The world’s best-known luxury brands now manufacture their staggeringly expensive products right in their backyard. Why opt for sweatshops in Bangladesh—when you have one in Milan?
Sweatshops: A quick refresher
We all know fast fashion relies on sweatshops in poorer parts of the world. What is less known: The luxury end is not all that different. There are three ways in which super-cheap labour is a part of the high-end market:
One: The straight-up dupes—whose place and company of manufacture is entirely unknown. At one time, buying counterfeit bags etc was considered embarrassing—now it’s a fashion statement. In other words, dupes now have been incentivised—as have the sweatshops that make them.
Two: Items that are mostly made in poorer parts of the world—but the final touch is added in Italy—for that ‘Made in Italy’ tag. This particular scam was exposed years ago–and became a source of embarrassment for luxury brands.
Three: That’s why they’ve turned a more ‘honest’ version of the same model—outsourcing manufacturing to sweatshops inside Italy. It allows a happy blurring of the line between sweatshop and ethical labour:
And so, it is possible that a fancy store may have expensive designer bags made by Chinese workers in Italy displayed next to the same bags made, also in Italy, by Italian workers, Calistri says. One cost €20 (about $30) to produce, the other €250 (about $365). The price tag is the same, often many hundreds of dollars.
Point to note: Unlike many other countries, Italy does not set a minimum wage—but it has strict laws that govern working conditions and hours.
Ok, tell me about these Italian sweatshops
Made by Chinese: Most of these factories—located in Milan, Tuscany etc.—have Chinese owners. And they hire Chinese and sometimes Pakistani workers—many of them undocumented. As of 2020, an estimated 310,000 Chinese people lived in Italy—the third largest community of foreign nationals residing in the country. Most of them work in the textile industry—and in towns like Prato and Florence. Many of them are indentured labour—in debt to those who brought them to the country.
Sweatshops, sweatshops everywhere: In April, two raids revealed appalling conditions in factories that supply Dior and Armani. In the case of Armani:
Production… was “active for more than 14 hours a day, including holidays.” Workers were “subjected to a gruelling pace of work” and with a situation characterised by “danger to the safety” of the workforce, who worked and slept in “degrading housing conditions,” and with wages “as low as 2 to 3 euros [$2.17 to $3.26] per hour, such as to be judged below ethical minimums.”
As for Dior: According to the Wall Street Journal:
Workers often operated machines from which safety devices had been removed to increase productivity, compromising safety, prosecutors said. Workers also lived, ate and slept at the workshop. Electricity consumption data indicated that employees typically worked from dawn until after 9 p.m., including on weekends and holidays.
The fallout: In April, Italian courts put a key subsidiary of the Armani brand—Giorgio Armani Operations Spa—under judicial administration. For now, Dior has simply been called out in the same court ruling.
Wait, these sweatshops were owned by Armani?
Nope. The brands are careful to maintain deniability—through a convoluted supply chain—located entirely within Italy. Armani creates an “ad hoc” in-house company called Giorgio Armani Operations Spa. It outsources the “entire production” of most of Armani’s 2024 collection of bags and accessories to third-party companies. Then comes the final step:
The supplier company, however, “has only nominally adequate production capacity and can compete in the market only by outsourcing, in turn, the orders to Chinese factories, which manage to cut costs by resorting to the use of illegal and clandestine labour in exploitative conditions.”
Mind you, the Chinese factories in this case were located right next-door in Milan and Bergamo—not across the world.
Point to note: This is similar to how the same brands hire Italian seamstresses in places like Puglia—who work from their homes for a pittance. But the brands can similarly deny all knowledge of their existence.
But is anyone shocked by sweatshop labour?
The Italian sweatshops created a stir—not because of the working conditions—but the eye-popping markup. Thanks to the court rulings, we now know how much it costs to make these uber-pricey products.
The markup: In the case of Armani, the sweatshops paid its workers €2-3 per hour—and then sold the bags to Armani's subcontractors for 93 euros. They re-sold those bags to Armani for €250—who slapped a hefty price tag of €1,800 in the shop. Dior’s retail maths: It paid a supplier €53 apiece, roughly $57, to assemble a handbag that it sells in stores for €2,600, or about $2,780.
Point to note: The cheap manufacturing costs are especially egregious given the skyrocketing prices for luxury goods. A mini Lady Dior bag that cost $3,500 in 2019 is now an even pricier $5,500—a 57% increase. Rest assured, the costs for making that bag have barely moved.
The scam: Everyone shopping in Shein knows that their cheap on-trend dress is subsidised by super-cheap labour. But the eye-watering prices of luxury brands are justified by “an expectation that they are made by skilled workers in artisanal workshops.” As one industry expert indignantly puts it—“When you have a product like Prada or Dolce & Gabbana, you are not supposed to use illegal workers.” Caterina Occhio writes in the Business of Fashion:
Though luxury brands like to position fashion’s environmental and social ills as a mass-market problem…The reality is that many luxury players operate more like fast fashion than they care to admit. For years now, “exclusive” goods have been produced and sold by the millions in a shift towards high-margin mass production that has come with increased pressure on manufactures and greater risks of labour exploitation.
Numbers to note: In the end, it’s not about the price tag on an individual bag or pair of shoes. The ‘cost-cutting’ is obscene when transposed next to the luxury goods industry—which has been booming for over a decade—growing from €349 billion in 2022 to €362 billion in 2023. Italy accounts for 50-55% of the world’s luxury clothing and leather products.
The bottomline: This golden era of exploitation is set to end soon—at least for Italian brands. European diligence rules will soon make them responsible for strict oversight of their entire supply chain. Failure to do so will result in penalties of up to 5% of global revenue. Ignorance will no longer be a defence. Then again—as that cliché goes—where there is a will, there is a way.
Reading list
Wall Street Journal (splainer gift link) and Hollywood Reporter have the latest on the sweatshops—and the court ruling. These older reports in LA Times and Reuters reveal how long this has been going on. New York Times looks at poor Italian seamstresses who subsidise the big brands.
