Prosecutors and police in Milan have been investigating whether workers have been exploited in supply chains linked to a dozen fashion brands as an extension of a long-standing probe into workers allegedly operating under illegal conditions.
A court in the Italian fashion capital appointed a special commissioner last week (10 June) to judicially administer an Italian-based subsidiary of French fashion giant Christian Dior, which is owned by French luxury giant LVMH, for a year.
The decision comes after authorities found staff were working under illegal conditions at four Chinese suppliers based around Milan employing 32 workers.
According to Reuters, which saw a copy of the judicial ruling, inspections and checks on electricity usage data found evidence that staff were working longer hours than they should. This included working into the night and during holidays.
According to the document that Reuters has seen, some of the staff were sleeping in their work area ‘in hygienic and health conditions below the minimum required by an ethical approach’. In addition, seven of the workers did not have the required documentation, and two were illegal immigrants.
The document also reveals the Italian-based subsidiary did not adopt ‘appropriate measures to check the actual working conditions or the technical capabilities of the contracting companies’.
WIDER CRACKDOWN
The decision by Milan’s authorities to place the Dior unit under court administration follows two similar cases this year and is part of a wider crackdown on alleged exploitation in supply chains linked to fashion brands.
In the first case, held in April, the court appointed a special commissioner to run a subsidiary of Giorgio Armani, which had been accused of ‘culpably failing’ to properly oversee its suppliers following an investigation into labour exploitation.
Prosecutors and police in Milan are also investigating other small manufacturers that supply around a dozen over brands, according to Reuters.
Bain, a consultancy, calculates that Italy produces 50% to 55% of global luxury goods, and the big brands rely on thousands of small manufacturers to supply them.
While a special commissioner oversees the operation of the fashion brands’ subsidiaries, they will be allowed to operate, but are required to resolve any problems identified during the period the commissioner is in place.
As Reuters points out, neither LVMH nor Armani Group are under investigation. The former declined to comment on the court’s decision when it was announced on 10 June while the latter responded in April that it had always sought to ‘minimise abuses in the supply chain’.
TAX EVASION
The fashion industry is the latest sector that Italian prosecutors have targeted over the past decade for allegedly using illegally employed workers.
According to Reuters, the latest investigation found that a small manufacturer could charge Dior as little as €53 to produce a handbag. The fashion house could then sell the same product in shops at €2,600.
Brands that subcontract their production to suppliers are required to undertake adequate checks on these operations under Italian legislation.
