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Boohoo Suppliers ‘Getting Creative’ in Hiding Pay Abuses

Boohoo Group says it’s investigating media allegations that its crackdown on worker exploitation in the English city of Leicester has only driven poverty-pay offenses further underground.

Anti-slavery campaigners told Sky News Friday that the ultra-fast-fashion giant’s audit-and-enforcement approach isn’t working because factory bosses have other ways of circumventing the legal minimum wage of 8.91 pounds ($12.41) per hour.

“We know from speaking to people here who are reliant upon the food bank, who aren’t being paid a fair wage, that there are methods in place where they have to pay that money back to the employer, where they’ve been given multiple workers cards so that not all their hours appear on their payslips,” said Paul McAnulty, U.K. and Europe program director at Hope for Justice. “So we know that the audit approach, the enforcement approach…hasn’t really given us any results in identifying evidence of slavery because factory owners are getting really creative and innovative in how they deal with that and how they hide it.”

One woman claimed to have repaid hundreds of pounds to her employers at a Boohoo-approved facility to offset the higher wages listed on her payslips.

“They say that you have to give this money back,” she told Sky News. “They said, you know, ‘I can’t give you minimum wage, I can’t afford to pay you minimum wage because prices are very low in our product.’”

Leicester has the second-largest concentration of textile and clothing producers in the United Kingdom, with 700 factories and 10,000 workers, according to the City Council.

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In a statement published on the London Stock Exchange website, Boohoo said that it is “committed to the highest standards of ethical compliance within its supply chain,” adding that “suppliers are wholly expected to adhere to these standards. What’s more, “any concerns such as those raised by Sky News are immediately investigated,” it said.

Still, the revelations sent Boohoo’s share prices tumbling in a move that recalled a more precipitous plunge last summer, when reports of infection-riddled factories that paid as little as 3.50 pounds ($4.88) per hour emerged at the start of the United Kingdom’s first Covid-19 wave.

The company, which also owns BoohooMan, MissPap, Nasty Gal, PrettyLittleThing, Karen Millen, Oasis and Warehouse, along with the recently annexed Burton, Debenhams, Dorothy Perkins and Wallis brands, launched an independent three-month probe. Its conclusion: While there was no evidence that Boohoo had committed any criminal offenses, reports about low wages and unsafe conditions were “substantially true” and the company’s own monitoring of the “many failings in the Leicester supply chain” proved “inadequate” because of “weak corporate governance.”

In response, Boohoo initiated its so-called Agenda for Change program, a revamp of its business practices overseen by accountancy giant KPMG and retired judge Brian Leveson. It whittled its U.K. supplier list from roughly 500 to 50, and announced plans to build its own “model factory” where workers are treated fairly. In June, the retail conglomerate announced it would be transitioning its domestic factories over to the Fast Forward initiative’s tech-enabled “forensic auditing” model over the course of the next 12 months, until which all suppliers must conduct their own audits through either Verisio or Bureau Veritas.

“Since last year’s independent review, the group has repeatedly stated its determination in rebuilding a garment industry in Leicester with a robust, fair and transparent supply chain,” Boohoo said. “Suppliers are visited more frequently, sub-contracting has been removed, products can only be purchased from our approved supplier list; mandatory whistleblower helplines have been installed at every supplier; and the use of technology is allowing the group to forensically monitor suppliers and their financial records.”

But labor-rights groups say the Agenda for Change is “simply providing a veneer of progress without corresponding improvements for workers,” since none of Boohoo’s measures include engaging with trade unions or ring-fencing labor costs to ensure that prices negotiated with suppliers cover the “reasonable cost” of production.

“Without confirmation from Boohoo that the price paid to suppliers has changed to ensure workers are paid at least minimum wage and all expected benefits—such as national insurance contribution, holiday pay, pension auto-enrolment and statutory sick and maternity pay—the conditions for labor-rights abuses that have persisted for the past decade will continue unabated,” Martin Buttle, head of good work at ShareAction, a nonprofit that promotes responsible investment, warned in June.

Equally unconvinced by Boohoo‘s charm offensive is Thulsi Narayanasamy, senior labor rights lead at the Business and Human Rights Resource Centre, who also remarked in June that “adopting policies and implementing them are two very different things.”

”It appears the Boohoo Group is going to great lengths to appear committed to change, but this hasn’t necessarily translated into action,” she added.

Boohoo CEO John Lyttle said, however, that the company is confident that the “significant steps that we have taken over the last 12 months are resulting in a fair, robust and transparent supply chain.”

“The group continues to closely monitor its suppliers, with swift action taken against any suppliers who fail to demonstrate the high standards that we expect,” he said in the Boohoo statement. “Nobody has done more to drive change in Leicester than ourselves, and our work continues unabated.”

Not that the scandals have hurt Boohoo’s sales. The firm reported in June that its revenues grew 32 percent to 486.1 million pounds ($677 million) in the three months leading up to May, despite the easing of lockdowns that delivered the bulk of its profits last year. U.K. revenues climbed 50 percent while those in the United States rose by 40 percent. Overall, Boohoo’s earnings swelled by 91 percent over the past two years.