A British parliamentary inquiry will examine working practices in e-tail fulfillment centers, among other issues.
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Digital Daily issue 03/07/2017

LONDON — A British parliamentary committee will begin hearings March 7 into the underregulated area of e-commerce fulfillment centers and related operations, including apparel factories that supply fast-growing e-tailers and which in some cases have stirred allegations of sweatshoplike conditions.

This story first appeared in the March 7, 2017 issue of WWD. Subscribe Today.

The inquiry, called “The Future of Work,” will be overseen by Parliament’s business, energy and industrial strategy committee. It follows a spate of British press reports detailing allegations of abusive work practices at distribution centers and apparel factories in the U.K., including arbitrary firings and no time for toilet breaks to overbearing surveillance and illegally low pay.

“People are in the main aware of sweatshops in the Far East manufacturing stuff, but what about the rest of the supply chain, the warehouse, the distribution?” Iain Wright, the MP for Hartlepool and head of the committee. “We hope to shed light on this.”

The focus is the changing nature of employment in general, and the gig economy of Deliveroo and Uber will feature highly, as will the impact of automation. But fashion retail names keep popping up. Cited in written evidence and by MPs have been Asos, which denies allegations from Joanne Goddard and others that it treated workers “like slaves;” Britain’s biggest sportswear firm JD Sports, accused of exploiting workers in its huge warehouses, and discount sportswear retailer Sports Direct, which was likened to a Victorian workhouse last year.

Wright is no stranger to these issues. His committee questioned and castigated Sports Direct owner Mike Ashley into admitting many wrongs. When the allegations against Asos first surfaced last year, Wright was quick in his condemnation.

“It does seem often to be these sectors in terms of: ‘Are the margins so wafer thin and they are pressing down on terms of conditions so much?’” he said. “Sports Direct is a particularly bad example — the culture, some of the practices, were appalling; but it’s not the only one. The Asos stuff really struck me. The scanners, the running to complete the order, not having time so you have to go to the toilet on the warehouse floor.

“We saw this with Amazon,” he added. In November, a BBC documentary exposed the stresses faced by delivery drivers for Amazon, who illegally worked 11-hour days and had to “defecate in bags” for lack of time. “These targets are almost impossible. Then you are speeding and a risk on the roads. You see in the distribution and logistics sector this sort of practice too,” Wright said.

“We take this matter seriously and strive for continuous improvement,” Amazon said in a statement following the screening of the documentary, adding that its code of conduct required drivers to be treated fairly. “We investigate any allegation that a delivery provider is not meeting our expectations.”

The proliferation of e-tailers such as Asos, its British rival Boohoo.com and Germany’s Zalando, major retailers growing e-commerce and, of course, Amazon has led to increased competition for ever clothes delivered faster and faster. Deloitte Consulting reported last year that customers no longer thought three-day delivery was in any way fast. For a generation brought up watching fashion vloggers unpack shopping bags from Boohoo and Missguided in their “haul” videos, next day delivery has become the template for shopping.

As a result, competing retailers keep raising the bar and have to streamline purchasing, delivery and return cycles, particularly in the U.K. — the largest European e-commerce market with online sales running at around 130 billion pounds, or $159.25 billion at current exchange, annually.

In an interview, Goddard, who alleges she was fired by Asos after having a panic attack on her shift, described the workflow: “When they press the button, the order comes in and you run. You must find it really quickly and deliver it on, often to another floor. It’s relentless. Team leaders keep shouting that you must get faster. You get a bollocking if you haven’t done enough picks. It completely stressed me out. Especially next-day delivery. It’s just not possible. It’s stupid. The whole system sucks.”

Campaigners say such abuses are made easier by the use of temporary agency staff, hired and fired to match the volatility of demand.

“My particular part of the recruitment industry — that dealing with unskilled industrial staff — currently operates with little regard for the law, and none whatever for any ethical considerations,” Adrian Gregory, director of the Extraman recruitment agency, wrote in his submission to the inquiry. “A pernicious cocktail of inadequate, impractical and muddled legislation, combined with a complete disregard for the rights and welfare of the very people, the temporary staff, who earn agencies their money, has led to mass exploitation coupled with huge tax avoidance.”

The GMB union, which has been championing the cause of Asos workers in the former industrial town of Barnsley, also wrote a submission to the inquiry.

“Five, 10 years ago, we would have been talking about call centers. Because of the transient nature of the staff, we were not properly able to get in there and help. We feel we missed that opportunity and aren’t prepared to let go here,” Neil Derrick, regional head of GMB in Yorkshire and North Derbyshire, told WWD. “If not challenged, these practices get normalized.”

Nimble online operations, with no physical stores and minimal inventory, demand short production runs that Wright says sound quite old fashioned, almost Dickensian. As an adjunct of fast fashion, the model goes hand in hand with “onshoring,” or the practice of repatriating manufacturing to the U.K., because in some cases low-cost production in Asia is too far away to be fast enough. While the concept can be beneficial in stimulating job growth in previously depressed areas, it also can lead to the onshoring of sweatshops.

Nikolaus Hammer of the University of Leicester, who has investigated the apparel industry and whose work is being studied by a separate Labor Party investigation, said the way in which new entities work is unrecognizable compared to the manufacturing base that the U.K. lost decades ago.

“Before they had big buildings of 2,000 workers, it was easier for trade unions to know where the workers were,” he said. Now there are smaller, barely regulated workplaces of 10 to 20 workers, churning out small orders and not knowing where the next piece of work is coming from. Some firms were found to be paying less than three pounds an hour.

A source at a U.K. high street fashion label, who requested anonymity, claimed to WWD that onshoring production doesn’t really work unless the company is a designer brand, since the resulting products would be prohibitively expensive if workers were paid the minimum wage.

Campaigners against such exploitation say some of the blame does lie with insatiable consumer demand, but putting the onus on shoppers can absolve others — such as governments and officials — from taking responsibility.

“There are two ways of looking at this,” said Deborah Coulter, head of programs at the Ethical Trading Initiative, which comprises many leading British and international brands, including Marks & Spencer, Next, Debenhams, Gap and H&M. “One is greed, so you take orders and outsource them to a cheaper factory so that you can make more profit and of course this goes on. But we say to our members: We have got to look at our purchasing practices. If the prices you are paying are so low that these people can’t pay their workers the minimum wage, then there’s something clearly wrong with that business model.”

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