LVMH Italian branch placed under court administration over labour exploitation

Italian authorities have placed a Dior subsidiary under judicial supervision due to allegations of labour exploitation. Investigations into working conditions in the Italian fashion industry are also targeting Armani and a dozen other fashion houses.

“Made in Italy”

More than half (50-55%) of the world’s luxury goods are produced by small factories in Italy, mainly in Tuscany or around Milan. But in practice, things are very different from the idyllic image this description evokes. They are often companies set up by Chinese owners, who employ (illegal) migrants in sometimes appalling conditions, as the Italian inspectors also discovered.

A branch of LVMH, responsible for producing Dior handbags, has recently been placed under administration by a court in Milan. At four of the brand’s subcontractors, it was found that some workers (nine out of 32 of whom did not have valid residence permits) had to sleep on site to keep the workshops running 24 hours a day, including nights and public holidays. All this in poor health and hygiene conditions. As a result, suppliers could charge 53 euros for a handbag sold by Dior for 2,600 euros.

Structural abuses

Earlier this year, the Italian court also placed one of Giorgio Armani’s subsidiaries under judicial supervision. This measure allows companies to put their affairs in order without having to cease trading. If the company can prove conclusively that it is compliant, the court will lift the monitoring. However, LVMH and Armani will not be on trial; only the suppliers in question will be facing exploitation charges.

Meanwhile, the Italian investigation is continuing into a dozen other players in the fashion industry. To avoid compromising the investigation, no names are being mentioned. After all, the abuses are ‘not something sporadic that concerns single production lots, but a generalised and consolidated manufacturing method’, according to a document that Reuters has been able to consult.