – as industry exemplars – will be held responsible. However, they are relatively small fish in the Leicester pond, sourcing from well under one in five local factories.

Even then, they are rarely that factory’s major customer.

I also understand the frustration of the ETI members named in the programme. Both River Island and New Look had acted to address issues.

The factories in which Dispatches filmed their products had been previously delisted as they failed to reach the standards expected. Subsequently, River Island and New Look told their suppliers not to subcontract.

But their instructions were ignored.

A Midlands manufacturing boom

The reality is that garment manufacturing in Leicester is booming.

But it’s booming on the back of a growing band of start-up, very low-cost Etailers and Cash and Carry merchandisers supplying market traders and cheap high-street independent stores.

“The situation is so grave in Leicester that retailers sourcing from the city should now impose significant sanctions against those factories that breach contracts.”

The ethical understanding of the latter is virtually non-existent. So where to from here?

ETI does not normally advocate pulling orders from factories – we believe that where possible it’s always better to work with suppliers and industry stakeholders to improve the circumstances for all workers.

However, the situation is so grave in Leicester – with wages hardly wages at all, and sometimes appalling health and safety violations – that retailers sourcing from the city should now impose significant sanctions against those factories that breach contracts.

Large brands cannot act alone. They cannot prosecute non-compliant factory owners, for example. Neither can they force government and local agencies to act.

The solution

There must be a hard-hitting and uncompromising multi-sectoral response. That should include agencies such as the Gangmasters and Labour Abuse Authority, the Health & Safety Executive, HM Customs & Revenue and politicians, among others.

The full force of the law must be brought to bear. Some local factory owners are preying on vulnerable groups, including South Asian women with limited English, or undocumented migrant workers.

That’s not to let retailers off the hook.

“There must be a lot less suspicion around working with trade unions, as a unionised workforce will result in better working conditions and a safer environment.”

There’s still a lot of work that needs to be done on costings, including ring-fencing labour costs, which some members are piloting.

There must be a lot less suspicion around working with trade unions, as a unionised workforce will result in better working conditions and a safer environment.

And audits must be fit for purpose; the right questions must be asked by experienced auditors, workers must be engaged and there must be collaboration across the sector.

Nonetheless, we must face facts. Leicester is not Dhaka or Guangzhou. If things can go so wrong in a UK city, campaigners and the media can argue rightly that there is little hope of improvement anywhere.

That would be a crying shame.