Image: Zara

Last year, individuals working in garment factories in Bangladesh that supply top global brands made headlines after clashing with police in a weeks-long strike over low wages.Before that, laborers in a factory tied to Zara affixed tags to the Spanish fast fashion giant’s garments, after they claimed that the retail titan failed to properly compensate them for their labor. The news came roughly 6 months after 500 garment workers in Mynamar took part in a massive strike, demanding that their employers observe Thingyan, one of the largest and most widely celebrated holidays in the country, and on the heels of employees at Topshop’s Leeds distribution center refusing to work earlier in protest of the “meager wages and exploitative contracts” utilized by the British fast fashion giant.

Meanwhile, higher up the fashion totem pole, luxury and high fashion brands have not been immune to unrest. In March 2018, Marc Jacobs, Coach, and Michael Kors came under fire after as many as 100 laborers in one of their suppliers’ factories went on a “major strike to protest alleged sub-standard and illegal working conditions,” according to NGO China Labor Watch. As WWD reported at the time, “Guangzhou Panyu Shimen Handbag Ltd. Co, a South Korean-owned factory, has been accused of failing to pay its workers a salary in line with local laws – its workers have gone on strike over back pay owed and are campaigning to receive a monthly base salary of 3,500 renminbi ($553) during production-low seasons.”

That same month, individuals working for Chanel’s outposts in Korea engaged in a temporary strike, protesting long hours and low wages. “The recent strike shows the desperation of workers in the services industry,” a representative for Korean Federation of Service Workers’ Unions said in a statement in March 2018. “Although department stores look luxurious and fancy, salesclerks working there are suffering from intense work for low wages. This is the reality of the nation’s cosmetics industry.”

Most recently, these labor-related discord came in the form of reports that supplier factories for British fast fashion giant Boohoo consist of “cramped high-density conditions,” and workspaces dominated by extreme temperatures and poor air quality, and wages that fall well below the national living wage. The Sunday Times shed light on the allegedly egregious situation in much the same way as the New York Times uncovered the web of “secret underpaid workers” laboring in factories in Los Angeles in order to churn out Fashion Nova’s low-cost garments and accessories, which have been heavily endorsed by mega-stars like Cardi B and the Kardashian/Jenners.

These are just a sampling of the attempts by laborers in the garment manufacturing sector – both at the high end and in terms of fast fashion – and the media, alike, to push back against the exploitation that is rampant in the global fashion industry. The question is: Why do fashion brands continue to fail to clean up their acts?

Even if brands want to be part of the solution, particularly as consumers, investors, the media, and their laborers consistently demand that they do, they are hindered by the current legal system. One of the biggest problems is that if brands are to eradicate labor exploitation, they must take more control of their supply chains. But if they take more control over their supply chains, they open themselves up to the risk of tremendous legal liability.

To effect real change in the global fashion industry, the countries where brands are headquartered – whether it be Spain, home to Zara’s parent company Inditex, Sweden for H&M, or France for most of the brands owned by LVMH and Kering – need to reconsider their legal policies. To be specific, the existing liability rules need to be amended to incentivize brands’ direct involvement in labor issues within their supply chains.

Global Value Chains

Over the past few decades, the production process for garments (and other things) has evolved, becoming very complicated. These “global value chains” include all the activities that are necessary to a product’s life-cycle – designing, manufacturing, selling, and sometimes, even recycling. When it comes to the relationship between these vast networks of suppliers and the law, there is a connection between responsibility and liability. Generally, a brand is only legally responsible for the actions of suppliers if the brand directly employs and controls that supplier. In a global value chain, most suppliers are typically outside of the brand’s direct control, operating, instead, as contractors and in many cases, even subcontractors, the latter of which are more often than not completely undocumented, as they tend to work from their homes.

Like many activist organizations, Oxfam places the onus on fashion brands to improve the labor practices of their subsidiaries and suppliers in developing countries. For instance, Oxfam calls for brands to implement a “living wage,” a wage that is sufficient for workers to meet their basic needs. A recent report from international confederation of charitable organizations focused on the alleviation of global poverty estimates that enforcing a living wage will only increase the final product price by 1 percent. This, Oxfam suggests, could be absorbed by the chain in order to keep prices from rising.

The key is this: To ensure individual garment workers receive a living wage, brands would need to exert additional oversight and coordination of their suppliers and subsidiaries. In other words, brands would have to take stronger control not only of their suppliers but also of their suppliers’ suppliers, and their suppliers’ suppliers’ suppliers, and so on. This is known as chain integration.

And in fact, in certain respects, brands themselves are also eager to integrate their supply chains, but for different reasons. From the brands’ perspective, integration can help ensure production efficiency, product quality control and effective management of brand reputation. This is one of the reasons why, for example, Chanel and other luxury brands have been actively acquiring an array of their supplier factories.

In many ways, it turns out, activists and brands actually want the same thing. They want greater chain integration. What then is stopping the brands from doing so, you ask? The legal reality that if brands were to take greater oversight efforts, from that follows the risk of colossal liability. It is impossible to put an exact figure on how much such liability might cost a fashion brand, but it is clear that if brands opt to more thoroughly oversee their suppliers, they will no longer be able to disclaim liability or knowledge of misconduct – either legally or in the court of public opinion amongst their consumers.

What will it take to create change?

In this regard, brands are in something of a Catch-22 situation. As the law currently stands (and because brands consequently limit integration), brands are rarely liable when a supplier or subsidiary in their chain runs afoul of the law. The problem from the brands’ perspective is that they are likely to lose any of their legal defenses if they proactively take control of their supply chains. This is true whether the control is for purposes of what they selfishly want (more efficient supply chains) or what activists want (better labor practices).

This dilemma played out following the 2013 Rana Plaza tragedy, when many European brands signed a safety accord that seeks to protect Bangladeshi workers from unsafe working conditions. Some American and Australian fashion brands refused to sign the accord precisely because of the fear of future liability.

To get brands on board with improving their supply chains and stopping worker exploitation, we must first recognize the complex landscape in which brands operate. In the current environment, it is often safer – legally and financially – for brands to limit their involvement in labor issues, and hide behind third-party “monitoring” and “audits.” To truly affect change, though, we must find ways to transform what are now risks of action into incentives for change.

Kevin Sobel-Read is a Lecturer in Law and Anthropologist at the University of Newcastle. Georgia Monaghan is a Research Assistant at the University of Newcastle. (Introduction courtesy of TFL)