The reality behind UNIQLO's corporate social responsibility promises

 | News and analysis
A Uniqlo shop front. Photo: Raizel Kiong
Excessive overtime, low pay, dangerous working conditions, punitive and oppressive management style.

In a new report SACOM reveals the sweatshop practices and labour rights violations belying UNIQLO's corporate social responsibility (CSR) promises. UNIQLO is a rising superstar in the global fast fashion scene with 861 stores worldwide – including an increasing number in the UK. It is already Asia's biggest apparel company and Forbes predicts it to pass H&M and Inditex to become the world's largest clothing company.  Tadashi Yanai, the founder and CEO of Fast Retailing, of which UNIQLO is a subsidiary, was ranked as Japan's wealthiest man by Forbes in 2013, with a net worth of USD 15.5 billion.

UNIQLO also has a high Corporate Social Responsibility (CSR) profile with a Code of Conduct and CSR reports that give the impression of transparency, a careful selection of suppliers, limits on overtime work, a commitment to freedom of association and close monitoring of working conditions. However, undercover investigations by SACOM have found systematic and large-scale labour rights violations in two factories producing for UNIQLO, documented in a report that unveils a completely different reality, with workers producing UNIQLO clothes toiling under inhumane conditions.

The two investigated factories are owned by two key suppliers of UNIQLO, Dongguan Luen Thai Garment Co. Ltd and Pacific Textiles Ltd which has a 17 year long history of cooperation with Fast Retailing, the conglomerate which owns UNIQLO. Together the two suppliers employ more than 50,000 workers in China, the Philippines, Cambodia, Indonesia and Vietnam.

Investigators found that UNIQLO makes visits to the factory shop floor twice per week to monitor the quality of the products – but there seems to be no similar commitment to monitor the commitment to UNIQLO's Code of Conduct.

The investigation found evidence of:

Excessive overtime

On top of a 11-12 hour work day, workers were working between 112 and 134 hours of overtime on a monthly basis, which is not in line with labour law that prescribes a maximum of 36 overtime hours and at least one day off per week.

Low pay

Workers' pay falls far below a living wage and they are not paid in accordance with the normal standards set out in Chinese labour law.

Hazardous working conditions

Workers do not wear protective gear and work under hazardous conditions with high temperatures and flawed protective measures. 

Harmful and chemical-laden waste water regularly floods the factory floors. One interviewed worker stated that he had witnessed a fatal accident in which a man was electrocuted when waste water came in contact with electrical machines.

The factories have poor ventilation - the ventilation system was entirely switched off in one of the investigated factories during the time of the investigation - and there was a high density of cotton fibre in the air, with a risk of causing serious lung disease (byssinosis). Furthermore, cotton dust is combustible and explosive, which has resulted in serious fatal incidents at textile plants in China in the past.

Temperatures reach high levels and workers are forced to endure long hours of work in inappropriate conditions with temperatures measuring up to 38 degrees Celsius on the knitting floor of the Pacific Textiles factory. In the ironing department of the Dongguan Luen Thai factory workers are forced to constantly work standing, despite long working hours and very high temperatures.

No respect for freedom of association, harsh and punitive management style

Workers have no platform to voice their concerns, and there is no such thing as a democratic body representing workers in negotiations with the management, contrary to the commitments to freedom of association in UNIQLO's Code of Conduct. In the Pacific factory the chairperson of the “union” is also a manager at the factory. The union organises leisure activities and distributes welfare benefits, but is completely inactive in dealing with labour disputes or advocating workers' rights.

Investigators heard that when workers organised a strike against the low wages at the Pacific Textiles factory in 2009, the management hired gangsters to physically assault the workers' leaders and suppress the strike. In a later incident the workers leading a strike against high temperatures on the shop floor were dismissed.

High pressure from brands on quality and delivery time is passed on to workers and the workers are not offered appropriate breaks. At the same time the Pacific Textiles factory uses 58 different kinds of punitive measurements to control the quality of the products, including 41 different fines that reduce workers' salary. Link to the full report: http://sacom.hk/wp-content/uploads/2015/01/2014-UNIQLO-Investigative-Report_final_20150109.pdf

Response from the company

In a response to the report Fast Retailing has acknowledged some of the problems pointed out by SACOM and has committed to improve conditions in its supplier factories.  The company claims that their own inspection revealed “several issues, including long working hours.” Furthermore Yukihiro Nitta, from Fast Retailing's corporate social responsibility unit, stated that “Fast Retailing has urged swift action against the factories on the issues identified in the SACOM report, and we will cooperate fully with them to ensure that improvements are made,”. The company says it is moving to address problems with working hours and it has requested that a government agency acts to check air quality and ensure that the factory floor is clean from water waste. It also claims that it has moved to increase holidays for workers and has made other improvements in working hours. Fast retailing also states that it will move to eliminate any fines or punishments that are levied on employees. 

Link to the response from Fast Retailing: http://www.fastretailing.com/eng/csr/news/1501150900.html

SACOM has requested a more resolute and measurable response and demands the following action from Fast Retailing:

  1. To be transparent by disclosing details of the progress and outcomes of its action plan, including all investigative result on factories' situations to the public;
  2. To revise its low order price with the production partners;
  3. To invite non-profit labour rights organizations to facilitate the establishment of democratic, factory-level trade unions and to provide training for workers in at least 5 factories supplying for UNIQLO by the latest June in 2015;
  4. To review and improve its supply chain monitoring mechanism;
  5. To disclose a complete list of UNIQLO's suppliers to the public and;
  6. To continue constructive and sincere dialogue with civil society organizations.

Links to articles about the report in English language press

Financial times

Uniqlo under pressure to raise clothes prices again

http://www.ft.com/cms/s/0/2bd4bfec-971c-11e4-9636-00144feabdc0.html#axzz3PQ485lSo

Fortune

Uniqlo owner promises to improve working conditions in China

http://fortune.com/2015/01/16/uniqlo-owner-factory-improvements/

Mainichi Shinbun

Japan retailer Uniqlo to step up controls on China suppliers

http://mainichi.jp/english/english/newsselect/news/20150117p2g00m0bu031000c.html

ABC NEWS

Japan Retailer Uniqlo to Step up Controls on China Suppliers

http://abcnews.go.com/Entertainment/wireStory/japan-retailer-uniqlo-step-controls-china-suppliers-28265256

CNN

Uniqlo owner promises to clean up its factories

http://money.cnn.com/2015/01/15/news/fast-retailing-uniqlo-labor-violations/

Bloomberg

Uniqlo Maker Vows to Improve Work Conditions in China

http://news.google.com/news/url?sr=1&sa=t&ct2=jp%2F0_0_s_4_0_t&usg=AFQjCNHVeL_sEQg4q7fuhxmWS6B1-4nKiw&did=cad7063cc1f22f3e&cid=52778712598033&ei=nhS_VIiLM9S94AL05oH4Cw&rt=STORY&vm=STANDARD&url=http%3A%2F%2Fwww.bloomberg.com%2Fnews%2F2015-01-15%2Funiqlo-maker-vows-to-improve-work-conditions-in-china.html

WSJ

Uniqlo Operator Vows to Improve Work Conditions in China

http://www.wsj.com/articles/uniqlo-operator-vows-to-improve-work-conditions-in-china-1421294785

The Japan Times

Uniqlo vows reforms as NGO deplores factory conditions in China

http://www.japantimes.co.jp/news/2015/01/16/national/social-issues/uniqlo-vows-reforms-as-ngo-deplores-factory-conditions-in-china/#.VL8WFnZWIwQ

Marketwatch

Uniqlo owner vows to improve work conditions in China

http://www.marketwatch.com/story/uniqlo-owner-vows-to-improve-work-conditions-in-china-2015-01-15

The wall street journal japan

http://blogs.wsj.com/japanrealtime/2015/01/16/top-wsj-stories-on-japan-uniqlo-history-textbook-economic-worries/

Reuters

Uniqlo tells Chinese suppliers to improve work conditions

http://www.reuters.com/article/2015/01/15/fast-retailing-china-idUSL3N0UU3J220150115

Channel News Asia

Uniqlo pledges to improve factory conditions in China

http://www.channelnewsasia.com/news/business/international/uniqlo-pledges-to-improve/1591840.html

China Economic Review 

http://www.chinaeconomicreview.com/uniqlo-owner-promises-action-following-labor-abuse-allegations-china

Business Spector

Uniqlo pledge on China factory conditions

http://www.businessspectator.com.au/news/2015/1/16/china/uniqlo-pledge-china-factory-conditions

The Australian business review

Japanese retail chain Uniqlo vows to improve conditions in its China factories

http://www.theaustralian.com.au/business/wall-street-journal/japanese-retail-chain-uniqlo-vows-to-improve-conditions-in-its-china-factories/story-fnay3ubk-1227187527934?nk=df1a2f18112a35de889ea2013b958a2c

The China Post

Uniqlo pledges to improve China factory conditions

http://www.chinapost.com.tw/business/company-focus/2015/01/16/426578/Uniqlo-pledges.htm

The Economic Times

Japanese clothing giant Uniqlo pledges to improve factory conditions in China

http://articles.economictimes.indiatimes.com/2015-01-15/news/58109228_1_fast-retailing-uniqlo-factory-conditions

Sportswear International

Uniqlo suppliers accused of harsh working conditions

http://www.sportswearnet.com/news/pages/protected/Uniqlo-suppliers-accused-of-harsh-working-conditions_9129.html

The Straits Times

Uniqlo pledges to improve factory conditions in China after claims of employee mistreatment

http://www.straitstimes.com/news/business/companies/story/uniqlo-pledges-improve-factory-conditions-china-after-claims-employee-#sthash.yjwS3Fmw.dpuf

Global times

Uniqlo owner tells its suppliers to improve work conditions following SACOM report

http://www.globaltimes.cn/content/902259.shtml

The Fashion Spot

Fast Retailing Demands Reforms at Supplier Factories

http://www.thefashionspot.com/buzz-news/latest-news/525119-fast-retailing-demands-reforms-supplier-factories/

The New York Times

Japan Retailer Uniqlo to Step Up Controls on China Suppliers

http://www.nytimes.com/aponline/2015/01/16/world/asia/ap-as-japan-uniqlo.html?_r=0

The Washington Post

Japan retailer Uniqlo to step up controls on China suppliers

http://www.washingtonpost.com/entertainment/japan-retailer-uniqlo-to-step-up-controls-on-china-suppliers/2015/01/16/93fb7504-9d5a-11e4-86a3-1b56f64925f6_story.html

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