It has been claimed that workers in factories supplying to Boohoo are paid £3.50 an hour, well below the UK's minimum wage of £8.72 for over 25s © Boohoo
It has been claimed that workers in factories supplying to Boohoo are paid £3.50 an hour, well below the UK's minimum wage of £8.72 for over 25s © Boohoo

What can buyers learn from the Boohoo scandal?

Retailers have called on the UK government to take urgent action to prevent the exploitation of garment factory workers in the UK.

In a letter, coordinated by the British Retail Consortium, retailers including ASOS, Marks and Spencer and New Look were joined by MPs and NGOs to call for the implementation of a ‘Fit to Trade’ licensing scheme to ensure all garment factories are meeting legal obligations to employees. 

The letter said there was an opportunity for the UK to become a world-leading ethical fashion and textile manufacturing industry, but “unless action is taken now, thousands more people will likely face exploitation”.

It comes after onliner retailer Boohoo said it was “shocked and appalled”  when it was alleged workers in UK factories manufacturing its garments were paid just £3.50 an hour and were not provided with adequate personal protective equipment during the UK’s lockdown. 

However, the Environmental Audit Committee said it was an “open secret” that some garment factories in Leicester were paying below the minimum wage. During an eight-month inquiry into fast-fashion, Boohoo’s founder Carol Kane even gave evidence on the topic.

Luke Smitham, senior consultant at Kumi Consulting, told SM the Boohoo scandal demonstrates a much wider problem on how fast fashion brands choose to source their garments. 

“There’s an over reliance on social compliance audits that are fundamentally not very good at identifying issues. There’s also an under reliance on known risk and effective due diligence when it comes to responsible sourcing,” he said. 

Some fashion brands put emphasis and money into auditing and trying to outsource the responsibility, rather than committing to ongoing work within the supply chain to really mitigate those risks.

Instead they should be focusing on their purchasing practices at a company level, Smitham continued.

“They should prioritise their time, support supplier factories, and demonstrate a good knowledge of those areas. It requires strategic engagement from brands and focusing resources. Sometimes brands worry about what that means moneywise, but if you take money away from auditing and move it towards increasing strategic engagement, you're likely to see better results,” Smitham said. 

“It's also about being better at reporting, being truthful about what you're finding, and the challenges they’re facing. Fashion brands can learn from other sectors in that respect.”

Issues around worker exploitation in Leicester are not new. In 2015, the University of Leicester reported “widespread and severe violations of work and employment laws” in the city’s garment sector. The report found many workers were paid less than half the national minimum wage and had no employment contract.

At the time, Nik Hammer, author of the report, said: “These working conditions exist because manufacturers are confronted with the considerable market power of global brands, who can source globally, allow only low margins in lean supply chain systems, and operate purchasing practices that are too often focused on the lowest possible price.”

Boohoo is not the only brand to come under fire. Clothing brand Quiz announced it had suspended a supplier after it was reported the factory offered a worker £3 an hour to make clothes. ASOS boss Nick Beighton also revealed he was considering taking action on one of its suppliers in Leicester after it had been flagged as “red critical” under the retailer’s ethical audit process.

Ben Muis, director and consultant at fashion business consultancy Conceptable, told SM incidents were not likely to stop buyers from sourcing from Leicester, but the situation showed there was a need for sourcing processes to be thorough, no matter the country of origin. 

“Sourcing is not just negotiating, placing a purchase order and arranging transport. You have to take ownership of the evaluation as well,” he said. 

Transparency and visibility are key to avoid falling into a trap of working with rogue traders, and buyers should not be afraid of asking questions and following up on them, Muis continued. 

“If you find that something you were told is not entirely true, don't exclude the possibility that other things you have been told or shown may not be true either. Keep relationships on a business level. There’s nothing wrong with being friendly, but keep the boundaries in place. This base helps to get a starting point in the supplier relationship where you are always expected to ask the difficult questions as well,” Muis advised. 

Using technology, implementing unannounced audits and having clear action plans in place to deal with irregularities are crucial to ensuring compliance.

“Some large brands are now so aware of their responsibilities and the consequences of poor sourcing practices that they have strategies which include quick spot checks by staff that have full authority to stop orders mid-flow,” he said. 

“In real terms, I have seen brands pull production off the lines into crates and move it out of a facility within an hour of finding something they were concerned about. If you are not prepared to do this, you should genuinely ask yourself why.”

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