Zara, Nike, and Abercrombie’s Indian Factories Weren’t Fully Paying Workers

During the last two years, more than 1,000 clothing suppliers in Karnataka, India, allegedly failed to pay their workers nearly $60 million in wages.

Update 2/14/22: This story has been updated with a statement from a representative for Shahi Exports.

Top U.S. brands like Walmart, Abercrombie & Fitch, and Nike source their clothes from Indian factories that refused to pay workers nearly $60 million over the course of the pandemic, a labor-rights watchdog says. The crisis left some households unable to buy basic staples like rice, meat, and vegetables, or pay off their debts.

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In total, more than 1,000 clothing factories in the southern Indian state of Karnataka, a garment-producing hub in the country, failed to give their laborers a legal monthly minimum wage increase of 417.60 rupees—or about $5.60, according to the Worker Rights Consortium. The modest pay hike, which went into effect in April 2020, would have helped approximately 400,000 workers, mostly women, cover day-to-day living costs like housing and food. It also would have gone toward paying off loans, according to advocates. Many workers had to take on debt to buy the expensive smartphones their children needed to attend classes online during lockdowns. 

“This is the largest wage theft we’re aware of anywhere in the global industry in terms of the total impact on workers,” said Ben Hensler, general counsel and deputy director for policy and research at the Worker Rights Consortium, which monitors labor rights globally. “What’s extraordinary here is the fact that all the garment factories, with few exceptions, in an entire state have all been violating the minimum wage openly for two years at this point.”

The Karnataka factories supply apparel to top global brands, including European fast-fashion giants like H&M and Zara as well as all-American shops like Gap. Garment workers had originally hoped to appeal to retailers directly for help, but their efforts didn’t go anywhere until they approached advocacy groups, according to Hensler

“These brands have been profiting from completely inhumane labor practices.”

In fact, many of the companies only publicly responded to the crisis in the last month or so—and major suppliers have only just started to commit to repayment in the past several days.

“Brands are basically happy to look the other way when hundreds of thousands of the workers who make their products are being denied wages that they need for daily survival,” Hensler said. “To allow that to go on unchecked for months—nearly two years—until the brands are called publicly to account for it—I think it says a lot about the thinness of the commitments that they claim to have for the welfare of the workers.”

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In the end, Western corporations essentially control the fates of scores of garment workers of color, predominantly women. It’s what Madhumita Dutta, an assistant geography professor at Ohio State University, calls the “racialized nature of this power asymmetry” in the garment industry. 

“We give this unconscious mandate for this kind of stuff to happen as a society,” Dutta said. “It's invisible. We don’t want to know and see it.” 

Pandemic problems

Laborers’ wages in Karnataka consist of both a daily basic rate of pay and another rate, called the “variable dearness allowance,” which reflects the cost of living. Because of the pandemic, the garment factories said they simply didn’t have the money to pay the increase for the second rate, experts said. 

Initially, the state government had postponed the pay hike, but the Karnataka High Court determined in September 2020 that the suppliers had to pay their workers the proper wage, according to the Worker Rights Consortium. Yet Karnataka’s apparel factories still stalled, saying the issue was pending in the courts. 

The pandemic has hurt garment workers in other ways—making the withheld wages in Karnataka an even worse slap in the face. 

“This is the largest wage theft we’re aware of anywhere in the global industry in terms of the total impact on workers.”

Starting in March, apparel factories in India completely locked down for a while to control the spread of COVID-19. Many American and European brands also canceled or delayed their orders after seeing sales plunge in the first few months of the public health emergency.

As a result, some factories were forced to shut down or lay people off. Many workers around the world went hungry

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Even in good economic times, fashion brands force their suppliers to keep costs low to remain competitive. Garment factories have been made to work faster and for worse profit margins over the past several years, and laborers’ wages sometimes end up getting cut, according to Dutta, who collaborated on a 2019 garment supply-chain study focused on India. For example, 80% of workers there said their wages couldn’t cover their living expenses, according to the study.

“There is a very intense squeeze on pricing and sourcing time that is creating this intense pressure,” Dutta said. “This is created by the firms on top, which goes down the supply chain, and ultimately impacts the wages and work conditions of the factory workers.” 

In the case of Karnataka, garment laborers did try going straight to the brands about the wage theft, according to Manodeep Guha, the Worker Rights Consortium’s field director for South Asia. They didn’t hear back. So the consortium stepped in and began to write to the companies, with the goal of getting the factories to pay the proper wages. 

“These brands have been profiting from completely inhumane labor practices,” said Meg Lewis, campaigns director at Labour Behind the Label, a UK representative of the global Clean Clothes Campaign, which is putting the heat on British clothing brands. “They have a responsibility to ensure that their business practices don’t result in human rights violations like this. Brands are the primary profit-makers in any supply chain.”

Repaying workers

Last month, the Business & Human Rights Resource Centre, a London-based group that tracks companies’ human rights efforts, also started publicly reaching out to 22 companies that sourced clothing from Karnataka and worked with factories accused of wage theft, posting their replies online. Companies mostly offered vague responses that they expected their suppliers to comply with local wage laws and brands’ codes of conduct, without specifically detailing concrete steps to see that workers were repaid.

Walmart, for example, responded that it would reach out to manufacturers to “reinforce” expectations. Levi Strauss said it was following up with each supplier individually, with the goal of getting them to make back payments as soon as possible. Nike promised it was “monitoring” the situation.

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Still, advocates didn’t see immediate changes. Only five brands indicated that workers in their supply chain had started to receive some of their due wages, including Abercrombie & Fitch and Inditex, the owner of Zara, according to the Business & Human Rights Resource Centre.

On Jan. 19, the American Apparel & Footwear Association also sent a letter to the Clothing Manufacturers Association of India pressuring the organization to make its members pay legal wages to workers going forward. The U.S. association warned brands’ reputations were at risk—as well as the sector’s relationship with Karnataka. 

Factories have only started to take serious action in the past few weeks, though. 

On Feb. 1, Shahi Exports, the state’s largest supplier with tens of thousands of workers, announced it would pay back wages, as well as the proper rate moving forward. In a statement to VICE News, Srinivasa Rao Venkatesh, Shahi Exports’ chief compliance officer, emphasized that the company’s code of conduct “clearly states that all employees shall be paid wages, overtime payments, and benefits in compliance with applicable laws.”

For example, Venkatesh said, the company has been paying a 2021 wage increase, though it saw the 2020 wage increase as stalled by legal proceedings.

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The company also disagreed with claims that it was non-compliant or opposed to minimum wage laws. 

“Shahi takes its legal and ethical responsibilities very seriously and holds social and environmental sustainability at the core of its business,” Venkatesh said. “This remains the case as we navigate the challenging impacts of the pandemic. 2020 was a year of uncertainty with nationwide lockdowns.”

Some brands have also been better at addressing the situation than others, according to Hensler. Gap and PVH, the owner of Tommy Hilfiger and Calvin Klein, were persistent in recent efforts to make Shahi pay workers back some $10 million, Hensler said—with roughly half of that money coming down to laborers by Feb. 10.

“PVH and Gap deserve a lot of credit for achieving the breakthrough of securing Shahi’s commitment to pay the proper wage and compensate its workers,” Hensler said. 

Asked for comment, a spokesperson for PVH said the company “continues to be in extensive dialogue with all relevant parties, including civil society NGOs, labor rights organizations, and our suppliers in the region to bring a resolution to this important issue while it remains under legal review.” 

A spokesperson for Gap said the company had established a timeline with its suppliers “by which we expect full compliance” with the proper legal wages and back pay. 

Abercrombie & Fitch, one of the several U.S. brands that advocates identified as getting its garments produced in Karnataka, did not immediately respond to VICE News’ request for comment but told the Business & Human Rights Resource Centre that its vendor confirmed it would start payments of the 2020 wage increase in January.

Well-known fast-fashion behemoth H&M also told the Business & Human Rights Resource Centre it had “made it clear to our suppliers in Karnataka that they must pay the workers legally mandated minimum wages, including all arrears,” or face “serious consequences.”

Zara said in a statement to VICE News that “almost all” of the eight factories it worked with in Karnataka had paid or committed to paying workers the 2020 pay increase.

The company didn’t respond when asked to identify the factories.

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Tagged:

India, nike, WALMART, Coronavirus, fast fashion, abercrombie, Karnataka, pandemic, covid

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