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Report: Low Prices Paid by Clothing Brands Drive Production Abuses

The true cost of clothing brands seeking the cheapest and fastest manufacturing is ultimately paid by factory workers, according to a Human Rights Watch report published April 23.

Seeking the lowest possible prices, demanding ever-shorter production times, frequently changing orders and delaying payments on completed work are among fashion brands’ actions that undermine efforts to create safe working conditions and protect the rights of workers.

The report’s title – “Paying for a Bus Ticket and Expecting to Fly” – summarizes the mindset of many fashion brands, which is contributing to the industry’s well-documented abuses and violations of workers’ rights during production.

This attitude is driven by consumer demands for cheap clothing that is currently in style and delivered quickly.

The drive for ever-lower production costs and ever-increasing speed inevitably results in negative consequences that fall in the laps of employees.

“Brand approaches to sourcing and purchasing are not merely a threat to a factory’s financial bottom line. They incentivize suppliers to engage in abusive labor practices and in risky contracting with unauthorized suppliers as a way of cutting costs,” the report said. “This means that brand practices in these areas directly undercut their own efforts to insist on rights-respecting working conditions across their supply chains.”

Only 16% of clothing brands surveyed in 2018 met pre-production guidelines mutually agreed upon during contract negotiations, making it nearly impossible to complete orders within the agreed upon time frame.

This is the rule not the exception, forcing manufacturers to scramble to meet deadlines, often at a cost of employees’ rights and working conditions.

“Detailed, written manufacturing contracts are not an industry norm. Where they do exist, they are often one-sided; many brands assume no written responsibility for delays or other mistakes made by them,” the report said. “Experts say that in some cases, unscrupulous brands unfairly charge discounts and penalties to suppliers as a way of cutting their own costs, knowing that suppliers do not have much leverage to push back.”

While acknowledging that suppliers are ultimately responsible for their business practices, factory conditions and employee safeguards, the report emphasized that fashion brands hold much of the power in the industry.

This necessitates that they do their part to “prevent and discourage, rather than incentivize, supplier abuses.”

A 2016 International Labor Organization survey cited in the report found that per unit price was the “main criterion” for 78% of fashion brand buyers, with only 42% taking working conditions at contractors’ factories into consideration in selecting manufacturers.

In addition, 52% of manufacturers reported taking a loss on production contracts in the hope that a future contract would be profitable.

Better practices and approaches by fashion brands would significantly improve working conditions in the production process.

This is particularly true when it comes to employee working hours that are often manipulated and misappropriated due to pressing deadlines (often stemming from the noted failure of fashion brands to meet pre-production requirements).

This could also decrease the widespread practice of subcontracting in order to meet deadlines, often using manufacturers with even poorer working conditions.

This practice tends to increase when a nation’s minimum wage increases but brands are unwilling to pay more for product manufacturing.

For example, during a three-year period (2014-17) in Cambodia in which the minimum wage increased by $53 USD per month, prices paid by the top five fashion brands using Cambodian manufacturers saw an overall decrease and the number of subcontractor factories increased nearly threefold.

Challenges arise when some brands and suppliers seek to improve working conditions and employee protections, inevitably increasing production costs and the price at the register, while other manufacturers and brands do not.

At present, “the industry stands at a real crossroads – one where there is both real momentum towards positive change, and a dangerous current of commercial pressure pushing in exactly the opposite direction.”

The full report is available here.