With buying practices said to be suppressing wages, campaigners want a GCA-style fashion watchdog. Creating one is not straightforward

The alleged exploitation of foreign garment workers by British supermarkets has a long and tragic history. As far back as 2004, Oxfam’s ‘Trading Away Our Rights’ report was warning of supermarkets and clothing brands “using their power in supply chains systematically to push many costs and risks of business on to producers”.

Since then, claims of a similar nature have come thick and fast. The latest emerged last week in a study by the University of Aberdeen. In a survey of 1,000 Bangladeshi factories, researchers found Asda, Tesco, Aldi, and Lidl were among the worst offenders when it came to paying less than the cost of production during the pandemic.

The claims were disputed, but the research has added further weight to calls for the creation of a fashion watchdog. It would work much like the Groceries Code Adjudicator, which regulates supermarket relationships with food and drink suppliers domestically and abroad.

Matthew Taylor, a former director of Labour Market Enforcement, has backed the concept amid fears voluntary measures have failed to drive improvement. The issue is also gathering momentum in Westminster, where 25 MPs from across the political spectrum have backed a bill to create an official code of practice for fashion retailers that would be enforced by a regulator.

Introducing the bill last July, Labour MP Liz Twist said: “A fair purchasing code [for grocery] has drastically reduced the prevalence of abusive purchasing practices that were once widespread in the sector,” as she urged the government to follow suit with a fashion watchdog under a similar cloak.

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‘GSCOP has to be the starting point for any piece of legislation for the fashion watchdog… The power imbalance is so similar’

Unhelpful practices

This doesn’t mean European retailers should be held entirely responsible for the working conditions in a factory many thousands of miles away. But retailers can influence conditions through their buying practices – and right now, evidence suggests they are making it considerably more difficult for improvements to be made.

For example, last week’s study found a high proportion of garment factories were subject to last-minute cancellations, payment delays, and buyers failing to raise prices in line with manufacturers’ costs.

This has a direct impact on a factory’s ability to increase pay. Research by the International Labour Organization in 2017 found retail buyers giving inaccurate technical specifications suppressed wages at manufacturers by more than 20%, while paying at least the costs of production could boost hourly wages by an average of 10%.

“Obviously improvements need to happen in both production countries and consumption countries,” says Fiona Gooch, a senior policy adviser at Transform Trade. “But what is so blindingly obvious is that we cause problems in the UK with how our retailers do their buying. Because we put suppliers – who are ultimately employers – in a position that means they can’t offer good conditions.”

MPs and campaigners believe the grocery watchdog offers a good model on which to base a fashion equivalent, given issues such as cancellations and payments delays are both already covered by the Groceries Supply Code of Practice. “GSCOP has to be the starting point for any piece of legislation for the fashion watchdog because those behaviours are so similar. The power imbalance is so similar,” Gooch argues.

The evidence certainly suggests the GCA has been successful in curbing abusive purchasing practices since its creation in 2013. In 2014, as many as 79% of suppliers were reporting breaches of the code by supermarkets in its annual poll. By 2021, that figure had fallen to 29%.

If a fashion watchdog were to have similar success, it must similarly have the power to issue fines, says Gooch. The GCA can fine large retailers up to 1% of their UK turnover – a power felt by Tesco in 2016, when it was forced to pay out a £1m penalty for delaying payments to suppliers.

Key differences

But fashion’s unique features would also demand differences in approach. A key one would be extending the code of conduct to include workplace standards, making it the retailer’s responsibility to ensure their manufacturer meets certain criteria, says David Sables, a GSCOP expert who has worked with several fashion brands as head of Sentinel Management Consultants.

While the GCA is set up purely to ensure fair play in negotiations, this would be inadequate in fashion, he says. For him, the problems at the heart of the fashion industry mean it would have to go further. This could involve extending the remit of factory audits already carried out by retailers, or relying on information from other sources. “The whistleblowers would perhaps start being a competitor who upholds the standards but knows they’re being undercut by a place that isn’t,” Sables argues.

Granted, this would come with challenges. The GCA serves to highlight the complexities involved. As a UK watchdog primarily looking out for UK suppliers, it still struggles with many suppliers being unaware of the details of the code, says Ged Futter, a leading GSCOP expert and director at the Retail Mind. “And if you’re not aware, then how do you know when a retailer is doing something they shouldn’t be?”

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Bangladeshi factories say UK supermarkets paid less than the cost of production in the pandemic (file image)

So, is it reasonable to expect a Bangladeshi garment factory to understand the rulebook of a country 5,000 miles away?

The answer to such a question can arguably wait. For now, campaigners face a more pressing obstacle when it comes to setting up a new adjudicator. Chiefly, persuading the government it needs one when the watchdog it’s already got – the GCA – has been mooted for the scrapheap as part of a Whitehall efficiency drive.

The government is clearly wary. In a letter to the environmental audit parliamentary committee in 2021, then business secretary Kwasi Kwarteng said officials had discussed the proposals with campaigners.

But he cautioned: “There are significant differences between the groceries sector and the fashion industry, in terms of scale and distribution of market share, so we need to understand whether this model would be as effective in driving compliance in garment manufacturing.”

So, what are the chances of a fashion watchdog being set loose on British retail? Sables puts it at 20% in the next five years. “I don’t hold out a great deal of hope,” he says. “But in terms of fairness for workforces around the world, it’s a good thing. I hope it works.”