European Retail Digest
Political Issues
Faster, Longer, Cheaper: The nexus between poor labour standards and
supply-chain management in the apparel industry
By Sumi Dhanarajan, Policy Adviser, Oxfam, UK
The clothing industry is big business. In a highly
competitive market however, the race is intense
amongst companies to deliver products at low
prices that also meet consumer demands on
quality and choice, and at the same time maximise
returns to shareholders. As the interest in clothing
retail grows from value or ‘discount’ retailers –
who now have, for example, over a quarter of the
market in the UK – so does a strategy of slashing
retail prices, shortening lead time and keeping
fashion lines fresh through regular changes
become the principal driver in this industry.
And what for the workers who cut, sew, assemble
and pack the t-shirts, blouses, trousers and
jackets? Positioned at the end of these long and
complex global supply-chains, they bear the
ultimate burden of the immense pressure upon
their employers to deliver ever-faster and ever-
cheaper. A young Moroccan woman working in a
garment factory supplying Spain’s leading
department store, El Corte Ingles laments, “They
pay as little as they can get away with. There is no
work law here – the only thing that matters is that
we work a lot in a short space of time. There are
no rights”.
In the last decade or so, high street retailers,
supermarkets and fashion brands have one by one
subscribed to policies of ‘ethical trading’ or
‘corporate social responsibility’. Responding to
sweatshop campaigns, many have adopted codes
of conduct that police suppliers’ adherence to
labour standards. Implementation is through
audits of workplaces either conducted in-house or
through third-party inspectors. Yet, despite all
good intentions, real improvements in working
conditions have been limited. Over the last year,
Oxfam with partners in 15 countries conducted
extensive research in order to understand why
this is the case. We revealed that current sourcing
strategies designed to meet ‘just-in-time’ delivery
combined with lowering of unit costs are
significantly contributing to suppliers adopting
exploitative employment practices. Whereas
companies have been putting resources into ‘fire-
fighting’ the problem of sweatshop labour by
whipping suppliers’ into line with codes of
conduct, not one was addressing their own actions
as a key cause of the problem.
Short Lead Time, Long Working Hours
“Last year deadlines were about 60 days…[this
year] the deadlines for delivery are about 60 days;
sometimes even 45…” reported a Sri Lankan
supplier to a major sportsbrand. Shorter lead-times
and unpredictable order sizes and frequencies
mean excessive working hours and forced
overtime, often at very little notice. Workers from
a Chinese factory producing for a UK sportsbrand
alleged that they worked a total of 120 hours of
overtime in a month – three times in excess of
Chinese labour legislation. One worker
complained: “We have endless overtime in peak
season and we sit working non-stop for 13 to 14
hours a day. We sew and sew without stopping
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Issue 43 | European Political Issues
until our arms feel sore and stiff.” At a Bulgarian
factory supplying a European sportswear company,
workers reported that refusal to do overtime was
used as a pretext for dismissal. The ‘fast-fashion’
phenomenon led by companies such as Zara and
H&M that can take designs off the catwalk and
into high street stores at incredible speed – Zara
can put together a range in between 7 – 30 days –
risks exacerbating the problem unless managed
responsibly.
Low Prices, Low Wages
Falling unit costs are also taking their toll. A Sri
Lankan supplier to Nike interviewed in October
2003 estimated that while production costs had
increased by approximately 20 percent in the last
five years, unit prices paid by Nike had dropped by
35 percent in the previous 18 months. He said, “I
feel that prices are reaching rock-bottom now in
Sri Lanka and I am not sure how we will survive.”.
At a Chinese factory, the owner reported unit
prices for Umbro shoes were falling year on year.
Workers from his factory interviewed in November
2003 complained that their wages had also fallen
over the last three years. Whilst they used to be
paid at least the minimum wage during the low
season, that protection has since been removed.
During a low season last year, workers in the sole
department reported being paid between a mere
RMB 200 and RMB 400 (¢20 – 40) per month.
Greater Flexibility? Pay by Piece and
Employ Casually
The current industry norm is to pay workers by
piece rather than by time-rates. This allows the
factory manager to define the quantity that he/she
wants to worker to produce according to the
orders put in by the retailer. Where suppliers are
given too little time to turn around the order,
production targets become excessive. If targets are
not achieved during the normal working day –
which they usually are not – then workers are
expected to work overtime on their own account
and are not paid unless they complete the target
set. In low season, piece-rates mean that the
factory manager can reduce labour costs. Piece-
rates also allow for the supplier to adjust to drops
in unit costs by reducing the amount paid per
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piece. Workers at an Indonesian factory supplying
six sportswear brands told researchers: “In the
garment division, the usual target is a thousand
pieces per lane, per day. But during export days,
the target doubles to two thousand pieces. This
doubling is very stressful for us and we often
cannot reach it. When we don’t, we get yelled at
by the management and sometimes we get
warning letters.”
There is also a growing trend within the garment
industry of hiring workers on a short-term ‘rolling’
basis - often with no written contract – even
though the jobs are long-term. With this
‘casualisation’, employers can ‘concertina’ their
workforce in response to demands for flexibility
from retailers. They are also able to circumvent
any labour protection offered including the need
to pay benefits such as maternity leave, social
security and severance pay.
Critically, employers also seek to prevent workers
from organising so that they do not challenge bad
working conditions. Garment workers in a Turkish
factory supplying several major European
sportswear retailers said, “Last year while the
workers of the next factory were striking, our
supervisor said to us “You will see – all of them
will lose their jobs. You never make this mistake.
Otherwise you also face the same consequence.”
Business-as-usual is not Ethical
Research has led Oxfam to conclude that ethical
trading – despite the rhetoric – is still very much
at the periphery of apparel companies’ core
business operations. And suppliers know this. One
Chinese garment manufacturer told our
researchers: “I know how to deal with the ethical
code people. I can judge the balance of power
between the buying departments and those
responsible for the codes of conduct to see where
the real power lies.” Oxfam’s research revealed
that at five Chinese sportswear factories, managers
had faked compliance with the retailers’ code of
conduct during audits either by doctoring the
books or forcing workers to lie during interviews.
Further, ethical trading staff themselves admit
that in circumstances where order have to be
 European Retail Digest

Figure 1 | The Supplier’s Dilemma

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Issue 43 | European Political Issues

delivered on time, they accept that the
management will have to derogate from certain
code provisions.
As the Multifibre Arrangement (MFA) comes to
an end this year, the concerns highlighted will
intensify. One fear is that suppliers in countries
that can no longer rely on quotas as their
comparative advantage will be forced into having
to meet even lower unit prices or offer greater
flexibility as retailers threaten to relocate to lower-
cost locations.
Make the Change
We suggest that the following policy and practice
changes by retailers could deliver the integration
of ethical and buying functions necessary to
ensure labour standards are met in their supply-
chains:
- Develop an ethical purchasing policy that
ensures sourcing strategies and purchasing
practices do not cause breaches in international
labour standards;
- Mandate ethical trading staff to oversee the
labour standards impact of purchasing practices;
- Train sourcing staff on their responsibilities to
meet the company’s code of conduct on labour
standards;
- Ensure staff incentives and performance
assessments are structured to reward rather
than undermine ethical purchasing;
- Include compliance with labour standards in
supplier selection and assessment;
- Set adequate delivery lead-times that are
determined with suppliers, taking into account
their ability to fulfil production without
breaching labour standards;
- Improve critical path management to prevent
inefficiencies at the retailer’s end imposing
upon production at the supplier’s end;
- Negotiate a price that is compatible with the
supplier meeting labour standards; &
- Give suppliers the opportunity to provide
feedback on the pressures they face through
purchasing practices without this jeopardising
their custom.
The global garment industry generates trade of
more than ¢280 billion a year. It is high time that
the 40 billion people employed within it reap the
benefits of this thereby truly being given a chance
to work their way out of poverty.

In February this year Oxfam International published Trading Away Our Rights: Women working
in global supply chains. The report forms the basis of 20 national campaigns seeking to secure
improvements in workers’ rights protection in the fresh produce and garment sectors. See Oxfam
International (2004) Trading Away Our Rights: Women working in global supply chains: Oxfam
GB [available at http://www.maketradefair.com]

In March this year, Oxfam, Global Unions and the Clean Clothes Campaign launched the Play
Fair at the Olympics Campaign to place pressure on the sportswear industry to ensure its
business practices do not undermine workers rights. The campaign also called upon the
International Olympics Committee to adhere to the tenets of Olympism by including labour
standards clauses in its marketing, sponsorship and licensing agreements. See Oxfam, Global
Unions and Clean Clothes Campaign (2004) Play Fair at the Olympics: Respect Workers Rights in
the Sportswear Industry: Oxfam GB [available at http://www.fairolympics.org]

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