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Zara’s sustainable sweatshirt raises troubling fashion ethics issues

Marc Bain
A Zara store logo shines in the sun

Low prices and high speed are two of fast fashion’s distinguishing marks. Zara, for instance, has become one of the most successful fashion companies in the world by being able to charge just $29 for a sweatshirt it designs, manufactures, and puts on store racks in the span of only a few weeks.

An investigation by Public Eye, a Swiss investigative group focused on human rights and corruption, traced the course of one such item: a €26.67 ($29.50) hoodie from Zara’s “Join Life” line, which it markets as sustainable and says is made by suppliers that received top ranks (pdf) in audits. In estimating the costs involved in making the hoodie, Public Eye says the wages workers earned at each step of production aren’t nearly enough to live on.

It contends they would have to be nearly doubled or tripled in some cases to meet the standard Zara lays out in its own code of conduct for its suppliers.

Zara vehemently denies the accuracy of the investigation. Public Eye argues the hoodie is a stark example of how a business model designed to keep prices low thrives at the expense of workers making the clothes.

The costs behind a hoodie

The hoodie, printed with “R-E-S-P-E-C-T” across the front in reference to the Aretha Franklin song, came together at factories in Izmir, a port city in Turkey. Zara says it produces 57% of its garments in Turkey, Spain, Portugal, and Morocco—unlike the many clothing companies that rely mostly on Southeast Asian nations such as Bangladesh for the bulk of their manufacturing.

Public Eye says it wanted to test Inditex’s claims of transparency. According to the group, it only learned of the sweatshirt’s origins after months of asking Zara for information. The retailer’s chief sustainability officer provided the names of the companies involved, including the factory that made the fabric, the one that cut and sewed it into a finished garment, and the printer that put the text on it. While he didn’t provide exact locations, Public Eye says it was enough to find the factories.

Zara offered mostly evasive replies to Public Eye’s questions about the amounts paid to factories, the group says. But through the course of its investigation, which included visiting the factories and speaking with their employees, Public Eye says it was able to determine how much they earned. The facility that cut and sewed the hoodies received nine Turkish lira (€1.53 in 2018) for each one completed, based on Public Eye’s research.

Public Eye then worked with Dutch and French partners from the Clean Clothes Campaign—a network of organizations and unions dedicated to improving conditions for garment workers—and the Paris-based consultancy Le Basic to arrive at an estimate of the costs for each step of making the hoodie.

The final numbers may not perfectly represent every Zara item, or even every “Respect” hoodie. For example, Public Eye had to work around the fact that Zara sells the hoodie at different prices in different countries, in part because of differences in value-added tax (VAT) rates throughout the world. The report notes the cost of the hoodie ranges from €25.95 in Spain to about €39.50 in Switzerland. Aside from its own on-the-ground research, Public Eye says Le Basic analyzed dozens of financial reports and trading data, and consulted with experts to come up with the estimates.

It calculated that Zara generally made €4.20 in pre-tax profit on each hoodie, assuming they sold at full price. The total sourcing price—a sum of the costs across all steps of production—was €7.76 per hoodie. Within each step of production, it also estimated the cost representing the wages of the workers involved, from the cotton farmers in India to the workers at the spinning mill in central Turkey to those who cut and sewed the fabric into a hoodie in Izmir. They totaled about €2.09—less than half Zara’s profit.

“Our conclusion: even for Zara’s ‘Join Life’ line, which is supposed to be particularly sustainable, the price pressure on producers is so immense that ultimately those who pay the highest price for Inditex’s profit are the people who make the business possible in the first place—the factory workers,” Public Eye said.

Inditex, Zara’s parent company, disputes the findings, saying Public Eye didn’t give it enough information for it to provide detailed answers. “Public Eye’s report is based on erroneous premises and inaccurate reporting,” a spokesperson for the company says in a statement. “For example, their primary allegation, the €7.76 sourcing price they cite, is based on Public Eye’s own speculation and is simply inaccurate.” The spokesperson notes that Inditex’s true sourcing price “is well above the one used in the report” and that “workers at these factories are paid more than the amounts mentioned in Public Eye’s report.”

The company also asserts that all factories involved in making the hoodies “have been registered with and supervised by Inditex prior to Public Eye contacting us. Moreover, they all have workers’ representatives responsible for the defense of workers’ social and labor rights. This is in line with our traceability and compliance policies, and there are no issues regarding the salaries of the workers in these factories.”

Oliver Classen, a spokesperson for Public Eye, says the group only had to derive its own estimates because Inditex isn’t transparent about the prices it pays. “They deny the result of those well-based calculations without disclosing any of the true numbers and proportions,” he says in an email.

While Zara takes issue with Public Eye’s accounting, it declined to specify in greater detail where it was inaccurate.

The wage conundrum

Zara’s own code of conduct (pdf) for suppliers states “wages should always be enough to meet at least the basic needs of workers and their families and any other which might be considered as reasonable additional needs.” Public Eye argues the wages workers in its supply chain earn would need to nearly double or triple in some instances to hit that mark.

It’s a high bar. A country’s minimum wage and its estimated living wage—which should cover a worker’s basic expenses for themselves and their family with some left over—can differ greatly. Governments looking to attract foreign business often have an incentive to keep minimum wages low. Even Public Eye says it heard many of the factory workers still earned Turkey’s legal minimum wage or just above it.

Zara didn’t contract the factories directly, according to Public Eye. It used a middleman called Spot Tekstil to find them and commission the work. The company also doesn’t have the power to set wages itself. Local governments, factory owners, and groups such as trade unions determine those.

Still, unions and researchers argue companies such as Zara can drive down wages and enable poor conditions through the pressure they exert on suppliers to provide low-priced, high-speed work. Public Eye reached the same conclusion. “In fact, the prices that factory owners are paid leave them with only two options if they themselves want to run a profitable business: either they pay workers less than they should be earning, or they let them work longer than they should be—or are allowed to,” it says. “We encounter indications that both are happening.”

The group claims workers at one factory were often employed on single-day contracts with no assurance of future work. Another factory, it alleges, operated around the clock, while workers toiled through 12-hour night shifts it says violate Turkish labor laws.

A spokesperson for Inditex says such conditions are not acceptable under its code of conduct, and if it ever learned of such a situation in the regular audits it does of its active factories, it would create a plan to address the problem.

Public Eye estimates that in a system where all workers in the supply chain made a living wage, it would only cost Inditex an additional €3.62 per hoodie. Whether or not the estimates are perfectly accurate, it’s arguably a small price to pay to ensure fair compensation.

 

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