Illegal gangmaster and exploitation of workers in the fashion industry
Illegal gangmaster trade is a form of employment exploitation that consists in the recruitment of underpaid labor through a middleman between the employer and the workers: the so-called “gangmaster”.
The gangmaster manages work activities, timetables, and wages of the workers, taking advantage of their state of need. This often translates into total dependence of the employees on their gangmaster for the need for food, accommodation, and basic necessities. Given the workers’ lack of independence, gangmasters usually set up well-organized contexts as a means to keep the workers under constant supervision. In Italy, despite it being illegal, this practice is widespread: according to data that emerged from the Italian National Labor Inspectorate (INL) regarding violations against employees, the agricultural sector had the highest number of offences for illegal gangmastering, with 865 cases recorded in 2020. This was followed by manufacturing (317) and transport and storage (107) (1).
Illegal gangmaster trade has been directly sanctioned by the Italian legal system since the introduction of article 603 bis into the Italian penal code with Legislative Decree no. 138/2011, converted into law (law n. 148/2011), and lastly with law. 199/2016.
Specifically, article 603 bis of the penal code punishes whoever:
- Recruits workers for the purpose of assigning them to work for third parties under exploitative conditions, taking advantage of the workers' state of need;
- Uses, hires, or employs labor, including through the brokering activity referred to in No. 1), subjecting workers to exploitative conditions and taking advantage of their state of need (2).
Article 603 bis states, therefore, that both the conduct of illegally recruiting workers and hiring illegally recruited workers are subject to criminal sanctions. However, for the configuration of the crime in case, it is required that the conduct takes advantage of the “state of need” of the workers. In this respect, the jurisprudence of the Supreme Court of Cassation (see Cass. Pen. 25 January 2007, n. 2841) has defined a “state of need” as “any situation of weakness or of material or moral deficiency of the passive subject, suitable to condition his personal will” (3). Such a broad interpretation allows to include within the notion of “state of need” also difficult economic conditions that, though not necessarily translating into a real state of indigence, are such as to give rise to a permanent concern for the subject regarding its own socio-economic sphere.
The penalty provided by article 603 bis is imprisonment for a term of one to six years and a fine of 500 to 1,000 euros for each worker recruited; if the acts are committed by means of violence or threat, the penalty is imprisonment for a term of five to eight years and a fine of 1,000 to 2,000 euros for each worker recruited.
The fashion industry has faced numerous accusations of gangmastering, given that some of the biggest brands produce clothes in countries where labor costs are low.
As a matter of fact, gangmastering in the world of fashion can manifest itself in several ways. A common means of exploitation is tied to the notion of subcontracting. With the latter, brands can subcontract their production to factories that then subcontract to smaller workshops or home workers, creating a complex supply chain that makes oversight and accountability difficult. This fragmentation can lead to exploitation as each layer seeks to reduce costs and maximize profits.
Another aspect of gangmastering in the fashion industry is low wages: workers, especially in garment factories, may endure low wages that are below living standards. Employees in the fashion industry work six days a week, often for less than $1 an hour. On average, it takes about 11 days for a CEO of a top 5 fashion company to earn what a normal worker earns in his entire life in an underdeveloped country (4). Many fashion brands lack transparency in their supply chains, making it difficult for consumers and advocacy groups to hold them accountable for labor abuses. Without transparency, it is difficult to trace the origins of products and ensure compliance with labor standards.
Efforts to address these issues include promoting greater transparency in supply chains, encouraging fair labor practices through certification programs such as the Fair Trade or Ethical Trade Initiative, and supporting empowerment initiatives of workers such as trade unions and worker-led organizations. Currently, the fashion industry is under scrutiny. The full price of an item of clothing must take account of the workers’ living wage. However, despite these efforts, systemic change often requires collaboration between fashion industry stakeholders, including brands, manufacturers, governments, and consumers, to address the root causes of exploitation and ensure that workers throughout the supply chain are treated fairly and ethically.
A case of gangmastering that has received particular attention recently is the "Armani scandal". From 2017 onward, Giorgio Armani Operations Spa has been operating in a manner similar to Shein. For seven years, the company responsible for crafting clothing and accessories for the renowned Italian fashion brand has relied on what are referred to as Chinese factories, that is dormitory-like structures where the idea of a "factory" encompasses unlawful labor practices, exploitation, and substandard conditions. Workers endure exhausting fourteen-hour shifts amidst unsanitary environments, lacking basic hygiene standards and safety precautions, all in the pursuit of ramping up production speed.
Specifically, problems regarded: glue machines from which the plexiglass insert, necessary to "prevent the worker from accidentally" getting caught with their hands or clothing, has been removed; die-cutting machines lacking an "emergency stop device"; edge dyeing machines without a safety glass; sewing machines without a "guard" to protect fingers, and so forth.
The company allegedly failed to adequately oversee the subcontractors responsible for its production. These subcontractors, unable to handle the workload internally, allegedly outsourced the work to exploitative factories employing undocumented Chinese workers, subjecting them to excessively long shifts and paying them meager hourly wages. It is evident that the company has failed to exercise proper control over its production chain, neglecting to assess the genuine entrepreneurial capabilities of its contracted companies and the specific production methods they employ. Moreover, the company has been passive in addressing the outsourcing of productions by its suppliers, lacking proactive measures.
The Giorgio Armani operations entered into judicial administration due to the Court of Milan's determination that it had failed to prevent and address instances of labor exploitation within its production cycle. The court concluded that the company had neglected to implement adequate measures to assess the working conditions and technical abilities of its contractors. Consequently, the company, established specifically for designing and producing Armani-branded accessory collections, inadvertently facilitated exploitative labor practices, according to the court's findings.
Federica Congedo
Vittoria Romano
Francesca Simonetti
Bibliography:
(1) Redazione, “Lo Sfruttamento Degli Irregolari Nei Sistemi Di Caporalato,” Openpolis, March 21, 2022, Openpolis.it
(2) Brocardi.it
(3) Avvocato di Strada
(4) Oxfam Italia
