The Apparel Supply Chain and Its Labor Risks

How did your clothes get to you and who was properly paid in the process?

The garment industry is notorious for labor exploitation and convoluted and unclear supply chains.

Both inside and outside the fashion industry, forced labor and modern slavery are on the rise. According to the new Global estimates of modern slavery report, there were 50 million people worldwide living in modern slavery: 28 million in forced labor and 22 million in forced marriages.

This is an increase of 10 million from when the report was written in 2016 – among other things, the number has been exacerbated by the COVID-19 pandemic, climate change and armed conflict.

What does the apparel supply chain look like? Cosmos investigation.

The shape of the garment industry: four levels (sort of)

“In a broad sense, when retailers talk about their supply chains, they tend to talk about levels zero to four,” says Dr Alice Payne, associate professor of fashion at Queensland University of Technology.

Level 0 corresponds to the direct operations of the company: retail businesses, offices and distribution centers, for example. Each additional level is a layer removed from them.

“Level 1 is the people and organizations that build the clothes for them – so assembly and manufacturing,” Payne explains.

Level 2 is the production of fabric, while level 3 is the production of the yarn that makes the fabric.

“Level 4 is about raw materials,” Payne explains.

“Natural fibers like cotton and wool, which come all the way back to the farm, or the forests where the trees come from which are then turned into viscose. And the petrochemical industry, which is the raw material for polyester, nylons, acrylics, etc.

A cotton farm in Australia. Even if grown on land, cotton can be shipped overseas for further processing. Credit: Bloomberg Creative Photos/Getty Images

In reality, there are no clear lines between these levels – especially further up the supply chain.

Even something as ubiquitous as cotton has a very complicated history.

“You have the seed inputs to grow cotton on the farm, the cotton has to be ginned – the seed and lint are separated – then from the gin it is shipped to a spinner to make yarn.

“Then the yarn producer often ships it to other countries to be made into fabric. At any point in the chain, it can be dyed,” says Payne.

“They can span the globe in terms of geographic location and can be very complex,” says Abigail Munroe, research and policy analyst on modern slavery at human rights group Walk Free, which compiled the Global estimates of modern slavery relationship with the United Nations International Labor Organization and the International Organization for Migration.

The division of labor along the supply chain

Workers are not distributed evenly between these levels. Spindles and looms are both highly mechanized processes, which makes intermediate levels less labor intensive. Tier 4 feedstocks can also be mechanized or labor intensive, depending on the fiber.

Garment assembly at Level 1, however, is enormously labor intensive.

“It’s part of the nature of the fabric – it’s fluid and malleable,” says Payne.

“In the field of robotics, they talk about the fact that it could take months to teach a machine how to fold a shirt, because it’s so difficult to maneuver and manipulate fabric.”


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Every seam of your clothes has to be manually guided through a sewing machine – which is a boon for poorer countries that want to introduce more industry.

“The textile industry is often the first rung of an industrializing country,” says Payne.

“What’s an industry to bring to a country when you have a big workforce? Well, often the assembly of clothes, because they are quite light machines.

But it also carries risks.

Who gets paid

According to Clean Clothes Campaigna T-shirt that sells for €29 (A$43) returns €0.18 (A$0.27) to the Bangladeshi textile worker who sewed it.

Free market Beyond Compliance in the Apparel Industry report found similar levels of low payment throughout the supply chain.

“According to our assessment, workers would need to earn nearly 40% more to meet their basic needs,” says Munroe.

Exploitation can be worse in the more distant levels.

“In general, across all types of industries, workers further down supply chains tend to face heightened risks of modern slavery,” Munroe says.

“This may be due to a number of reasons – some of them being that they are more likely to work in the informal economy and they are more likely to be invisible to policies designed to protect them.”

Hunt down slavery

Governments have taken steps to require companies to monitor these supply chains, but there are still gaps in the legislation.

In Australia, for example, the Modern Slavery Act 2018 requires companies with an annual turnover of over A$100 million to produce annual reports on their supply chains and the risks of modern slavery within those chains. The UK has similar legislation.

Walk Free Annual Beyond compliance reports, track these disclosures and so far they have looked at the hospitality, finance and apparel industries.

While most apparel companies in this year’s analysis had modern slavery claims (an improvement over the hospitality and finance industries), 33% still failed to meet the minimum requirements set by the laws. More than a quarter of companies produced no supply chain information, while of those that did, only 35% went beyond Level 1.

Brightly colored yarns hanging above a spinning machine
A spinning machine in Myanmar. Credit: g4gary/Getty Images

“There’s actually no penalty for companies that are within the bounds of the law but don’t file a return,” Munroe says.

And, even if these requirements are met, there is little incentive to improve reporting.

“We definitely see statements that are clearly used as check mark activity,” Munroe says.

“For these two laws, even the Australian law which has more complex requirements, it is entirely based on disclosure. So just pointing out that the company needs to do more in terms of supply chain mapping or risk assessment is enough.


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Stricter legislation, such as regulation currently offered by the EUcould include financial penalties for non-compliance, as well as obligations to prevent and mitigate human rights abuses throughout the supply chain.

The Australian government is under review its Modern Slavery Act, with a consultation period ending in just over a month.

Future changes to the law could increase compliance – but right now most places where you buy clothes don’t specify where the clothes come from – or who is properly paid to make them.



Michael O. Stutler