Why subcontracting fails workers in the fashion industry
Recent investigations have once again exposed troubling labour practices in the European luxury sector. Several leading fashion houses have been found in violation of Italian labour laws for subcontracting practices tied to worker exploitation. Courts have confirmed multiple cases, signalling that these are not isolated lapses but part of a systemic problem. With around half of global luxury production carried out by thousands of small Italian manufacturers, the implications stretch far across the sector.
For the luxury industry, overlooking social practices is not only unethical — it creates reputational, legal, and operational risks, especially as regulations like the EU Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD) and Forced Labour Regulation take hold.
Subcontracting creates structural risk in fashion supply chains
Sourcing practices in the fashion sector are shaped by intense pressure on price, speed, and flexibility. Brands frequently outsource production to a network of suppliers, and those suppliers often subcontract parts of the work further down the chain. While this system allows companies to respond quickly to shifting market demand, it comes at the cost of transparency and accountability. The further production is subcontracted, the less visibility brands have into actual working conditions — and the higher the risk of abuse.
To secure contracts, small workshops accept low prices and, in turn, reduce wages or demand excessive hours. Workers may end up earning below legal minimum wages, working without proper contracts or social protection, or being paid cash-in-hand under unsafe conditions. In severe cases, these situations meet international definitions of forced labour or modern slavery.
Investigations in Italy revealed migrant workers facing exploitative conditions such as excessive hours and inadequate pay in subcontractors for luxury brands. In the UK, garment workshops supplying fast fashion brands were found to have systemic underpayment and unsafe environments. These cases dispel the assumption that abuses happen only in low-cost countries: exploitation is present in both fast fashion and luxury production.
Unequal exposure to the risks of subcontracting
Workers at the lower tiers of production, often migrants, women, or those in precarious situations, are most exposed to exploitation. Subcontracting amplifies these risks, as workers with limited language skills, insecure residency status, or economic dependency often lack access to unions or grievance mechanisms, leaving them with little recourse against exploitation and largely invisible within the system.
In short, subcontracting is not only a business practice but also a systemic risk driver. Unless sourcing models are redesigned to include fair pricing, enforceable standards, active monitoring, and stakeholder engagement, subcontracting will continue to perpetuate cycles of exploitation across the fashion supply chain.
The case for stakeholder engagement
Understanding risks in fashion supply chains requires looking beyond broad country- or sector-level assessments. Such high-level analyses often fail to capture how labour practices affect workers on the ground. Recent cases in Europe have demonstrated that serious violations can remain hidden beneath the surface of seemingly well-regulated supply chains. This makes it clear that compliance checks alone are not enough.
Active stakeholder engagement is a critical part of effective human rights due diligence (HRDD). It helps companies identify where risks arise, understand their impacts on different groups, and design responses that move beyond box-ticking toward meaningful change.
Respecting human rights in supply chains requires actively centring rightsholders — through direct dialogue with workers, collaboration with trade unions, and partnerships with local NGOs. Digital tools such as grievance systems and worker voice platforms give workers a direct channel to speak out, enabling their experiences to be more visible to other parties.
Focusing on vulnerable groups is especially important, as they often face barriers such as limited access to formal channels, social or economic vulnerability, or other barriers. Embedding stakeholder perspectives throughout the HRDD process gives companies a clearer understanding of where risks occur and supports more targeted interventions to protect workers and vulnerable groups.
Correcting the course towards responsible fashion
The persistence of exploitation cases in Europe shows that industry initiatives alone cannot eliminate systemic labour risks in fashion supply chains. These incidents highlight the limits of current risk management approaches, which often fail to address hidden or systemic problems, particularly those affecting vulnerable groups. They reveal the limits of current practices, and highlight the need for more nuanced, multi-layered approaches that actively integrate the voices of rights-holders throughout the supply chain.
Research shows that purchasing practices can directly influence working conditions and, in some cases, undermine supplier compliance. This underlines the need for mandatory frameworks that embed human rights due diligence, ensuring companies address risks created by their own practices. When sourcing decisions integrate stakeholder engagement, grievance mechanisms, and protections for vulnerable workers, responsible purchasing becomes both a safeguard for human rights and a driver of resilient supply chains.
Practical resources such as the recently published Purchasing Practices HRDD Framework by the Common Framework for Responsible Purchasing Practice (CFRPP) offer companies guidance to strengthen their purchasing practices. Developed with input from multi-stakeholder initiatives, the framework serves as a useful reference point for instance on how to align costing procedures and adopt supplier engagement strategies, which can help businesses build stronger supplier relationships, reduce risks, and improve working conditions across supply chains.
When combined with proactive risk management and legally binding requirements, such practices enable the fashion sector to move beyond reactive measures towards real accountability, ensuring transparency, safeguarding workers, and preventing the recurrence of exploitative practices across both global and European supply chains.
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Sarah Blank
Senior Consultant