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If the workers behind a €9,000 designer jumper earn nothing, what exactly am I paying for?

Damning allegations about the ugly underbelly of high-end fashion are beginning to pile up - including that workers crafting Armani bags worth €1,800 were paid as little as €2 or €3 an hour. Consumers should ask what they’re paying for

Kendall Roy, played by Jeremy Strong, often sported a €500 Loro Piana cap in Succession. PA Photo/HBO

Elaine Maguire O'Connor
Sun May 5 2024 - 07:00

Allegations of mistreatment and exploitation have swirled around the dirty business of fast fashion for years. But recently, attention has turned to the conditions of those producing the kind of clothing and accessories sold in luxury department stores for four-figure sums.

Clever branding may convince us that these items are produced by skilled artisans, employed for their experience and craftsmanship – and sometimes, that may indeed by the case.

But not always. A court case in Milan last month revealed that workers producing €1,800 Armani handbags were being paid as little as €2 to €3 an hour and working in degrading and unsafe conditions, exposing an ugly underbelly of exploitation and profiteering behind the glossy allure of luxury fashion.

A model walks the runway of the Giorgio Armani show during the Milan Fashion Week Womenswear Spring/Summer 2024. An Italian court placed under judicial administration a company owned by Armani accused of indirectly subcontracting production to Chinese companies that exploited workers. Photograph: Gabriel Bouys/AFP via Getty Images

The Armani Group claims that it “always had control and prevention measures in place to minimise abuses in the supply chain”. Giorgio Armani Operations, a subsidiary that has been described as the industrial arm of the Armani Group, had outsourced the production of bags, belts and leather goods to two firms. They, in turn, subcontracted the work to four entities, who employed undocumented Chinese and Pakistani migrants on the outskirts of Milan who were forced to work in unsanitary conditions and to use machinery with safety devices that had been “purposely and maliciously removed”. Investigators claimed that these labourers worked 10 hours per day on average, in some cases seven days a week, to make bags that were sold to Armani’s subcontractors for €93, re-sold to Armani for €250 before ending up on the market for about €1,800.

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Historically, the “made in Italy” label was seen as a signifier of quality and prestige; an indicator of artisanal expertise and attention to detail, allowing brands to capitalise and charge premium prices for their products. Consumers associate the phrase not only with quality, but also an expectation that the products that they are purchasing meet certain minimum ethical standards when it comes to how they are manufactured. Labour violations are more usually associated with fast fashion brands operating factories out of China and southeast Asia and selling clothing for unfeasibly low prices. That workers were apparently being exploited in Milan, just a few short kilometres from Armani’s headquarters, is a cautionary tale for those who believed a higher price tag and a European country of origin are always indicative of ethicality in the production of clothing and accessories.

The Armani court case came just weeks after a Bloomberg investigation raised questions about LVMH-owned luxury label Loro Piana. The label is known for eye-wateringly expensive high-end goods: Kendall Roy, played by Jeremy Strong, often sported a €500 Loro Piana cap in Succession. The brand sells €9,000 vicuña sweaters – produced, according to the Bloomberg investigation, using wool of vicuñas (a rare breed of doe-eyed camelid, native to the central Andes). The Bloomberg reported revealed that some of the indigenous farmers shearing these animals in the Peruvian community of Lucanas were not being paid for their work, despite the price of the final product. To compound the irony, LVMH is controlled by Bernard Arnault, listed by Forbes as the world’s richest man, worth an estimated $214 billion.

[ LVMH becomes first European company to reach $500bn market value ]

Loro Piano said in a statement to Bloomberg that: “Since it arrived in Peru in the ‘80s, Loro Piana has been committed to upholding the highest standards of ethical and responsible business practices. Loro Piana represents a key economic support locally, protecting and fortifying the demand and the value of the vicuña fibre, regardless of market dynamics.”

Setting aside the absurdity of paying €9,000 for one jumper, how is it that prestigious brands, which publicise their commitment to ethics and social responsibility, can persist with business models that appear to perpetuate exploitation?

The opaque nature of fashion supply chains is partly responsible. The fashion industry is labour intensive and often relies on elaborate and fragmented manufacturing and distribution networks to produce a single garment. Outsourcing and layers of subcontracting allow brands to easily distance themselves from unethical practices, arguing that it would be impossible for them to be aware of abuses, given how far removed they are.

Workers in the production cycle can include the farmers who grow silk and cotton, textile manufacturers, pattern cutters as well as logistics companies who arrange transportation. And while it has become commonplace for luxury brands to publish information on the final stages of production, including lists of immediate subsidiaries and direct suppliers, transparency as to what happens further down the chain – such as the shearing of animals – remains murky and difficult to come by.

If it sounds like it is too easy for fashion conglomerates to wash their hands of exploitation while building astronomical profits, it’s because it is. Lack of regulation and the complexity of cross-jurisdictional laws and cultural norms enable large corporations to shirk their responsibilities without being held accountable.

Recently, after months of debate and deliberation, the EU Parliament voted to approve the Corporate Sustainability Due Diligence Directive, a regulation that aims to create legal liability for companies relating to environmental and ethics violations within their supply chains. The directive will require companies to prevent and end or mitigate harm to human rights and the environment within their supply chains and companies that do not comply will face fines of up to 5 per cent of their annual turnover. The text that was finally agreed, however, was a heavily watered-down version of the initial proposals to address the rampant ethical violations that occur.

Arguments from business lobby groups that the directive would burden companies with unnecessary red tape resulted in a series of amendments meaning far fewer companies will now be captured than initially envisaged. While companies with more than 500 employees were originally in scope, now the directive will only apply to companies with more than 1,000 employees and with a net turnover above €450 million, creating a bare-bones framework with navigable loopholes.

In tandem with the moral and ethical quandary that consumers find themselves in, the simple question arises – what exactly am I paying for? If alleged luxury products are being produced in filthy factories by unskilled workers, is that the craftsmanship and finesse that the “made in Italy” label promised? Or is it just paying for marketing, expensive real estate, and improving the bottom line of the obscenely wealthy – the type of person, presumably, who can afford to buy a €9,000 sweater.

Elaine Maguire O’Connor is a writer and consultant working in fashion law.

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