Growth and degradation in UK apparel manufacturing

Nikolaus Hammer - Lecturer in Work and Employment, University of Leicester

nterestingly, it is precisely in the aftermath of the financial crisis that UK apparel manufacturing has had a resurgence. After the industry’s long decline it may come as a surprise that gross value added (GVA) increased by over 10% between 2008-14. In the East Midlands, the largest ‘Fast Fashion’ sourcing hub in the UK, it increased by 39% between 2008-13. However, this increase in UK production is actually a complement to off-shoring to the Far East and South East Asia. While bulk orders tend to be placed in overseas countries with low labour costs, products that are highly responsive to consumer demands tend to be sourced at home, allowing ‘Fast Fashion’ orders to be delivered to shops in the UK within 10 days. This process, however, has had significant distributional implications: between 1997-2015 UK consumer prices for clothing fell by 3.5% every year at the same time as UK factory gate prices rose by 0.9% (well below the figures for manufacturing as a whole). So, how could these price pressures be accommodated and who has paid for it?

Research on working conditions in the East Midlands (to be published in the Industrial Relations Journal), has highlighted an average hourly wage in the industry of just £3 per hour (at a time when the national minimum wage stood at £6.50). In the East Midlands alone, this amounts to a defrauded wage sum of £1 million per week. Workers, mainly women of British-Asian background, are employed without contract but available ‘on tap’ (‘the job is as and when required’ as one of our respondents put it). Working conditions vary according to the degree of vulnerability of different groups of workers but the issues exposed by our research range from inadequate health and safety standards to verbal abuse, bullying, threats and humiliation. Perhaps unsurprisingly, this form of flexible, precarious and informal employment leads to significant working poverty, with a reported average monthly wage of £584 and a weekly household income of £229. So, why did workers stick with such jobs? Interestingly, over half the workers in our sample held British citizenship but still felt unable to escape this work as they only spoke English with difficulties. As regards the non-British workforce, factory visits by the Border Agency continue to highlight the existence of different degrees of ‘unfree labour’ in the industry.

This situation of low pay and poor working conditions in UK apparel manufacturing has emerged as a result of changes in the enforcement regimes of employment standards, as well as the restructuring of the UK apparel value chain (and similar developments can be observed in other countries in the Global North). At the same time as the state has put all its money on ‘responsive’ forms of regulation and enforcement – in a so-called Better Regulation initiative that saw significant reductions in resources to control and fine violations of work and employment regulations – the manufacturing landscape has shifted dramatically. Across the sector the shifts include: leading brands with significant manufacturing experience ceding their place to discount retailers; general retailers developing their own clothing brands; the rising importance of online portals and the emergence of online-only brands. A producer market that was dominated by manufacturers employing over 2,000 workers has given way to an average firm size of 10 employees. Last but not least, organised labour has lost touch with a workplace which is now largely characterised by a new wave of British-Asian entrepreneurs and workers, many of whom operate at the boundary of the informal economy.

Our research has also highlighted a stunning gap between the omnipresence of regulatory actors in the workplace and the degradation of work and employment. 97% of the workers we surveyed had in the last year witnessed an inspection in their workplace by the brands (the so-called ‘lead firms’) whose clothing was being manufactured. However, only 37% had witnessed an inspection by tax authorities, 47% by immigration authorities and just 27% had experienced an inspection of their working conditions (typically by social auditors). Thus, a clearer picture of regulatory bias emerges: as the state’s enforcement of work and employment standards has shifted from control to collaboration with seemingly compliant firms, it has, in the same breath, ceded the control imperative to lead firms. This shift leaves vulnerable immigrant workers as the only remaining focus of hard forms of enforcement by official state agencies.

The responsive regulatory strategy, however, suffers from a number of fallacies. First, shifting from policies of control to collaboration does not mean that the latter emerges at the push of a button. For a start, neither manufacturers nor workers have any kind of effective collective voice, let alone representation, in the UK apparel industry. Second, requiring lead firms to carry out basic control functions instead of the state creates a whole set of new conflicts of interest and practical difficulties. Who would happily pick up the tab of the 3.5% decline in clothing prices? Judging by established power relations in the value chain, price pressures will be passed to the workers. Finally, it is erroneous to see employment standards simply as a function of a robust enforcement policy, regardless of their actual focus on compliance or collaboration. Rather, work and employment standards need to be seen in the context of an industrial relations system and an industrial policy. These might not be all parts of the puzzle but they are certainly indispensable ones if the aim is to reduce the polarisation between financialised lead firms at one end of the value chain, and labour cost competition in the informal economy on the other end.

Labour market exploitation in the UK has become indigenised over recent decades and goes far beyond a problem confined to vulnerable migrant workers. Creating new mechanisms of representation for workers is crucial to hold the new private regulatory actors to account, as well as to harness workplace participation for strategies of industrial upgrading.