The myth of ethical and made in Italy fashion falters under the blows of gangmastering

Despite the recent scandals, it is a widespread belief that Made in Italy fashion is ethical in itself.A small virtuous supply chain is changing the rules.

• In the last two months, the Milan prosecutor's office has investigated several cases of gangmastering and labor exploitation in factories scattered across Lombardy, which produce fashion and leather goods for some large luxury brands.
• These news cases have raised doubts about the Made in Italy fashion supply chain, traditionally considered ethical in itself, especially in the luxury sector.
• Ethicarei is an example of an ethical luxury supply chain.It deals with textile packaging, leather goods and footwear production, matching between profit and non-profit organizations, with the aim of increasing the inclusion and involvement of disadvantaged communities.

Fashion scandals made in Italy.The last one involved, in chronological order, was the Dior brand.A few weeks earlier, Alviero Martini and Armani. The investigation by the Milan prosecutor's office into episodes of gangmastering, exploitation of labor and abuse in factories scattered across Lombardy has hit important names (And according to Reuters there would be another dozen brands involved).What was most striking in the last case, that of Dior, in addition to the reiteration of the same scheme of poorly controlled commissions and subcontracting, were the prices.As reported by the Italian newspaper Corriere della Sera:“The price of the Dior leather bag model marked for example with the code PO312YKY?It costs customers 2,600 euros in the store, but Dior first spends only 53 euros to buy it from the factory."

A chain of exploitation and abuse that includes – as several newspapers have reported – illegal work, lack of adequate safety measures, workers who ate and slept directly in the factory, without rest shifts, and worked at night (the investigations also led to monitoring of night-time energy consumption).Again as Corriere reports:“The story photographed by the investigations – the investigators sum up – is in truth a symptomatic alarm bell of a more extensive and widespread organization of production:it is not a question of episodic and limited events, but of a generalized and consolidated production system".

Unethical Made in Italy in the world news

The latest was a long article in the British business newspaper Financial Times, but the case has been reported in all the major international newspapers in recent weeks.In particular, when the latest case hit the national news, Business of Fashion, an esteemed trade magazine dedicated to global fashion professionals, published an open-ed entitled The Myth of Ethical Luxury signed by the Italian Caterina Occhio, sustainability advisor for luxury companies, consultant to the United Nations, as well as member of the board of directors of the World Fair Trade Organization (Wfto).“The time had come to put it in writing, what we all know deep down.Everyone who works in fashion in Italy knows the substratum of opaque procurement, very present in the so-called made in Italy production".The title refers to the deep-rooted belief that a luxury good, therefore with a high price, has naturally been produced in ethical and respectable conditions, especially if made in Italy.“In reality, already in 2020 the Dutch NGO Fairwear Foundation highlighted in the report Italy Risk Assessment that our country was not at all free from situations of abuse in the fashion supply chain.The focus was on small and medium-sized Chinese-owned businesses, but then the report expanded across the board, also including forms of unregulated home-based work."

Italy is home to thousands of small producers who cover 50 percent to 55 percent of the global production of luxury goods (according to Bain Consultancy, other figures are even higher), often in medium and small-sized companies, specializing in one certain process.The luxury fashion system, although it still enjoys an aura of charm, is now aligned with fast production models and with impressive volumes close to those of fast fashion, with several collections per year and a business diversification that goes from accessories to makeup:“The reality is that many luxury players operate more like fast fashion than they want to admit.For years now, “exclusive” products have been produced and sold by the millions, in a shift to high-margin mass production that has brought greater pressure on manufacturers and greater risks of labor exploitation,” Occhio wrote in his article.

When control audits in factories don't work

But how can episodes like these in recent weeks still happen?“The supply chain problem is mainly represented by the second level, the subcontractors.Some brands and groups ask the main contractor to pre-approve those they subcontract to.All Italian companies involved in the fashion system should have a Code of Ethics, as outlined by Legislative Decree 231/2001, and a manual of procedures for selecting suppliers.When you read it carefully you understand if they are serious from two fundamental details.First of all, control audits do not have to be announced, whereas most are.Announced means that they tell the supplier weeks in advance when they will go to the company.Semi-announced audits, however, indicate a two-week time frame in which the audit will be performed.The only series, obviously, are the unannounced visits, which can also be outside working hours, to understand if the workers are, for example, working at night or sleeping in the factory.And after these audits, not only the results should be published, but also a consequent correction plan, when necessary.Transparency is a fundamental step to be credible."

The case of Ethicarei

A year ago Caterina Occhio, with four other partners, founded Ethicarei, the first ethical supply chain in Italy guaranteed by the World Fair Trade Organization.Ethicarei deals with textile packaging, leather goods and footwear production, matching between profit and non-profit organizations and between schools and work environments, with the aim of increasing the inclusion and involvement of disadvantaged communities in companies and brands.Continue Eye:“Ethicarei wanted to send a signal, even before the cases officially came to light.Fashion and luxury can and must do better and start introducing social entrepreneurship in a systematic and non-occasional way into their way of operating.On the other hand, the social enterprises with which we collaborate, including the historic Alice cooperative active in Milanese prisons and Cartiera in Bologna, specialized in the employment inclusion of people with migration or fragility paths, are committed to raising the level of quality to provide a product up to luxury standards.It is a gap that we are trying to fill, every day."

Ethicarei has collaborated with made in Italy fashion brands such as Zanellato, Emporio Armani, Aspesi and the French Chloè. Their motto is “Made in Italy, made in Dignity”.A word, dignity, which also returns in the report dedicated to the fashion supply chain drawn up by Campagna Abiti Puliti, entitled “A living wage is a universal right.A proposal for Italy, starting from the fashion sector." The report, presented for the first time in 2022 and updated annually, investigates the complex phenomenon of working poverty in Italy, which also includes unstable and insecure employment contracts, in addition to the calculation of a decent wage, which in 2024 is equivalent, according to Campagna Abiti Puliti's calculations, to 11.50 euros net per hour or 2 thousand euros net per month which, assuming a standard working week of forty hours per week.

On the topic of supply chain, At the end of April, the European Union launched the so-called CSDD, among many difficulties and compromises (Corporate sustainability due diligence directive, also called supply chain law), which will lead larger companies to take responsibility for the concrete and potential negative impacts on the environment and human rights of their activities along the value chain.In the case of Italy, fashion must and can step forward to resolve cases of systematic abuse and change behavioral models that are still rarely questioned today.With its communicative power and its cultural impact, fashion can and must make other choices to change its impact.