"No Contracts, no Rights: How the Fashion Industry Avoids Paying Minimum Wages in Pakistan"

Executive Summary

Brands and Retailers do not Prevent well-known Labour Rights Violations in the Pakistani Textile Industry.

Most workers in Pakistani garment factories are cheated out of their rightful wages: The vast majority does not receive written contracts, pay slips or wages that would enable them to feed their families. Moreover, factories in Pakistan often hire only a small proportion of the workers directly. Many workers are hired through third parties who act as intermediaries between the textile factories and the workers. Often, these workers do not even receive the legal minimum wage nominally and are not registered and insured in the social security system. This so-called contracting system is a way to flexibly get rid of workers if necessary and makes it difficult to trace labour rights violations and the affiliation of workers to factories. These practices are well known to anyone working in the Pakistani garment industry, including brands and retailers who produce in Pakistan. However, companies have ignored these obvious labour rights violations for decades. [...]

To assess how companies that are covered by the new German law implement their new due diligence obligations, a survey was conducted amongst workers in Pakistan who produce for such brands and retailers. For this, more than 350 garment workers in different factories in Sindh province were interviewed over a period of six months between January and June 2023. The results of the study indicate that so far no effective measures have been taken by brands and retailers to prevent the withholding of an adequate (living) wage in the surveyed factories.

Of the over 350 workers interviewed, 97% of the respondents did not have a written employment contract, and 80% did not even receive a pay slip. 29% of the workers reported being employed through third parties. In the factories where employment through third parties was reported particularly frequently, this was also accompanied by particularly serious violations of labour law, including withholding of appropriate wages: Approximately 28% of workers did not even nominally receive the legal minimum wage for "unskilled workers" of 25,000 PKR per month. In 94% of these cases, no trade union was active and 84% of those not receiving the legal minimum wage were either employed through third parties or received piecework wages. [...]

This study provides a revealing insight into employment practices and working conditions in Pakistan's textile industry. The results of this survey confirm the severity of issues that have been known about the Pakistani textile industry for years while also showing that so far, brands and retailers have not acted upon the well-known violations that rights holders are facing.