Major high street fashion brands reportedly paying below the cost of production

H&M, Gap, Next, Primark and Zara among the brands named as treating suppliers unfairly. Image credit: Shutterstock

Large fashion brands sourcing clothes from Bangladesh for the UK market are reportedly paying below the cost of production, according to a major new survey of 1,000 Bangladeshi manufacturers published today.

The majority of Bangladeshi factories selling to 24 of the largest global retailers report them paying the same prices almost two years on from the start of the pandemic, despite the cost of raw materials increasing. Large numbers of high street fashion brands mentioned in the study, ‘Impact of Global Clothing Retailers’ Unfair Practices on Bangladeshi Suppliers During COVID-19′, were reported to be buying from factories facing rising costs for raw materials and nearly one in five struggling to pay the Bangladeshi minimum wage of GBP2.30 per day. In total 90% of larger high street brands buying from four or more factories were reported as engaging in unfair purchasing practices in the survey carried out by the University of Aberdeen and trade justice charity Transform Trade.

More than 50% of suppliers reported experiencing unfair purchasing practices, including cancellations, failure to pay, delays in payment and discount demands, with knock-on effects including forced overtime and harassment. Larger brands buying from many factories were engaging in unfair purchasing practices more frequently than smaller brands, according to suppliers. Every brand purchasing from 15 or more factories was reported to be engaging in at least one of these practices.

Bangladesh is the second largest garments exporter in the world, providing millions of garments to the UK market. “Two years on from the start of the pandemic, Bangladeshi garment workers were not being paid enough to live on, with one in five manufacturers struggling to pay minimum wage while many fashion brands which use Bangladeshi labour increased their profits,” said project lead Muhammad Azizul Islam, Professor in Sustainability Accounting and Transparency at the University of Aberdeen Business School. “Inflation rates soaring around the world are likely to have exacerbated this even further.”

The survey also found that post-lockdown, garment factories only employed 75% of the workers they had before, suggesting that up to 900,000 workers could have lost their jobs.

Inflation rates soaring around the world are likely to have exacerbated this even further.” Project lead Muhammad Azizul Islam, Professor in Sustainability Accounting and Transparency

“This research is a wake-up call,” said Fiona Gooch, senior policy advisor at Transform Trade. “When retailers treat suppliers badly by breaching previously arranged terms, it’s workers who suffer. If a retailer fails to pay the agreed amount, or delays payments, the supplier has to cut costs some other way, and this is frequently passed on to their workers, who have the least power in the supply chain. Reports of being rehired on worse pay and conditions, bullying and unpaid overtime are the predictable result.

We need a fashion watchdog to regulate UK garment retailers, along the same lines as the existing supermarket watchdog. “ALDI and LIDL’s grocery buying practices are regulated in both the UK and European markets, but their clothing purchases aren’t, which is why unethical behaviour persists. We need a fashion watchdog to stop unacceptable purchasing practices of the clothing retailers benefiting from large consumer markets, along the same lines as existing protections for food suppliers.

Only when suppliers are able to plan ahead, with confidence that they will earn as expected, can they deliver good working conditions for their workers.” Nearly two-thirds of the factories reported receiving some financial support from the Bangladesh government or Bangladeshi banks in order to remain afloat. Of the brands listed in the report, 12 are members of the Ethical Trading Initiative which aims to promote workers’ rights around the world.

“Multi-million fashion brands are extracting their wealth from some of the world’s poorest countries in a form of 21st century neo-colonialism,” said Professor Pamela Abbott, director of the Centre for Global Development at the University of Aberdeen and co-investigator of the project. “Because of the unequal power dynamic between the suppliers and buyers, none of the suppliers who reported illegal contract breaches in the survey took legal action to recoup their losses.” The ready-made garment industry accounts for 85% of Bangladesh export income, with more than 12 million Bangladeshis dependent on the sector. The research was funded by the University of Aberdeen through an award from the Scottish Funding Council under the Global Challenges Research Fund (GCRF).

Notes for Editors

The research team consists of: Professor Muhammad Azizul Islam, Professor Pamela Abbott and Dr Shamima Haque of the University of Aberdeen, and Fiona Gooch of Transform Trade
Transform Trade is a trade justice charity working in partnership with networks of workers, farmers and social entrepreneurs in South Asia and East Africa to fight for trade that values people over profit.

Its roots are in the alternative trade movement in the north east of England.

The charity’s focus areas are fashion, tea and farming.

Transform Trade is a registered charity, no 1048752 www.transform-trade.org
The survey looked at the period from March 2020 to December 2021 and was funded by the University of Aberdeen through an award from the Scottish Funding Council under the Global Challenges Research Fund (GCRF).
A full copy of the report is available for download in the Related Content section above.
Table 1 – shows the challenges suppliers reported they had faced between March 2020 and December 2021 related to the practices of buyers, by size of factory
Table 4 – shows the brands/retailers that factories reported in connection with four challenges
A Fashion Supply Chain (code and Adjudicator) parliamentary bill was tabled with cross party support in 13 July 2022, proposing the establishment of a watchdog to oversee fair purchasing between clothing retailers operating in the UK and their suppliers, irrespective of where the suppliers are in the world.
The existing supermarket watchdog (Groceries Code Adjudicator) enforces a statutory code of practice which bans certain unfair purchasing practices by large retailers towards their food and groceries suppliers, irrespective of geographical location.
In the EU, large food businesses operating in the EU need to comply with the European Unfair Trading Practices directive in their relationships with smaller business partners, irrespective of the suppliers’ geographical location.
Growing awareness of unfair purchasing practices of fashion brands which impact suppliers, smaller brands, the environment and workers is resulting in parliamentary support and more than 16,000 people in the UK calling for a #FashionWatchdog. More than 79,252 in the EU are petitioning the European Union to stop unfair trading practices as part of a package of measures to ensure a living wage for the people who make our clothes.
Fair Trade Advocacy Office campaigns to raise awareness about poor working conditions and calls on the EU to stop abusive purchasing practices by garment brands.

Issued by: The Communications Team
Directorate of External Relations, University of Aberdeen, King’s College, Aberdeen
Phone: +44 (0)1224 272014
Contact: Laura Grant
Issued on: 08 January 2023

Major high street fashion brands reportedly paying below the cost of production

Related Content

Share This

Notes for Editors