Italy’s luxury brands shaken by sweatshop probes

A person walks by a Dior store Tuesday, April 8, 2025, in Las Vegas. (AP Photo/John Locher)

A series of investigations into exploitative work conditions within fashion subcontractors has roiled Italy’s luxury industry, with the government decrying attacks on “Made in Italy”.

Five fashion brands have been put under court administration since 2024 following probes by Milan prosecutors that uncovered worker abuses and a lack of oversight into the supply chains of some of Italy’s most respected brands.

On Wednesday, a Milan court granted lawyers for luxury leather company Tod’s more time to complete what lawyers called the “evaluation and strengthening of the system of controls”, postponing a hearing until February 23.

Prosecutors are seeking to impose a temporary advertising ban and outside administrators in light of what they have called “malicious” actions by Tod’s in overlooking abuses, such as workers paid as little as 2.75 euros per hour.

In a statement, Tod’s said it was confident in the outcome of the probe and said defending workers’ dignity was “one of our family’s most important values and one of the group’s founding principles”.

The company has terminated contracts with the subcontractors in question, lawyers said in a court document viewed by AFP.

The investigations led by prosecutor Paolo Storari have cast a spotlight on the dark underside of the luxury industry.

At issue is the near-ubiquitous practice of brands subcontracting work to suppliers, who in turn contract to others, amid ever-tighter margins and scant oversight of labour conditions.

To date, investigations have targeted Loro Piana, Dior’s Italian subsidiary Manufactures Dior, Giorgio Armani Operations and Alviero Martini -- and prosecutors have suggested more probes could come.

Italy’s government has gone on the offensive, with Industry Minister Adolfo Urso saying the reputation of Italian brands was “under attack”.

It has proposed a certificate for luxury companies to show they are in compliance with current law -- a measure critics have called toothless, in part because it is voluntary and would unduly shield brands from liability.

“We are taking concrete measures to firmly defend Italian fashion, to protect its reputation and the values that have made it synonymous with beauty, quality and authenticity,” Urso said in October.

‘Chain of exploitation’

Prosecutors last month said Tod’s -- whose leather loafers can reach over $1,000 -- and three of its executives had “full awareness” of the exploitation of Chinese-run subcontractors in Italy but failed to set up systems to prevent it.

Tod’s allegedly ignored its own audits revealing working hours and wage violations, breaches of safety measures and what prosecutors called “degrading” sleeping areas within the factory.

Under Italian law, companies can be held responsible for offences committed by representatives -- such as approved suppliers -- acting in their interest.

Advocates for fashion industry workers have for decades pointed to widespread abuses in the supply chain.

Suppliers “are at the mercy of big brands that impose commercial conditions, starting with prices that are too low to cover all costs”, said Deborah Lucchetti, national coordinator of the Clean Clothes Campaign in Italy.

That fuels a system in which first-tier suppliers turn to subcontractors, imposing ever more stringent terms, which leads to labour abuses, most often against migrants.

“It’s a chain of exploitation,” she told AFP.

Italy’s fashion suppliers are predominately small- and medium-sized companies, tens of thousands of which have shuttered in recent years, according to industry associations, amid a luxury downturn and higher production costs.

Unable to invest, due to erratic work from the commissioning brands and hyper-thin margins, the suppliers stay small. When a big order arrives, they turn to subcontractors for quick help, a system that “effectively pushes players in the supply chain to engage in illegal conduct”, said Lucchetti.

Prosecutors said both Tod’s and Loro Piana could not have been unaware that one of their main suppliers was externalising its production -- given that it did not have any production equipment, such as sewing machines, in its facility.

The companies targeted thus far have responded by cutting ties with suppliers, condemning their actions, or blaming them for concealing abuses.

Reputational risk

Amid the reputational risk, some brands have sought to reassure consumers.

Last week, one of Italy’s top luxury brands, Prada, invited journalists to its Scandicci factory outside Florence, showing the step-by-step transformation of supple leather into luxury handbags.

Asked about the investigations, Prada’s Chief Marketing Officer Lorenzo Bertelli said the group had always taken responsibility for its production, noting Prada owns 25 of its own factories, 23 in Italy.

Yet he called it a “constant battle” to keep the supply chain clean, adding: “We must constantly carry out inspections or checks on suppliers, this is the daily work we do.”