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Low Pay Commission review of the textile manufacturing industry

Why the Low Pay Commission review of the textile manufacturing industry in Leicester matters to Procurement

Low pay commission released its report on the review of pay in in the textile manufacturing industry in Leicester. The review concluded that manufacturers are still underpaying and exploiting workers despite the efforts of enforcement bodies and UK retailers.

Practices in Leicester came to the forefront during the Covid pandemic in 2020, where large rates of infection were detected in the often cramped and unsafe working conditions, with workers forced to come to work even if they had covid symptoms. Thus, the aim of the review was to capture whether there had been improvements because of the increased scrutiny by the enforcement agencies.

In particular the review highlighted the unethical practices carried out by manufacturers as well as the challenges faced by government agencies and retailers in trying detect and prevent such practices.

A key point also made by the Bran Sanderson Chairman of the LPC was that whilst this review focused on the textile industry in Leicester, it stated that the findings were representative across the UK for workers in labour intensive work placed in precarious positions facing the same obstacles. This means that the findings are relevant to all procurement teams in who engage similar supply markets in the UK.

Supply chain auditors with long experience of the local sector, who contributed to the review, spoke of unregistered small-scale manufacturers, identifiable only if you listened in the street for the sound of sewing machines. Amongst the suppliers there was a ‘race to the bottom’ culture, with manufacturers and subcontractors competing over who can do the work quickest and cheapest.

Indeed, HMRC told us that large numbers of businesses closed either before they were due to be visited or part way through an investigation. It’s possible that some of these businesses were non-compliant and closed to avoid detection.

The review stated that one retailer complained that, whereas in other countries they could take concerns to industry associations and unions, that was not possible in Leicester. Factories are not represented in any trade association and workers very rarely belong to a union. The retailer said they face issues around transparency and honesty in dealing with manufacturers in Leicester; they described this as a barrier to building relationships, understanding and resolving issues, and ultimately to expanding their operations in the city

In terms of exploitation of workers, the report found the following:

That textile workers are too scared of losing their jobs to complain about working conditions, making the job of detection of poor working conditions even harder. Workers in Leicester explained their reluctance to report underpayment. At the heart of this are fear and low expectations. Workers are afraid of losing their hours and incomes, worried about moving jobs and often grateful just to have employment. There is a deep distrust of enforcement bodies and a lack of faith that complaining will make any difference, other than to put their livelihoods at risk. Workers question how they would prove underpayment when it’s just “your word against theirs” and talk of being “coached” by bosses in what to say if an enforcement officer speaks to them. Language and cultural barriers also play a role, as does uncertainty over where to make a report.

There is also widespread under reporting of hours worked for given amount of pay. Worryingly, to control this practice, retailers and supply chain auditors increasingly insist on biometric machines for workers to clock in and clock out. We heard, however, that these too can be circumvented, for example via a second, hidden machine or a separate paper record.

The review also stated that unethical practices were not one sided with some workers being complicit because they claim benefits based on their recorded hours, rather than their actual hours. Thus, they intentionally under report their hours.

In the Garment and Textile Workers’ Trust’s recent survey, 56 per cent of workers reported pay below the minimum wage of £9.50 per hour, 55 per cent did not get holiday pay and 49 per cent did not receive sick pay. Around a third of workers surveyed had received neither a contract nor payslips. However, the report also makes clear that this survey cannot be taken as representative of the sector.

The greatest driver, though, has perhaps been retailers taking greater control of their supply chains. Rigorous auditing and restrictions on complicated chains of subcontracting have narrowed the space for non-compliance. This consolidation has created opportunities for better jobs but also brought risks of a narrower manufacturing and employment base.

Encouraging greater numbers of workers to report underpayment and other abuses is important for the success of enforcement. BEIS and HMRC recognise this problem, and there is research ongoing to understand the barriers to worker complaints. This should be at the centre of the Government’s strategy and there should be a specific policy aim to increase complaint volumes. Bodies that workers trust – such as trade unions and charities – have an important part to play in identifying and reporting abuses.

This review therefore highlights the problems faced not just in the textile industry in Leicester, but other similar labour-intensive industries across the UK. Whilst the private retailers have made tangible improvements to workers conditions in their supply chains there are other actions that can be take by procurement to support the improvements.

This includes achieving greater visibility of supply chains, particularly if subcontractors are involved by mandating suppliers to disclose this before or during the contract.

To further gain better visibility there is a need for procurement to collaborate with trade unions and charities. Procurement therefore could use their tender process to find out what affiliations the supplier’s staff have to trade unions or charities.

Challenging abnormally low prices and seek justification as to how this can be achieved whilst maintaining minimum wage levels and acceptable working hours.

To provide training opportunities, with recognised qualifications and institutions for staff to build their knowledge and skills which give opportunity for staff to progress their careers as opposed to feeling trapped with no opportunity to move on. Buyers can include the ‘social’ aspect in the evaluation criteria to award. 

Ensuring that suppliers have a whistle blowing policy with an independent organisation whom staff can anonymously make their complaints to, could assist in reducing the current fears of staff.

If you currently work or are considering working in procurement and would like to develop your procurement knowledge Telso Learning provides certified Ethics and Modern Slavery courses in addition to the Chartered Institute of Procurement & Supply CIPS qualification courses as an Approved study centre.