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Retail fashion chain Zara under investigation for sweatshop in Brazil

New Delhi, 20 August 2011: A number of articles in the international media over recent days have reported on an investigation by Brazil’s Ministry of Labour into the Spanish retail fashion chain Zara after a contractor in São Paulo was found to be using employees in sweatshop conditions to make garments for the company. According to The Guardian newspaper in the UK: “The Brazilian government listed 52 charges against Inditex, Zara’s parent company, after it ‘rescued’ 15 workers from a factory sub-contracted by AHA, the company responsible for 90% of Zara’s Brazilian production. Fourteen of the workers were Bolivians and one was from Peru. One was 14.”

A statement by Inditex on the investigation unfortunately offers up a standard response that other multinational companies use time and again in such situations namely that it could not be held responsible for “unauthorised outsourcing”. It has, however, offered to compensate the workers because AHA had violated the Inditext code of conduct. Nevertheless, this response has not satisfied the Brazilian authorities which have stated that the company is responsible for its employees and that, logically, it should know who is producing its garments. In the case in São Paulo, it was reported that the workers, who lived on the premises, worked 12-hour shifts in dangerous and unhealthy conditions and earned between US$156 and $290 a month. The minimum wage in Brazil is $344.

The report highlights the continuing challenges facing the global garment sector and those who strive constantly to demand improvements in working conditions, the elimination of child and forced labour and accountability and transparency all along supply chains. Indeed, these issues were brought to the fore once again at the International Consultation on Roadmap 2016 and the Garment Sector organised by Global March in New Delhi, 10-11 May 2011. A presentation by an official from the Department of Labour in New Delhi highlighted the need for multinational brands to acknowledge that all sub-contractors are working for them as the “principal employer” and that this responsibility cannot be pushed off on to others down the supply chain.

“The issue of ‘principle employer’ needs to be clarified and at a global level and it happens to now – no more excuses and time wasting,” said Global March Chairperson Kailash Satyarthi. “We cannot continue to have situations of multinational companies using the excuse that they cannot be responsible when their suppliers outsource manufacturing activities. Over too many years now, there have been discussions on accountability, transparency and responsibility and yet examples such as what happened in São Paulo are reported in the international media on an almost weekly basis. There needs to be more concerted and coherent action between stakeholders and there needs to be decisive action on making supply chains transparent to enable effective monitoring and robust prosecution of violations.”

The report is already being followed up by the Global Union Federation for the garment sector, the International Textile, Garment and Leather Workers’ Federation (ITGLWF), which is in discussions with Inditex based on its Global Framework Agreement with the multinational. The ITGLWF has issued a press release emphasising that the news should be a wake-up call for all brands and retailers sourcing in the country and wherever else sub-contractors are being used.

The agreement was signed by former ITGLWF General Secretary Neil Kearney whose untimely death in 2009 robbed the trade union and civil society movement of a tireless campaigner for workers’ rights in the garment sector.  Under the agreement, Inditex recognises the ITGLWF as its global trade union counterpart for workers employed in the production of textiles, garments and footwear and the main objective is to ensure the application of core labour standards throughout the Inditex supply chain. In particular, the agreement places the right of workers to unionise and to bargain collectively with their employer at the heart of efforts to secure sustainable compliance to key labour standards by suppliers to Inditex.

Inditex is also a member of the Ethical Trading Initiative in the UK and, in 2007 modified its Code of Conduct for External Manufacturers and Suppliers to come in line with ETI’s Base Code of Conduct. The Inditex Code prohibits forced and child labour, discrimination and harsh and inhumane treatment throughout the Inditex supply chain. It also provides for the payment of a living wage for a standard workweek, limitations on working hours, healthy and safe workplaces, regular employment and environmental awareness. The terms of the agreement are supposed to apply equally to direct suppliers, contractors and sub-contractors, including homeworkers. It also states that no sub-contracting is allowed without the prior written consent of Inditex and suppliers allowed to sub-contract are responsible for sub-contractor compliance. The application of the agreement is reviewed annually by a group drawn jointly from Inditex and the ITGLWF.

“Clearly Inditex needs to do more to implement its code of conduct and ensure that its suppliers are not sub-contracting production without their prior authorisation”, said Laura Carter of the ITGLWF. 
“In reality, though, all brands and retailers who sub-contract their production are vulnerable to abusive behaviour down the supply chain, and the situation is likely to be worse where uncontrolled sub-contracting is permitted … This week’s revelations should prompt all brands and retailers to map their entire supply chain and review working conditions to ensure that every supplier and every sub-contractor provides decent work … They should be disclosing their entire supply chain, ensuring that sound industrial relations exist at each workplace and that workers have the right to organise and to bargain collectively. And if they are really serious about avoiding exploitative practices in their supply chains, they should do business only with unionised workplaces.”

The investigation in São Paulo was launched following reports by the local garment workers’ union in June 2011 that sweatshops in the city were producing for Zara. Inditex admitted that the conditions in the workplace were a “grave infringement” of its standards, but said that a sub-contractor had illegally employed the workers without its knowledge. However, the Brazilian government has insisted on pursuing Inditex, and has listed 52 charges against them relating to the investigation.

Sources: The Guardian, BBC, People Management, Inditex

For a copy of the article in The Guardian, click here

For a copy of the article in People Management, click here

For a copy of the article on the BBC web site, click here

For more information on the Inditex Code of Conduct and corporate social responsibility, click here

For the full press release of the ITGLWF, click here

For more information on the ITGLWF Global Framework Agreement with Inditex, click here