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Cases, critical thinking and questions

Ethics (unit 2)

According to a newspaper report from a well-respected (factual and accurate) newspaper, factory
workers at ABC Knitwear make clothes (in a UK factory) destined for retail fashion chain Primax (a low
cost clothing chain), work up to 12 hours a day for £4/hour in the UK, where the legal minimum wage is
£9/hour.

Supplier ABC Knitwear (ABC) was also found, in the report, to employ illegal workers in poor conditions
at its UK factory. ABC denied all the claims presented in the newspaper article, while Primax says it is
"extremely concerned" and is carrying out its own investigation.

Primax is known for its cheap fashion clothing and went against the trend on Britain's high street last
year to make a £233m profit. On its website, it claims to deliver fast fashion without breaking its ethical
code or exploiting its workers

In a statement, Primax said: "The apparent practices shown in the newspaper article are a matter of
great concern. We are seriously concerned about the business practice at ABC Knitwear and we pride
ourselves on ensuring our suppliers conform to the highest standards".

ABC Knitwear Ltd, based in a former Victorian mill in Manchester (UK), supplies clothing to several high
street fashion chains and it is Primax’s biggest UK supplier, handling hundreds of thousands of garments
for the company each year.

The newspaper reporter, who is a non-UK national, applied for a job with ABC Knitwear company and
was not asked about her right to work. She was not even asked her name before being given a job at
ABC Knitwear.

While working, she discovered an intense work culture where employees admitted to being under
pressure to meet orders, two-thirds of them for Primax. Many in her work section were working 12-hour
days, seven days a week, at much below the minimum wage. In addition, she also found out there was
no heating in that section of the factory, and staff worked in their coats in bitterly cold temperatures. An
unrepaired toilet meant workers of both sexes were sharing one set of toilets. One Chinese man, working
alongside the reporter, said he was an asylum seeker and had been working illegally in the country for
three years, another said their visa had expired eight years ago. Workers received their wages as cash in
hand without any paperwork.

Furthermore, it has been reported that ABC Knitwear uses other sub-contractors (to give work to
smaller factories), where some of the conditions are even worse. It is important to note that Primax’s
own code of conduct promises workers a living wage (5% above the minimum wage) and does not allow
Primax’s sub-contractors to use their own subcontractors.

Questions to discuss:
1. What should the CEO (Chief Executive Officer) of Primax do?
Stop the collaboration with ABC
Clearly investigation based on the contract and review their ethical code
Contact more than one supplier.

2. What should an ethical code (Code of Conduct) in the clothing industry include to influence
policies of a direct sub-contractor?
Working time
Ensuring the working environment, equalize employees’s rights
No illegal recruitment
Transparent in labor contracts with employees

3. Under what conditions is it ethically defensible to outsource production to a developing country

where labour costs are lower and workers’ rights are weaker than in the firm’s home country?

4. In an article in NYT in 1970 Milton Friedman stated ‘The social responsibility of business is to
increase profits’. Do you agree?
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5. What is the responsibility of a company to its suppliers and stakeholders when comparing CSR,
sustainability and environmental practices?