Primark drops three Indian suppliers for using child workers

The low-cost British fashion retailer Primark has dropped three of its Indian suppliers for sub-contracting embroidery work to companies which use child labour. All orders with the firms, based in the southern state of Tamil Nadu, have been cancelled and all clothing supplied by them has been removed from Primark's 170 UK branches.

Associated British Foods, which owns Primark, said: "We take this lapse in standards very seriously indeed. Under no circumstances would Primark ever knowingly permit such activities, whether directly through its suppliers or through third-party sub-contractors."

The infringement of the company's ethical sourcing code only came to light because of a BBC documentary to be screened on Monday. The Panorama Special is the second television programme this month to look at sweatshops used by the chain. Channel 4's The Devil Wears Primark – allegedly a hard-hitting exposé of cheap clothing outlets – was pulled from the schedules two weeks ago.

Primark stressed that it had taken swift action as a result of the investigations. "As soon as Primark was made aware of the facts, the company acted immediately, cancelling all new orders with the factories concerned and withdrawing from sale the embroidered garments involved," it said.

George Weston, the ABF chief executive, added that Primark "would normally work with suppliers to fix practices we don't like", but that the three suppliers in Tirapur had been guilty of "wholesale deception".

Such robust condemnations are a sign of the public relations issues raised by offshore manufacturing. In response to growing public repugnance at sweatshop labour, ethical concerns have shot up the retail agenda. All members of the British Retail Consortium, which represents 80 per cent of the country's retailers, have signed up to the independently audited Ethical Trading Initiative. The code of practice covers such issues as the free choice of employment, the right to collective bargaining, safe working conditions and payment of a living wage. "The ideas that workers in these countries are worse off because British companies are doing business with them is just wrong," said a spokesman for the BRC. "These are attractive jobs, which are well paid, and that is why people choose to do them."

Ethical concerns are by no means restricted to retail. Some 90 per cent of FTSE 100 companies produce an annual report on corporate responsibility every year, including an external assurance statement auditing performance. "Corporate responsibility creates shareholder value because being cognisant of what stakeholders demand, and responding to them, is good for business," said Mike Barber, a partner at Deloitte.

Primark is Britain's second-largest clothing chain and, with T-shirts priced as low as £1, almost its entire stock is sourced from Asia. The company says its low prices are made possible because it has a lower mark-up than its competitors.

The intuitive link between cheap products and exploitative practices no longer stands up, according to Mr Barber. "Cheap goods may, at first sight, seem to conflict with ethical sourcing, but studies show that if a company sources responsibly it is likely to get suppliers that produce quality goods, on time and enhance the value of the brand. It is too simplistic to say cheap has to mean cutting corners."

But campaigners say ethical sourcing codes are barely worth the paper they are printed on, and without Government involvement to force changes in business models the problems of exploitation will never go away. Not only is the current situation no better than it was before the recent rash of corporate responsibility-taking, but in some ways it is made worse by the veneer of progress, according to Simon McRae, a senior campaigner at War on Want.

Constant pressure on offshore suppliers forces compromise on ethical standards, and, with only a voluntary code, relying on infrequent audits, to protect them, factory workers in the developing world remain exposed.

"The problem is companies are saying to their customers that they are treating their workers ethically, but then they say to their suppliers that they want to turn things around quicker and they put pressure on prices, and that leaves them looking to other means to fulfil the orders," Mr McRae said.

Workers need a developed employment infrastructure – including trade union representation and proper education about their rights. "There is a systemic problem, and, whilst it is great in theory to have a code, unless retailers work to enforce it and deal fairly with their suppliers rather than just squeezing them the problem will just reoccur," Mr McRae said. "We have to address the business models and the way the sector is regulated or these issues will not go away. Companies can't rely on a once-a-year audit."