Working Conditions in UK - High Levels of 'In-Work Poverty'

Clothes manufacturing in the UK has seen a striking revival since 2007. Not only have new business models come onto the scene, particularly with the growth of online retailers, their actual manufacture has increased significantly. Between 2008-2012, for example, the industry grew by almost 11%.
This phenomenon is largely based on the advantages of the Fast Fashion business model. Items are produced in small batches, delivered to stores within ten days and – if they sell – can be reordered, adjusted if needed, and again delivered to the store or online platform, without the need to hold large stocks.
However this success has come at a significant price – both for workers, as well as manufacturers who play by the rules. While many may welcome the return of manufacturing to the UK, minimum conditions of work and employment are being violated and many manufacturers who comply with regulations find themselves continuously undercut as some of the competition produces the same items at half the labour cost.

These are the findings of a new report commissioned by the Ethical Trading Initiative (ETI) and carried out by the Centre for Sustainable Work and Employment Futures at the University of Leicester.
The report, which investigated the working conditions and business models of clothing manufacturers in Leicester and the East Midlands, found that the majority of the workforce earns around £3 per hour (compared to a National Minimum Wage rate of £6.50). Workers receive wages cash in hand and do not hold an employment contract.
Many employers get away with this by only declaring part of the hours worked and informally considering wages as a composite made of different parts: officially recorded hours at minimum wage rates; not recorded hours at around £3 per hour; and, at times, workers’ benefits are considered as part of their wage package.

Needless to say, in-work poverty is high. Data from a small-scale survey conducted as part of the research point to an average monthly wage of £584 and a weekly household income of £229 (and these figures are likely to overstate actual wages and incomes across the local industry).
Evidence we collected suggests that the underpaid wage sum for the East Midlands alone amounts to £1 million per week. In other words, underpaid wages constitute 20% of the approximate gross value added of the industry. Workers have also complained about health problems, inadequate health and safety standards, verbal abuse, bullying, threats and humiliation.

Of course, this does not apply to all workers across the board in the same way. The largest group working under these conditions is made up of female workers who have been in the UK for more than ten years, and either hold British citizenship or have a leave to remain and right to work status. The main reason why they have to continue working under these conditions is their insufficient English language skills that prevent them from applying for jobs elsewhere.
Beyond this group of workers, there appears to be a more vulnerable segment, mostly because they have no or insufficient rights to work full-time. They tend to work at lower wage rates and under worse conditions than the core group of workers. Both these groups produce garments in factories that have not been subject to social audits, garments that have been subcontracted without the knowledge of the lead firm or brand.

This industry has historically constituted a sizeable part of British manufacturing and had a reasonable degree of representation both on the employer as well as the trade union side. So what’s behind this downturn in standards?
The market power of the lead companies involved are a key factor. These are global enterprises based on global sourcing networks and wield a level of market power that cannot be matched by relatively small suppliers and manufacturers. And, if the dominant business model of fast fashion is one of quality production, low margins, and lean supply chain practices, it is only logical that purchasing practices are oriented towards price, rather than more long-term and mutually sustainable practices.

The shape of the industry and the way existing regulations are enforced has also changed significantly in the past 20 years. The average size of clothing manufacturers has shrunk dramatically to 8.6 employees, meaning that regulatory authorities are faced with a large number of small firms that are hard to keep track of, as they are often registered and wound up at astonishing speed. And, having to regulate corporate taxes, minimum wages, right to work permits, health and safety, trading standards, and a host of other regulations, these authorities generally have not been able to enforce the law.
The decline in power of trade unions has also been a factor. Historically they were able to ensure work and employment standards remained within a legal framework, however, given adverse policies and the structural changes in the sector, unions have lost a lot of ground. As far as individual workers are concerned, it is easy to see how those who know they can’t get a job anywhere else, who are up against internally consistent wages and hour records by their employer, are unlikely to take on a battle that is lost before they even start complaining.

What can be done?
Unfortunately these working conditions are not a new phenomenon. This does not make them acceptable and they are certainly not legal, so something must be done to improve the situation of the thousands of workers in the UK being treated unfairly.
ETI has launched a programme which outlines how it will tackle the labour rights issues identified in the research. As emphasised in the report, three aspects, in particular, are key to any initiative.
To start with, firms must recognise that they have a responsibility along the entire supply chain, not simply the suppliers they place orders with, as is currently the case. Even better, this should be enshrined in law.
Wages need to be taken out of competition: wage rates are to be determined by minimum wage regulation and collective bargaining rather than simply by market power. And any enforcement or work and employment regulations will remain problematic unless trade unions as well as workers at factory level have a voice.
Ultimately, it is these kinds of measures that will make clothing manufacturing in the UK sustainable. They will help workers earn a minimum – if not living – wage, they will also help compliant manufacturers develop their businesses on a sound basis, and they should help lead firms in marketing ethical fashion that is made in the UK.

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The question posed above 'what can be done?' is in reality 'what can be done within capitalism?' or even 'what can we hope will be done within capitalism?' Appalling as these conditions are for the workers involved they are just one more example of how capitalism works for the workers, whether in the UK or elsewhere on the globe - (badly). The object of capitalism is to make profit and the only way to do that in manufacturing is from whatever the workers produce. Even when in a position to be a member of a trades union with some bargaining power the situation is often precarious, as has been seen over the years with multiple lay-offs and declining wages across the board. Little is guaranteed.

What we wish to do here is to remind, once again, of the socialist agenda of 'taking wages out of competition.' Neither minimum wage regulation, collective bargaining nor market power need figure in the equation. Work will be voluntary, access to the common store will be as required, all and any business will be in the hands of the people and wages will be relegated to the historical record.

JS