Ethical trading agreement 'has had little impact'

An ethical trade agreement signed by some of Britain's leading high-street brands has failed to stop the exploitation of workers who produce the bulk of the products sold in UK shops, a report has found.

Thousands of British and foreign workers employed by suppliers to well-known companies including Marks & Spencer, Tesco, Body Shop International, Gap, Sainsbury's and Typhoo Tea, remain on low incomes, have no union representation and in some cases are harshly treated by their bosses.

The findings are published today in the most comprehensive study to date of the impact of the Ethical Trading Initiative (ETI), which was established eight years ago in the face of public concern over sweatshop and child-labour scandals. Nearly 40 British companies with a combined annual turnover of more than £120bn and more than 25,000 suppliers worldwide, signed up to the agreement.

But today's report, by the Institute of Development Studies at Sussex University for the ETI, shows that while some working conditions have improved, in most cases the agreement has made little or no difference.

"In general codes had almost no impact in terms of ensuring workers receive a living wage, although at nine of the 25 sites they had encouraged payment of at least the national minimum wage," the authors wrote.

"However, there were several cases where a decrease in working hours in order to comply with codes of labour practice had led to reductions in take-home pay... In all countries at least some workers complained that their basic wage was not adequate to live on."

The report recommended British brands and retailers should "take responsibility for ensuring prices paid to suppliers are sufficient to cover labour costs based on a living wage".

In a separate conclusion, the report found that workers were being denied membership of trade unions in the five countries chosen for the study - the UK, Costa Rica, India, South Africa and Vietnam. "In none of the 25 sites did we find an increase in union membership," it said.

The ETI's director, Dan Rees, said there had been improvements in health and safety, a reduction in the incidence of child labour, better pay and reduced hours. But, he added: "We must all recognise that despite the growing pressures on UK retailers to address consumers' ethical concerns, they face much greater pressure to deliver the cheapest products in the shortest possible time. Perhaps it is time for a more open and honest debate about the cost to workers of demand for cut-price products."