THE PARENT company of Spanish clothing retailer Zara is under investigation in Brazil after a local supplier was accused by the country’s labour ministry of using slave labour.
The investigation into Inditex follows raids on sweatshops in São Paulo which found Bolivian immigrants working in unfit conditions for less than €1 per item completed.
The local sweatshops were contracted by AHA, a company registered in Paris with contracts to supply Inditex in Brazil. But officials say they were working directly for the Spanish company. Over 90 per cent of the work contracted out by AHA in Brazil was destined for Zara.
“This [supplier] would not exist in the economic world without Zara. The design orders, definition of test pieces and even the choice of materials came directly from the main company [Inditex] in Spain,” said Luis Alexandre de Faria, an investigator for the labour ministry in São Paulo, to the Estado de S Paulo newspaper.
Authorities identified 48 infractions of labour laws and recommended Zara be fined €435,000. The company risks being included on a list of companies caught using slave labour maintained by Brazilian authorities, which could prevent it raising finance in the country in the future.
In one of the raids, investigators found Bolivian immigrants including five children working for up to 16 hours a day. Workstations were described as dirty and dangerous with exposed electrical wiring and a lack of ventilation.
Many workers were living in the factory where the shower lacked hot water. They told officials they had to ask permission before they could leave the premises.
Poor immigrants from Bolivia and Peru have long been a source of cheap labour for São Paulo’s clothing industry. Many work for less than Brazil’s minimum wage and often for several months to pay off “expenses” owed to contractors who hired them in their home countries.
Investigators estimate that the sweatshops contracted by AHA produced more than 50,000 items in May and June alone, destined for Zara stores in Brazil and Argentina. Zara has 30 shops in Brazil.
Repórter Brasil, a local organisation that campaigns against slave labour, says items for which workers were receiving less than €1 were on sale in Zara’s São Paulo shops for €60.
Inditex says that in outsourcing its contracts to supply Zara, AHA violated the code of conduct to which its suppliers must agree. This stipulates all contracting-out by suppliers must be authorised by Inditex. It said it was working with Brazil’s labour ministry “to totally eradicate these practices which violate not only our rigid code of conduct but also Brazilian and international labour legislation”.
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ZARA, WHICH opened its first of nine stores in Ireland in 2001, is part of the Spanish retail chain Inditex. Since it was first launched as a family business in A Coruña in Spain in 1975, the Zara brand has expanded and now has over 1,500 shops in 78 countries worldwide. Its founder, Amancio Ortega, has become Spain's richest man.
One of the largest fashion retailers in the world, Inditex owns brands Pull Bear, Massimo Dutti, Zara Home and Bershka and is known for its ability to respond to trends quickly – new designs are produced and distributed to outlets within a fortnight. Unlike most other retail brands, Inditex refuses to advertise its lines, and its business model is based on "proximity sourcing". This means that almost half of its clothes are produced close by in Spain, Morocco and Portugal.
In 2010, despite the downturn, Inditex saw its profits jump by 32 per cent to €1.73 billion and it has been described as a "machine" by industry analysts.