Activists ask Boohoo about living wage for Leicester garment workers | Boohoo

Boohoo shareholders have rebelled against the high salaries of the fast fashion group’s executives, accusing it of paying “very low” prices to the factories producing its clothes.

Just over a third of shareholders who voted at the group’s annual meeting on Friday voted against the group’s pay report, which found chief executive John Lyttle received nearly 1.4 million pounds last year after receiving a generous bonus despite being absent. targets.

The company handed Lyttle a bonus of £712,631, three times what he would have received based on stated targets, as it said the lower payout “would not reflect the huge progress made by management over the course of the year”. Co-founders Mahmud Kamani and Carol Kane did not take any bonuses for the year, however.

A quarter of shareholders also voted against a new long-term incentive program for executives under which they could earn a bonus of up to double their salary if they meet financial and business goals, including ethical and sustainability measures.

The scheme was introduced after it became clear that an earlier scheme, which would have awarded up to £150m to executives including Kamani and Kane, if the group’s market value reached just over £7.5bn by June 2023 was probably unachievable. Boohoo’s market value is currently below £1bn after a major meltdown over the past year.

The revolt over executive pay came after campaigners said workers at Leicester factories that supply Boohoo could be owed up to £125million in underpaid wages. Labor Behind the Label and ShareAction estimated the underpayment based on the fact that some of the retailer’s suppliers previously paid workers below minimum wage.

Activists at the shareholder meeting asked if Boohoo would ensure that workers were fully reimbursed “for the underpayment of minimum wage which has underpinned much of its margin for several years”.

Campaigners will also seek clarification on what the Manchester-based company is doing to “ensure that its prices will allow the payment of a living wage to workers in the UK, and will be sufficient to enable suppliers to operate legally, to make a profit and to invest”. in their factories in order to create a sustainable industry”.

Boohoo, which this week revealed an 8% drop in revenue in the three months to May, held its annual shareholder meeting at a new showcase factory in Leicester to highlight efforts to reform its supply chain in UK. In 2020, evidence of malpractice emerged after an investigation by an undercover reporter.

The meeting came after a new investigation found poor working conditions persist at Leicester’s garment factories nearly two years on.

More than half of the garment workers involved in the study, according to The University of Nottingham’s Rights Lab and De Montfort University said they were paid below minimum wage and received no holiday pay.

A Boohoo Group spokesperson said: “We strongly reject any inference that people in our supply chain are paid less than the national minimum wage, and we do not recognize the [historic] figures quoted by Labor Behind the Label referring to the shortfall. When we asked Labor Behind the Label for evidence to support these claims, they did not provide it to us.

The company said it had donated £1.1million to set up a new independent charity to defend workers’ rights in Leicester. It also completed a ‘change agenda’ overhaul of its supply chain practices in February, with progress signed by retired judge Sir Brian Leveson and consultancy KPMG.

“The program included a significant investment in our compliance teams and a tightening of our code of conduct which helps to ensure that the people who make our garments have their workplace rights protected,” the spokesperson said.

“We work collaboratively with our suppliers, sharing best practices and insights so they can grow their businesses and invest for the long term. Our new manufacturing center of excellence in Leicester is a visible demonstration of our commitment to the city.

At a showcase for Leicester suppliers on Thursday, many said they felt the recent survey was unfair and did not reflect a changing industry.

However, several suppliers said brands, including Boohoo, continue to try to reduce order payments, despite rising costs for factories such as soaring energy bills, rising wages and costs. higher fabric imports.

Brands and suppliers at the showcase said the cost of production had risen by at least 15%, but some factory owners said they had been unable to raise prices by the same amount.

A supplier said it lost orders representing 30% of its production in weeks after online fashion site Missguided collapsed and orders were withdrawn from other brands that would not accept the prices offered.

One supplier said: “Boohoo has changed in many ways and been proactive… There’s a lot more paperwork involved, but they still want low prices and that’s impossible to achieve with the minimum wage increase.

He said many brands had failed to award contracts to UK manufacturers agreeing to buy a number of garments. “They want to be [as] flexible as possible, but that does not help the supply chain. They do [contracts] abroad but not here,” he said.

Another supplier said Boohoo’s prices were low but they paid on time and tried to support an “ethical stance”.

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Shaista Jakhura of local campaign group Hope for Justice said brands needed to take more responsibility for paying a fair price.

“How can we expect exploitation to be eliminated if there are no good purchasing practices,” she said. “If brands aren’t paying properly and treating manufacturers fairly, what can you expect?”

She said some manufacturers who lost out when Missguided collapsed, or because Boohoo reduced its number of suppliers in Leicester, chose to work for cheap ‘cash and carry’ brands that did not monitor their practices. work leading to “uncontrolled control”. exploitation”.

However, a brand manager at the supplier event said more brands are now considering sourcing from Leicester as there is a wider range of products on offer, improved ethical standards and lead time benefits. fast turnarounds and a reduced carbon footprint.

“The UK can be a fantastic place to source produce if you work with the right people,” said the executive. “It’s better for the UK economy and the environment because you’re not shipping stuff around the world.”

Michael A. Bynum