Ethical Performance
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Primark problems show audits cannot reveal all

July 2008

The retailer Primark has blamed the presence of child labour in its supply chain on 'wholesale deception' by three suppliers and the difficulty it has in auditing subcontractors.

The cut-price clothing and household goods chain, which is the UK's second largest clothing retailer by volume, terminated contracts with three Indian factories last month after a BBC investigation revealed they had secretly subcontracted jobs to homeworkers, and children were embroidering dresses.

Primark said that before considering withdrawal it would normally insist suppliers stop unethical practices, but in this case the contracts had been terminated with immediate effect because the owners of the factories in Tamil Nadu had committed 'wholesale deception'. The company claimed each had been audited three times during the past 18 months against the Primark code of conduct. There had been 'suspicions' about their use of child labour but the suppliers had consistently denied this.

Primark, which sourced about 200,000 garments a year from the factories, said it felt 'very let down' as it had believed that relations with the suppliers were good.

The Ethical Trading Initiative, to which Primark belongs, said the incident showed audits 'are not always foolproof' and that most companies are likely to have supply chain problems at some time, even if monitoring is thorough. The important point was how companies tackled difficulties after they emerge.

Anti-sweatshop campaigning group Labour Behind the Label criticized Primark for 'cutting and running' from the suppliers and thus penalizing the factory workers, some of whom had been instrumental in exposing the child labour.

Brands often continue to work with suppliers even if serious breaches in working practices are exposed, but many still terminate contracts if they feel progress is not being made.

Level Works, a Hong Kong-based social auditing consultancy, claims its recent experience suggests falsification of records by suppliers is widespread and increasing, particularly in the apparel sector, with Bangladesh, China, India and Pakistan among the countries worst affected, along with a number of Gulf states. It estimates that as many as eight in ten factories in Bangladesh and China falsify records in some way, and just over two-thirds in India and Pakistan.

Primark, which is owned by Associated British Foods, said its auditing system usually spotted ethical lapses, but that monitoring subcontractors was difficult, especially if suppliers did not declare they were being used. Primark has therefore appointed an unnamed non-governmental organization in southern India to detect any unauthorized subcontracting in the region by acting as its 'eyes and ears on the ground'.

In data compiled for Unicef's The state of the world's children 2008, 12 per cent of Indian children aged 5-14 were listed as being involved in child labour.

Primark | Global | Supply chain monitoring

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