Informal employment in garment industry risks worker rights and brand reputation

Brands were urged to adopt binding agreements and enforce human rights standards throughout their supply chains.

INFORMAL Employment practices in the garment industry are endangering workers’ rights and sustainability whilst tarnishing brand reputations and sustainability, said Anannya Bhattacharjee, International Coordinator for Asia Floor Wage Alliance (AFWA).

“Brands, who are amassing super profits at such a low cost with great cost to human rights, are in danger of reputational risk,” Bhattacharyaji told Retail Asia.

She stressed that brands engaging in such practices risk severe reputational damage. She pointed out that these brands often prioritise profits over human rights, leading to unsustainable business models and wasteful production practices that exacerbate the climate crisis.

Bhattacharyaji highlighted pervasive gender-based violence (GBV) and harassment faced by women workers. She described how such practices, ranging from verbal abuse to physical violence and even murder in extreme cases, are enabled by systemic factors within factory settings and broader industry practices.

She noted that informal employment leaves workers vulnerable, lacking legal protections and facing heightened risks.

Bhattacharyaji also cited instances where workers, particularly women, endure wage theft and precarious working conditions without recourse, fearing retaliation if they report abuses.

Overhauling business models

Bhattacharyaji called for a fundamental overhaul of the current business models in the garment industry. She urged brands to prioritise worker well-being alongside profitability and advocated for stricter regulations to hold brands accountable for their practices.

“The business model of global supply chains of garment production today has to change,” she said. “They are based on outdated views on the connection between good business and worker wellbeing, they need to update their views to good business also requires worker wellbeing.”

Bhattacharyaji attributed the factors driving informal employment across Asia to the profit-driven motives of global brands. She criticised brands for exploiting loopholes in labor laws to cut costs and maintain unilateral control over supply chains, often at the expense of workers’ rights and wellbeing.

“Brands made a huge amount of profit from stock buybacks whilst workers were reeling in a massive crisis,” she noted. “So purchasing practices of a brand fuel informality, and we need legal and binding regulation of brands in global supply chains."

A call for action

To address GBV at the factory level, Bhattacharyaji called on brands to adopt binding agreements and enforce human rights standards throughout their supply chains to protect workers and ensure fair labour practices.

Retailers and brands must adopt business models that prioritise human rights, following the United Nations’ principles for Business and Human Rights and addressing the impacts of their practices.

This includes conducting due diligence to mitigate adverse impacts, adhering to fundamental labour rights, and complying with international standards such as ILO Convention 190 and Recommendation 206.

She said they should sign binding agreements with laboUr, like the Lesotho and Dindigul agreements on GBV, with co-created grievance mechanisms.

Additionally, brands should mandate written contracts between employers and workers to establish clear terms and protections, viewing the absence of such contracts as a risk factor during due diligence.

Furthermore, brands are encouraged to base their product pricing on labour costs that encompass legal wages, benefits, and ethical standards, moving towards ensuring living wages for workers in their supply chains.

Collaboration with unions and worker collectives is also deemed crucial, and brands should consider the absence of such partnerships as a risk in their due diligence process.

“The business model[s] have to change, and the unregulated corporate power of brands and supply chains have to change,” said Bhattacharyaji.