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Press release: Activists call on Boohoo board to give evidence that prices don’t prohibit legal work

Press release: Activists call on Boohoo board to give evidence that prices don’t prohibit legal work

  • Prices paid to Boohoo suppliers called into question as potential barrier to legal wage payments and sustainable growth
  • Activists say Boohoo workers could be owed £125 million in unpaid wages for former illegal pay cases
  • Boohoo Group AGM taking place today will see key challenges raised

Activists are posing key questions [1] to the board of Boohoo Group at their AGM today concerning the prices Boohoo pays to suppliers, and debts owed to workers.

Representatives from the human rights campaign group Labour Behind the Label will raise concerns about the impact of Boohoo’s purchasing practices on the ability of Leicester factory owners to operate legally, turn a profit and invest in their factories.
 
Citing Boohoo’s statements on ‘fair pricing’ for suppliers, activists are requesting that Boohoo publish details of the benchmarks they are using, and whether these prices ensure the minimum wage, or indeed the living wage, is payable under the standards.
 
Questions follow clear evidence that illegal pay of £3.50 / £4 an hour was common in Boohoo suppliers, linked to prices [2]. Evidence is being requested from the board that this situation has been addressed, particularly with regard to aggressive downward pressure on supplier prices.
 
Historic debts owed to workers from Boohoo supplier factories following years of underpayment of the minimum wage are also being raised. Activists say Boohoo could owe over £125 million in illegal underpayment of wages to workers who made their goods over the past 5-year period. The estimate is based on calculations from the British Retail Consortium that garment workers in Leicester at the peak of the illegal pay exposes were collectively being denied £2.1m a week [3].
 
Kaenat Issufo from Labour Behind the Label said: “Mahmud Kamani and the Boohoo board of directors need to own up to truth that Boohoo’s business model has driven abusive practices in its supply chain. Owning up means changing its purchasing practices, and making right the past wrongs that its business has created. Boohoo should pay the workers making its clothes a living wage and payback the millions in underpaid wages it owes to the workers who created Boohoo’s profits over the past ten years. It’s current approach of giving charity is demeaning and the community where I live is suffering as a result. Workers need rights not handouts.”
 
Some further details being requested concerning the brand’s commitment to building sustainable relationships with Leicester suppliers in the light of recent withdrawals from over 100 suppliers in the city [4].
 
ENDS

Notes to editors: 

  • Labour Behind the Label is a campaign that works to improve conditions and empower workers in the global garment industry.
  • The Boohoo Group PLC Annual General Meeting is being held at Boohoo’s factory at 301 Thurmaston Lane, Leicester, LE4 9UX on Friday, 17 June 2022 at 14:00

[1] https://labourbehindthelabel.org/boohoo-group-plc-agm-questions-2022

[2] Allison Levitt QC who was commissioned to conduct an internal investigation in allegations of illegal pay in  Boohoo Group suppliers found illegally low rates of pay at £3.50/ £4 per hour to be substantiated, and that directors knew of the seriousness of the issues but failed to act. https://www.theguardian.com/business/2020/sep/25/boohoo-report-reveals-factory-fire-risk-among-supply-chain-failings
 
[3] In 2020, the British Retail Consortium calculated that workers in Leicester were being underpaid £2.1m a week. https://www.thebusinessdesk.com/eastmidlands/news/2041936-leicester-textile-workers-owed-over-27m-says-report.
This had grown from 2015 estimates, where Unversity of Leicester research put this underpayment at around £1m a week. https://amp.theguardian.com/sustainable-business/sustainable-fashion-blog/2015/feb/27/made-in-britain-uk-textile-workers-earning-3-per-hour
 
Boohoo was sourcing 50-80% of Leicester’s total output between 2015 and 2021. It is therefore a conservative estimate to assume that £50m in underpayment of wages per year, should result in Boohoo owing £125m in over a 5-year period.
 
[4] https://www.cityam.com/boohoo-cuts-ties-with-hundreds-of-suppliers-following-leicester-factory-scandal/

Media contacts:  

Boohoo Group PLC AGM Questions 2022

Questions to the board of Boohoo Group PLC
AGM date: 17th June 2022
Venue: 301 Thurmaston Lane, Leicester, LE4 9UX
Time: 14.00

Question 1 on repayment of wages to Leicester workers

My name is Dominique Muller, I’m from Labour Behind the Label, and my question today is about the historic wage debt owed to workers by Boohoo group. As you are aware, Boohoo has been at the centre of investigations surrounding illegal pay for many years, with media exposes from 2018 and 2020 causing the company to initiate investigations. Allison Levitt QC found allegations of illegally low rates of pay to be substantiated, and that directors knew of the seriousness of the issues but failed to act. £3.50 / £4 per hour rates were paid to workers making Boohoo clothing – this is not a disputed fact. Many worked in suppliers selling only to Boohoo. The issue of whose responsibility it is to repay the debt owed to workers who received these wages however remains unresolved. In 2015 ETI estimated that Leicester garment workers were underpaid around £1 million per week while in 2020, the British retail Consortium estimated that workers were owed around £27 million underpaid wages in three months alone. A conservative total then is around £50 million underpaid to Leicester garment workers each year – given that Boohoo bought 50-80 % of Leicester’s garment production in the last decade, workers who supported Boohoo’s profit margins could be owed around £125 million for the past five years.

If Boohoo is committed to ensuring its supply chain operates legally in the UK, will it ensure workers are paid back, in full, for the underpayment of the minimum wage that has been the basis of much of its margin for a number of years? Will it be creating a fund to pay back workers for the illegal wages?

Regardless of whether or not illegal wages are still being paid at Boohoo suppliers in Leicester, , the ongoing impact of Boohoo’s historic purchasing practices in Leicester suppliers should also be acknowledged. There remains an entrenched way of working where Leicester suppliers pay illegal wages and cut corners on HR and safety to compete for the low prices that buyers assume can be met in factories in this city. What is Boohoo doing to ensure it changes this, and sets an example of transparent pricing that encourages payment of a living wage, compliance and business growth?

 

Question 2 on prices paid to suppliers prohibiting sustainable practices

My name is Kaenat Issufo, I’m from Labour Behind the Label and work as the Leicester garment worker engagement lead. My work involves supporting local workers and I’m in contact with a lot of local suppliers who face continued low prices and precarious contracts. My question today is about Boohoo’s impact on business in Leicester, the prices it pays and what it is doing to support the long-term improvement of factories.

Boohoo plays a huge role in influencing how prices are set in factories here, as at least 40% of the products sourced from Leicester are for Boohoo, and many of the other brands who do business here are its price competitors. The prices that Boohoo pays to suppliers – like many other brands – are very low and over the years prices have stayed low because Boohoo keeps them there.

Boohoo stated that it has developed a series of responsible purchasing practices including paying a ‘fair price’ to suppliers. However there are no clear details for these practices and no clear benchmarks for what exactly is a fair price. I want to ask, what exactly is Boohoo doing to make sure that its prices will enable the payment of a living wage to workers in the UK? Are prices enough to allow suppliers to operate legally, turn a profit and invest in their factories in order to create a sustainable industry?

Boohoo have also pulled out of lots of Leicester suppliers in the past year leaving factories with no business. What is Boohoo doing to make sure it supports suppliers in the long run to build their businesses, work with suppliers to improve wages and support the growth of a sustainable garment industry in Leicester?

 

Open letter: Missguided co-owners and investors must prioritise the payment of debts to suppliers, thus respecting workers who made Missguided clothes

Open letter: Missguided co-owners and investors must prioritise the payment of debts to suppliers, thus respecting workers who made Missguided clothes

To: Charles Edwards, Gavin George (Alteri / Project Marley Newco)
To: Nitin Passi (Project Marley Newco / Nakai investments / co-owner)
To: Rajib Passi (Charge holder, Missguided / Project Marley Newco)

Cc: Ian Gray (Chair, Missguided)
CC: Dean Beales Insolvency Services
Cc: Dimitry Bejenar and Siegfried Kobal, ERS
CC: Daniel Francis Butters, Teneo

 

Dear all,

We are writing to you as co-owners and investors with regards to the current administration process at Missguided, to strongly urge you to prioritise the payment of debts to suppliers, thus respecting the legal rights of workers who made Missguided clothes.

Now that Missguided has entered administration it is crucial that suppliers are prioritised in the repayment of debts to prevent the permanent closure of many factories. Workers at a growing number of UK suppliers have not been paid owed-wages and an unknown number of suppliers, UK and overseas, have laid workers off without wages due to Missguided’s non-payment.

Missguided has taken a number of damaging decisions in relation to payments to suppliers and workers in recent months. In the first week of May, Missguided took the decision to halt all payments to UK suppliers pending a successful search for new investment. Many overseas suppliers report having not been paid for goods received by Missguided since January 2022. No explanation for non-payment was received by suppliers and many reported receiving no answers to emails or calls. No suppliers were informed of the impending administration. Indeed, some brand representatives informed suppliers that there were no problems in the financial health of Missguided as late as April 2022 – this was blatantly untrue.

This poor communication and payment halt came after extensive discounting was applied unilaterally in December 2021 – discounting of at least 30% on order prices already produced. Many suppliers have stated that they were forced to accept discounts to prevent Missguided going into administration… Despite the internal moves towards insolvency, new purchase orders continued to be placed at suppliers by buyers at Missguided – right up until the end of May. This is unacceptable business practice.

In addition, customers were able – and encouraged – to place new orders on Missguided websites right up until the 30 May, despite the Missguided GXO warehouse reportedly refusing to allow orders to leave the warehouse since 25th/26th May, thus meaning that Missguided sold items which they knew could not or would not be delivered to customers.

Missguided stated publicly at the end of April that “Missguided has made substantial operational progress since receiving new investment at the end of 2021, placing us on a sounder footing in a very short space of time.” This is despite months of non-payment and a decision to halt all supplier payments at the start of May. This begs the question if non-payment to suppliers was in fact a strategic decision.

In January Labour Behind the Label wrote to you concerning your commitment to ensuring corporate social responsibility at Missguided. It now appears that our concerns were well founded and that Alteri investment in Missguided did not lead to a renewed commitment to ethical trading but instead to a further deterioration of the rights of workers in Missguided supply chain and an apparent abdication of responsibility towards the welfare of the industry.

We will be continuing to follow up on and highlight these responsibilities with your companies despite the current administration process. We will of course also be in touch with the Insolvency Services to investigate claims of fraudulent and wrongful trading.

Our questions are as follows:

1. When were Teneo involved in Missguided and did Missguided staff and Directors place new orders and receive orders from customers with the knowledge of impending administration and knowing that orders will not or could not be paid?
2. What action is Alteri taking to ensure workers that made clothes are being paid?
3. How is Alteri supporting suppliers facing financial difficulty?
4. What stakeholders is Alteri working with to monitor and ensure workers are paid wages correctly?
5. Will Alteri establish a fund to ensure payment of all supply chain workers’ wages, and other payments (including social security etc) through the administration process?
6. What protections for workers have been included in the recent sale of the Missguided brand to Frasers group?

Our strong demand is that you respect and protect workers’ rights in the administration process that you are in, and that supplier debt is prioritised. We would be happy to meet in the next days with you in order to discuss your response and what can be achieved

Best wishes,

Dominique Muller
Policy Lead, Labour Behind the Label

 

PDF copies of the full letters as sent are available to download here:

Letter to Missguided

Letter to Alteri

Letter to Teneo

Press release: Concerns raised about NEXT’s supply chain commitments ahead of Annual Meeting

Press release: Concerns raised about NEXT’s supply chain commitments ahead of Annual Meeting

For immediate release: 18 May 2022

Concerns raised about NEXT’s supply chain commitments ahead of Annual Meeting

 

Rights groups have expressed concerns regarding NEXT’s efforts to ensure supply chain workers are compensated fairly in a joint statement released on the eve of the fashion brand’s AGM.

In the light of the global cost of living crisis, Labour Behind the Label and ShareAction have issued a joint statement calling on NEXT plc. to honour its commitment to sustainability in supply chains, and ensure workers’ rights are protected.

The two organisations are raising a shareholder question to the board of NEXT plc tomorrow, calling for clarification on the company’s commitment to responsible purchasing practices, that they say have led, in the pandemic, to factory closures where workers were left with no pay, and poverty and debt experienced on an unprecedented scale.

The question cites two cases in NEXT suppliers – the Neo Trend factory in Turkey and Wai Full Textiles in Cambodia – where workers were left without their legally owed wages and severance payments following a withdrawal of Next’s orders causing the suppliers to close. The cases are given as an example of a wider systemic issue.

Labour Behind the Label and ShareAction are calling on NEXT to intervene and ensure that workers from both of these factories are paid their legally owed wages and severance. Furthermore the two organisations assert that the brand should reduce vulnerabilities for workers in its supply chain by making a public time-bound commitment to ensuring that workers are paid a living wage.

The question further queries the brand’s approach to wage improvement and how it is making efforts to ring-fence living wage levels in its price negotiations with suppliers so that workers’ wages aren’t the topic of cost saving.

Anna Bryher from Labour Behind the Label said: “The debt crisis experienced by Asian factory workers when fashion orders stopped in the pandemic, made abundantly clear the precarious situation that workers are in in global fashion supply chains. Living on a minimum wage in Asian garment producing countries (a third of a living wage or less in almost all cases) is near impossible, and building savings even less so. Brands like NEXT must urgently make sure living wages start to be paid into the pockets of workers who are making their clothes, to avoid future exploitation if orders once again grind to a halt. NEXT must do more than simply stating a commitment to change, and must stop prioritising profits that are being made on the backs of workers”.

Martin Buttle from ShareAction said: “Over the past few years it’s been clearer than ever that the treatment of the workforce in investee companies is a material risk that investors should be engaging companies on as part of their wider ESG strategy. Furthermore, responsible investors are increasingly engaging on company approaches to living wages not only in their direct operations but also in their global supply chain. Investors should pay particular attention to ensure that commercial practices are not undermining the standards they set for suppliers.”

The full text of the question being put to the NEXT plc board is available here.

ENDS

Notes to editors:

Labour Behind the Label is a campaign that works to improve conditions and empower workers in the global garment industry.

ShareAction is a campaigning organisation pushing the global investment system to take responsibility for its impacts on people and planet, and use its power to create a green, fair, and healthy society.

The NEXT plc Annual General Meeting will be held at Leicester Marriott Hotel, Smith Way, Grove Park, Leicester, LE19 1SW on Thursday, 19 May 2022 at 09:30.

Media contacts:

Anna Bryher, Labour Behind the Label, +44 (0)7786 832 035, anna@labourbehindthelabel.org

Conor Quinn, ShareAction, +44 (0)7444 696 214, conor.quinn@shareaction.org

More information about the Neo Trend NEXT supplier case is available on the Labour Behind the Label website here. Below is also a video that the workers made to raise their case.

Next plc AGM question 2022

Question to the board of NEXT plc on Global Living Wage
AGM date: 19th May 2022
Venue: Leicester Marriott Hotel, Smith Way, Grove Park, Leicester, LE19 1SW
Time: 9.30

 

My name is Anna, and my question today is about Next PLC’s approach to Living Wages and compensation for workers in production countries following pandemic supply chain disruption.

The lack of a Living Wage for workers in supplier factories meant that when goods ordered stopped due to Covid-19, many workers were left with no savings, and facing serious financial difficulties when factories closed and jobs were lost. My question concerns both the need for immediate remedy for workers who had been making your clothes, and the prevention of this kind of financial crisis being faced by workers again.

Next have been members of ACT – an industry initiative and agreement with the global union federation IndustriALL in pursuit of living wages – for over 5 years. As part of the agreement, Next has committed to ensuring it has responsible exit strategies in place for when it leaves suppliers, and that its purchasing practices support payment of a living wage by separating out labour costs from price negotiations. However, in a recent survey of global buyers and suppliers undertaken by ACT, 70% of brands said they weren’t sure they were putting in place due diligence processes to ensure workers who lost their jobs as a consequence of a brand’s exit from a supplier, received due wages and their legally-entitled severance pay. The same survey said that 36% of buyers did not know whether the price quotations that they gave to suppliers were enough to cover the cost of a Living Wage.

So firstly, can the board tell us whether the picture painted by the ACT survey is reflective of Next PLC? Workers from former Next suppliers Neo Trend in Turkey and Wai Full Textiles in Cambodia both report that they haven’t received legally owed wages and severance pay following Next’s withdrawal of orders and subsequent factory closures. Can the board clarify that steps are being taken to address responsible exit concerns?

Secondly, can the board tell us what steps Next is taking to ensure that its buyers understand whether price costs cover living wage payment? Will Next make a public time-bound commitment with clear benchmarks to ensure a living wage is paid to all workers, and publish results on how its purchasing practices are driving living wage payment in its suppliers?

Finally, will Next agree to meet with Labour Behind the Label, Share Action and Next shareholders, to discuss supply chain pandemic impacts, severance, purchasing practices and living wages further?

 

Supporting evidence: https://actonlivingwages.com/app/uploads/2021/11/ACT-purchasing-practices-report-2021.pdf

Press release: Eliminating poverty and fighting climate change are not mutually exclusive

Press release: Eliminating poverty and fighting climate change are not mutually exclusive

PRESS RELEASE

For immediate release- 31st October 2019

In a recent interview, H&M Chief Executive Karl-Johan Persson warned of ‘terrible social consequences’ if consumers ditch fast fashion amid concerns about the climate crisis[1].  In his warped logic, reducing fast fashion could lead to increased poverty as jobs and economic growth would stall. Persson’s claim that reducing consumerism will threaten the elimination of poverty must be challenged.  His claims are at best misguided and at worst deceitful and fail to acknowledge the social and environmental consequences of the global garment industry.   

We do not have to choose between improving human rights in the garment industry or reducing the environmental impact. In fact, we cannot improve one without the other. Positioning environmental concerns as a threat against human rights is divisive and dangerous. The growth of the conscious consumer should be welcomed not resisted.

Fast fashion exacerbates poverty

The global garment industry is built on the exploitation of cheap labour in developing countries. It is corporate greed, rather than environmental concerns that stands in the way of poverty alleviation. Profit from fast fashion at rock-bottom prices is only possible through poverty pay, unsafe working conditions and suppression of unions.  

Whilst Persson is reportedly worth around $1.9 billion[2], an average wage for a garment worker in Bangladesh, where H&M is among the biggest garment buyers, is around is around $1000 per year [3]. In other words, a days’ salary for a worker making clothes for H&M is around $3.64. Oxfam calculated that it takes just four days for a CEO from one of the top five global fashion brands to earn what a Bangladeshi garment worker will earn in her lifetime[4]

Persson’s claim that fast fashion supports the eradication of poverty is outrageous, considering not a single worker in H&M’s supplier factories earns a living wage[5]. Last year, in response to H&M’s failure to pay a living wage, despite their widely publicised commitment that 850,000 workers would be paid a living wage by 2018, the Clean Clothes Campaign submitted a shareholder proposal for the 2018 profits to go into a living wage fund[6].  Unsurprisingly this proposal was voted down.   

Decent jobs and a living wage are required to eliminate poverty and the global garment industry is currently providing neither. The myth that low paid labour-intensive garment production is a source of economic development is a lie. Water extraction, pollution, carbon emissions and toxic chemical use alongside excessive working hours, low pay and sexual harassment are the hallmark of the garment industry.  What is needed is decent work. If fashion brands paid their workers a living wage, not only would these workers and their families have access to a decent life, but as consumers themselves they could do more to end poverty than the spread of low-cost, low-quality garment production.  

“To reduce the damage to the environment, one of the solutions is to produce less and consume less natural/raw materials and practice circular economy. H&M must pay a living wage to all garment workers producing for H&M all over the world now!”; May Wong, CCC East Asia Coalition

“Having worked in support of worker rights for over 20 years, I am not often shocked, but the callousness and deceit of these remarks take industry white-washing to a whole new level”; said Dominique Muller, Labour Behind the Label. “If H&M was really interested in eliminating poverty it must start with paying its workers a decent wage and not pretending that the throwaway fashion model will save the planet.”

 

The climate crisis affects garment workers

 The struggles against climate crisis and exploitative labour cannot be pitted against each other. They are interdependent and symbiotic, and the impact of both crises hits the same communities hardest. Climate change fuels internal migration to urban areas where many find exploitative employment in the garment industry. [7] The UN highlights that is the urban poor in the Global South, living near polluted grounds or in instable structures, who are most vulnerable to the affects of the climate crisis[8].

We need corporations to radically change business models to pay workers more, reduce production and consumption and redistribute the value chain. It is only when businesses prioritise both people and the planet before profit, that the elimination of poverty will be possible.

 

—ENDS—-

 

Notes

Amancio Ortega, founder of Inditex—the parent company of Zara—earned approximately €1.3 billion in share dividends in 2016 (about $1.37 billion). Forbes lists his fortune at $77.4 billion.

Mahmud Kamani, founder of Boohoo, the online fast fashion brand is estimated to be worth around £1 billion. In April 2017, Boohoo announced that its profits had almost doubled. Meanwhile reports continue to emerge that some UK workers producing for Boohoo in Leicester are paid an average of £3 an hour.

“It would cost $2.2 billion a year to increase the wages of all 2.5 million Vietnamese garment workers from the average wage to a living wage…This is the equivalent of a third of the amount paid out to shareholders by the top five companies in the garment sector.” (Oxfam 2018 [9])

Labour Behind the Label is the UK platform of the Clean Clothes Campaign, which works to improve conditions and support the empowerment of workers in the global garment industry. The CCC has national campaigns in 15 European countries with a network of 250 organisations worldwide. Please see labourbehindthelabel.organd www.cleanclothes.org for further information.

Contacts

Meg Lewis – Labour Behind the Label- 0117 954 8011 / meg@labourbehindthelabel.org
Dominique Muller – Labour Behind the Label- 07596098399/ dominique@labourbehindthelabel.org

References

[1] https://www.bloomberg.com/news/articles/2019-10-27/h-m-ceo-sees-terrible-fallout-as-consumer-shaming-spreads

[2] https://www.forbes.com/profile/karl-johan-persson/#16eded0b2b48

[3] Based on the new minimum wage of 8000 Taka per month. https://wageindicator.org/salary/minimum-wage/bangladesh/archive/minimum-wages-in-bangladesh-with-effect-from-01-12-2018

[4] https://oi-files-d8-prod.s3.eu-west-2.amazonaws.com/s3fs-public/file_attachments/bp-reward-work-not-wealth-220118-en.pdf

[5] http://labourbehindthelabel.net/wp-content/uploads/2019/06/TailoredWagesUK-FP-updated.pdf

[6] https://turnaroundhm.org/finale/

[7] https://www.telegraph.co.uk/global-health/climate-and-people/climate-change-fuelling-migration-crisis-bangladesh/

[8] http://unhabitat.org/urban-themes/climate-change/

[9] https://www.oxfam.org/en/press-releases/richest-1-percent-bagged-82-percent-wealth-created-last-year-poorest-half-humanity