Recent investigations led by Italian prosecutors have placed luxury fashion giant Dior under judicial administration for one year following revelations of severe worker exploitation by their suppliers in Milan, Italy.
According to reports, the Italian police raided several subcontractors for Dior, finding that the company paid only $57 to produce handbags that retail for $2,780, as reported by Business Insider. This discovery has sparked significant backlash against Dior and other luxury brands for their failure to oversee supply chain practices.
The probe revealed that Chinese-owned subcontractors, hired by Dior, were exploiting workers and ignoring labor laws. Prosecutors found that many workers were undocumented immigrants living in dire conditions. As per reports, some were even forced to sleep in factories to maintain round-the-clock production. The court documents highlighted that these practices were not isolated incidents but part of a “generalized and consolidated manufacturing method” aimed at maximizing profits.
Mrinalini Jain, Group Chief Development Officer of Banijay Asia & EndemolShine India, criticized the companies involved, stating, “Business owners unfortunately don’t normally question why certain goods or services cost so little. They simply seize the chance to maximise profit. You’d think ultra-low prices would ring alarm bells.”
The court also uncovered severe safety violations, including the removal of safety devices from manufacturing equipment to increase production speed. Data showed continuous production cycles, even during holidays, with some workers living illegally in Italy without contracts.
Dior, a subsidiary of the French conglomerate LVMH, was not found criminally responsible but was deemed negligent for failing to check the working conditions of their subcontractors. The Milan court’s president, Fabio Roia, emphasized the need for better oversight in the luxury goods industry, stating, “If we managed to eradicate labour exploitation, profits would diminish, but there could be legal competition among businesses.”
The investigation has led to increased scrutiny of the supply chains of several luxury brands. Italy, which accounts for over 50% of global luxury goods production, faces mounting pressure to ensure ethical sourcing and protect workers’ rights.
LVMH, known for its strong Environmental, Social, and Governance (ESG) reputation, now faces the challenge of addressing these human rights abuses. Despite their high rankings for sustainability efforts, the company’s commitment to human rights is being called into question.
In response to these findings, the court has proposed guidelines to Italy’s Chamber of Fashion and other associations to improve supply chain control. The goal is to eradicate labor exploitation while maintaining fair competition within the industry.
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