Garment factories in Leicester still exploit employees, study finds

Leicester City textile manufacturers still underpay and exploit workers, despite scrutiny from enforcement agencies and concerted efforts by UK retailers to clean up their supply chains, According to a new study by the Low Pay Commission.

Labor abuse in city garment factories in the East Midlands has been known for many years, but due to focus in 2020when unsafe working conditions were blamed for the spread of Covid-19 in the city.

Since then, enforcement agencies have carried out hundreds of audits, while major retailers have sent auditors to their suppliers, checking for subcontracting and building costs. new fees to reflect compliance with the minimum wage.

The LPC – an independent body that advises the government on minimum wages – said as a result the sector has clearly changed “significantly”. But its report, released on Monday, also pointed to a stark divergence between officials’ view that non-compliance in one area is no worse than in others. Other reliable, knowledgeable witnesses believe it is “popular and blatant”.

Bryan Sanderson, president of the LPC, called on the government to take “comprehensive action”, adding: “Leicester’s case is not unique. Across the UK, workers in precarious positions face similar obstacles”.

The LPC said the exact size of the abuses was “unknown”, but that non-compliance remained “a serious problem affecting too many workers” and “will go undetected”. .

This is partly because most textile workers are too afraid of losing their jobs to complain about working conditions: some told LPC that employers have threatened to ensure that troublemakers will ” never work again,” while some said managers instructed workers what to tell inspectors.

Rogue executives also find it too easy to bypass scrutiny by simple methods such as reporting fewer hours worked for a certain salary or paying for minimum wage but forced workers to hand over part of their pay in cash to managers, the report said.

HM Revenue & Customs, responsible for controlling compliance with the minimum wage, also struggled to deal with the so-called “phoenix”, when employers closed factories and quickly reopened. them under a new name to avoid investigation.

The LPC found that the efforts of the retailers themselves made more of a difference than the efforts of the authorities, in part because private auditors did not have to find corroborating evidence of fraud. non-compliant, but can only warn retailers that certain manufacturers seem too risky to deal with.

The LPC said “rigorous” audits and restrictions on complex subcontracting chains narrowed the scope of abuse, as retailers removed suspected manufacturers from their supply chains. surname.

This is making the area cleaner and smaller, the report said, with “an increasing risk of job loss”. Manufacturers think the future of the sector in Leicester is precarious, while advocacy groups warn that rogue operators could be pushed deeper into the underground.

LPC says enforcement agencies need to do more to encourage workers to report abuses; and they must work better with organizations that workers trust, such as trade unions and charities. It urges HMRC to establish a process for lower-paid workers to appoint a third-party agent to represent them.

Meanwhile, the government should legislate to better protect those who work unsafely; and help them gain the skills and confidence to switch jobs.

HMRC said it has “a range of measures and powers” it can use to deal with the phoenix issue, with the new law strengthening their ability to pursue an individual when a company has been dissolved. . It said it would comment more fully on the LPC’s other recommendations when the report is published.

A government spokesman said the UK had “made strong progress in making legislation to ensure that our employment laws keep pace with the needs of our labor market” and took “strong enforcement action” against employers who did not pay employees correctly.

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