Exploitative employment of labour: Italian fashion industry in crisis

The recent administrative measures taken by the Court of Milan against three well-known companies in the fashion industry as part of an investigation into the exploitation of workers show how deeply rooted the phenomenon is in this sector and how long and difficult it is to take appropriate preventive and countermeasures.

According to the court documents of the Milan Public Prosecutor's Office, a business culture based on the failure to control – or to carry out a very minimal control – of the production chains has spread in the companies concerned. The companies placed under court administration all followed the same pattern. They outsourced production activities through contracts with contractors, who in turn subcontracted to third parties, who in turn used the services of workers who worked under precarious safety and hygiene conditions, were subject to wage conditions below the legal minimum (wages of only 2-3 euros per hour) and worked hours far more than those contractually agreed and authorized. 

Considering the findings resulting from the investigation by the Labour Inspectorate of the Milan Police Command, the Milan court found that the companies did not adequately control the production chain. In other words, according to the authorities, the companies concerned had failed to check the business performance of the companies with which they had concluded supply contracts and the production methods they used. It was also criticised that many necessary initiatives were not taken, such as formally requesting the review of subcontracting agreements, which in all three cases created the facts necessary for the application of the preventive measure of judicial administration pursuant to Art. 34 of Legislative Decree no. 159/2011.

In view of the above-mentioned “Capolarato” cases, a technical round table was opened on 8 May 2024 at the request of the President of the Court of Milan, Fabio Roia, with the participation of representatives of the entire fashion and crafts sector, as well as the Labour Inspectorate and the Polytechnic of Milan. The common goal is to combat the exploitation of labour in this sector, with a preventive examination of the critical business aspects of various entrepreneurs. The aim is to use the results obtained by the ad hoc appointed court administrators to improve the situation within the companies. 

 

 

The cases described above make it clear how important it is for companies to introduce an appropriate organisational model in accordance with Legislative Decree no. 231/2001 to prevent measures such as those taken by the Milan court. However, this alone is not enough: The organisational model must be part of an effective governance characterized by control, transparency, accountability, safety and fairness to prevent labour exploitation.

Companies that outsource services should regularly access and inspect their contractors, subcontractors and suppliers. The CSDDD (Corporate Sustainability Due Diligence Directive), adopted in May 2024, will largely reinforce these measures by requiring companies to integrate sustainability into their processes to take responsibility for the environment and workers. The directive will be applied gradually from 2027 and will be fully applicable from 2029 for companies with more than 1,000 employees and a turnover of more than EUR 450 million.

Furthermore, there is a clear need for all companies to take action today, without waiting for the aforementioned CSDDD to enter into force: every company - regardless of its size - must prepare now by implementing an adequate risk management system that covers the entire “chain of activities” (a term coined by the CSDDD itself that is much broader than the definitions of “supply chain” or “value chain” commonly used today). Consequently, it is essential for companies to specifically monitor their suppliers and to accompany and support them on their way to a more sustainable business model.  ​​

 

 

Violation of labour rights in the fashion industry

In addition to the phenomenon of “​caporalato”, there are other serious violations of labour rights in the Italian fashion industry, including numerous cases of discrimination.

In this context, the statements made by the managing director of another well-known fashion label at a public event attracted a great deal of media attention, which revealed that men or, alternatively, women over 40 should be given preference when filling management positions. These statements were subsequently the subject of a recent court case.

The reason given for this view was literally that women over 40 “if they have to get married, they have already married, if they have to have children, they have already had them, if they have to separate, they have already done so, so let's say I take the ones who have already done all the “ways”, i.e. who are nice and quiet by my side and work 24 hours a day, that's important”.

The judge – who upheld the claim brought by the “National Association for the Fight against Discrimination” – declared the discriminatory nature of these statements and sentenced the company to pay EUR 5,000 in damages plus interest and legal costs, as well as publishing the text of the judgement in a daily newspaper of its choice. Innovative and in line with the need for an effective company management system was the judge's further order to implement a company anti-discrimination training plan - in which all employees must participate - to promote the con​scious non-influence of criteria such as age, gender and family commitments in the personnel selection phases for management positions.

Discriminatory behavior – for example in relation to gender and age – is evidence of a working culture that is still characterized by deeply rooted prejudices. This is a phenomenon that is becoming more prevalent in the fashion industry, but which has the potential to have a positive impact on consumers through its communicative power and cultural impact.​​