On the one hand, workers’ rights are being protected; on the other, their source of employment may be being destroyed. Meanwhile, the debate rages. By Patty Huntington.

Ethical dilemmas in the fashion world

Bangladesh’s Rana Plaza factory disaster of April 24, 2013, in which 1133 people died and more than 2500 were injured, was a global PR disaster for cheap clothing and a call to arms over its potential human cost. The tragedy prompted the implementation of a number of factory safety and consumer awareness initiatives, notably the Accord on Fire and Building Safety in Bangladesh that has been signed by non-government organisations, labour unions and more than 160 apparel corporations from 20 countries.

In Australia, conversely, initiatives designed to beef up protection of the invisible army of predominantly migrant outworkers/homeworkers, who comprise an estimated 40 per cent of total factory-based employment in the remaining textile, clothing and footwear manufacturing sector, are currently at risk of being unravelled.

From July 1, as part of the Coalition government’s budget cuts and war on red tape, Ethical Clothing Australia (ECA) will lose its $1 million in yearly funding. The joint union-industry NGO was established in 1997 to administer the newly launched voluntary Homeworkers’ Code of Practice. It oversees an accreditation and labelling system to which about 500 suppliers and 100 brands are now signed, including Cue Clothing, Jets Swimwear, Nobody Denim and Carla Zampatti.

Also on July 1, the federal Department of Employment will conclude a post-implementation review of the Fair Work Amendment (Textile, Clothing and Footwear Industry) Act 2012. This legislation extended the operation of most aspects of the Fair Work Act 2009 to textile, clothing and footwear outworkers and enforced additional outworker entitlements and protections under the modern Textile, Clothing, Footwear and Associated Industries Award (2010). Industry submissions closed this week and, given the heated rhetoric on this subject during the past two years, it’s fair to assume the department was inundated.  

In one corner: industry claims that forensic micromanagement is strangling small business, forcing layoffs and closures – all fuelled by sensationalised accounts of exploitation based on out-of-date research that fails to take into account progress made via a litany of reports, state and federal inquiries and legislation over the past two decades.

In the other: claims that all this scrutiny and legislation counted for naught until now because it was impossible to enforce, and that exploitation of outworkers remains widespread. Those on this side of the fence say a misinformation campaign is now being conducted by “crazies” who fear scrutiny and are trying to apportion all blame for their inability to adapt to the changing business landscape on labour costs.

How many outworkers are we talking about?

According to the Productivity Commission’s “Modelling Economy-wide Effects of Future TCF Assistance” report of 2008, no more than 19,400. That’s a dramatic decrease from the estimated 50,000 to 330,000 cited in the Textile Clothing and Footwear Union of Australia’s incendiary 1995 report, “The Hidden Cost of Fashion”, which prompted a 1996 senate inquiry.

All but one of the dozen-odd reports into the sector in the interim are at least a decade old. The most recent, the Brotherhood of St Laurence’s 2007 report “Ethical Threads – Corporate Social Responsibility in the Australian Garment Industry” – a survey of just 37 organisations and 13 outworkers – found some Victorian outworkers were being paid $3 to $4 an hour. Depending on skill level, under the award outworkers must be paid $16.80-$20.40 an hour.

Regarded as scabs by the union until the 1980s – when tariff reforms prompted a manufacturing exodus, leaving the unregulated outworker sector as a go-to onshore alternative – outworkers were first defined as employees as far back as 1987 via amendments to the then Clothing Trades Award (1982). Enforcement was difficult. 

In 2014, fashion businesses subcontracting labour to anyone working from home – or their agents – can no longer legally give out piecework on a casual basis. It has to be on a permanent or part-time basis, with a minimum of 15 hours a week, paid weekly, plus benefits. They must be also registered with the Fair Work Commission’s Board of Reference, fill out highly detailed work-order forms and can be held liable for unpaid entitlements up the supply line. Thanks to newly enhanced right-of-entry powers, the union can inspect premises with 48 hours’ notice. Fines for breaches can reach $110,000.

“At the end of the day, it’s not the labour cost – it’s the way we’re forced to do business,” says one manufacturer who declined to be named. His business closed in December after, he alleges, tighter regulation prompted his biggest client to move production offshore. “We are now put in a position where we have to provide minimum hours on a seasonal industry where we don’t have this sort of guarantee from our clients, but we now have to guarantee it to our employees”.

Says another, “So many factories have shut down in the last 12 months and so many contractors. They [my former contractors] have said to me, ‘This is communism; we left our country to get away from this.’ ”

“I’ve spoken to both small designers and manufacturers and they’ve had from 40-70 per cent drops in turnover or work that they’ve had to give people so they’ve had to lay people off, so it’s making the industry contract even more,” says Kiri Delly, chief executive officer of peak industry body the Council of Textile & Fashion Industries of Australia (TFIA). “The reason why it was put together was all in good faith, but it got to the point where it was so onerous and the paperwork was just so hard that it just made it impossible for people to justify. Everybody else is allowed to be a contractor. Really it’s just small businesses that want to be able to have the flexibility to do what they do, and that’s been taken away. If we keep just thinking about protecting the workers but it’s at a point that people can’t employ the workers, then there’ll be no workers to protect.”

Alexandra Smart, managing director of Sydney-based fashion label Ginger & Smart, which has been ECA-accredited since 2010, declined to disclose how much of Ginger & Smart’s manufacturing remains onshore, but noted that ECA labelling on their locally produced product has generated “very positive” customer feedback. 

Notes Smart, “It was always important to [sister] Genevieve and I and when we wrote our first business plan, to weave an ethical approach through whatever we did, so when we were given an opportunity to put our money where our mouth was and to support our supply chain and our makers, we came on board with that. Which was a not inconsiderable commitment to us at the time.”

Ethical Clothing Australia national manager Simon McRae scoffed at claims ECA is a union shopfront and describes industry complaints in the media and on the Save the Australian Fashion Industry Facebook page as “the biggest load of manufacturer tripe of all time”.

“If you ask me honestly, I think there could be more flexibility in the system, but all I’m talking about is things like minimum hours you have to work,” says McRae, who estimates ECA has helped improve conditions for 6000 outworkers. “It’s a hidden workforce, they’ve got very weak negotiating skills, you’re talking about migrant women – who barely know what their rights are – negotiating. The irony is if the ECA is successful, there’s less need to have such a regulatory regime and I recognise that some people might find it a bit constrictive. But the reality is that they’ve got to demonstrate that they’re doing the right things for the law to change.”

This aritcle was edited on May 23 to delete an erroneous reference to Ethical Clothing Australia accreditation costing $40,000 a year. In fact, this is the estimated compliance cost of accreditation.

This article was first published in the print edition of The Saturday Paper on May 17, 2014 as "Ethical dilemmas". Subscribe here.

Patty Huntington
is a correspondent for US trade newspaper Women's Wear Daily. She is The Saturday Paper's fashion editor.