In the summer of 2015, Patagonia made an unusual announcement: the crunchy outerwear brand, known for its commitment to ethical and environmentally responsible production, had found multiple instances of labour exploitation at its suppliers in Taiwan — an important sourcing hub for the technical fabrics and materials used in the brand’s gear.

The company had uncovered a systemic issue. Labour shortages mean factories in Taiwan rely heavily on migrant labour, routinely outsourcing recruitment to brokers. These agents were charging workers in countries like Vietnam, Thailand and the Philippines thousands of dollars just to land a job.

The excessive, often illegally high fees resulted in “a form of indentured servitude that could also qualify, less politely, as modern-day slavery,” Patagonia said in its declaration. The company hadn’t picked up on the issue sooner because its audits hadn’t previously extended beyond the factories manufacturing its products to cover their suppliers; mills making fabric and trims, like those in Taiwan.

That level of supply-chain scrutiny still isn’t common practice. The point of Patagonia’s disclosure was to raise awareness of the problem, showcase its efforts to tackle it and encourage other fashion labels to join in (as a lone advocate, the brand’s leverage to drive change was limited).

The company extended its monitoring procedures, introduced new training programmes for suppliers, updated its standards and guidelines for sourcing partners and set a target to eliminate recruitment fees by 2020. Several other brands, including Lululemon and Nike, joined the effort. Others, like Adidas and Puma set similar goals of their own.

But untangling embedded systems of exploitation buried deep in complex and opaque supply chains remains fiendishly difficult. A decade since Patagonia first highlighted the risks of exploitation linked to high recruitment fees in Taiwan’s textile sector, the problem persists, according to an investigation published Tuesday by Transparentem, a nonprofit that works to uncover and reform abuses in global supply chains.

Pay to Play

According to best practice labour standards published by the International Labour Organisation, workers shouldn’t have to pay any fees or related costs to land a job. To cover costs, workers often have to take out hefty loans that leave them vulnerable to exploitation. Roughly a fifth of forced labour cases around the world are caused by debt bondage, often linked to recruitment fees, according to the ILO.

In Taiwan, industry watchdogs say the issue is pervasive — the result of limited regulatory protections and a heavy reliance on migrant labour, especially for low-paying industrial jobs like textile manufacturing.

“The placement fee in Taiwan is notorious,” said Jing Ru Wu, a researcher at the Taiwan International Workers’ Association, a Taiwanese NGO focused on migrant workers’ rights.

Transparentem’s report found migrant workers at textile mills in the country had paid labour brokers as much as $6,000 to secure work — among the highest recruitment fees the nonprofit has uncovered over the course of multiple investigations in several countries. The investigation covered nine suppliers with links to nearly 50 global brands, including major sportswear companies with commitments to end the practice.

Some workers reported paying additional deposits of between $500 and $1,000, down payments interviewees described as a means of preventing their “escape.” The payments didn’t stop after landing a contract, either. Workers said they were required to pay agents monthly service fees of $50 to $60, the equivalent of two full month’s wages over the course of a three-year contract. At some factories, workers said their movements were restricted and their passports taken away. Complaints about poor labour conditions or efforts to organise were met with threats of repatriation, they said.

There were also signs that the years of work by Patagonia and others had made a real difference. Most of the suppliers linked to Patagonia, Nike, Lululemon, Adidas and Puma had introduced “no fee” policies since 2020, seeming to largely end the practice for new hires, the investigation found.

But there still appear to be gaps in the system. Older employees at these factories said they had not been reimbursed for past expenses. Workers at one factory with links to all five brands said they still faced recruitment fees even after a commitment to end them was introduced. The sportswear giants also all still had connections to suppliers with no policies on recruitment fees in place at all.

“It’s hard to make systemic changes on our own,” said Wendy Savage, Patagonia’s senior director of social impact and transparency, emphasising how challenging it is to drive change across the industry when only a small number of brands have been focused on the issue. Progress has been won through painstaking and time-consuming engagement, one factory at a time. The brand still hasn’t expanded its efforts beyond its fabric mills to dye houses and yarn suppliers deeper in its supply chain. “There’s no perfect factory; there’s no perfect brand … Every single issue is so intricate and difficult to resolve,” Savage said.

Nike, Lululemon, Adidas and Puma said they are committed to ensuring ethical labour practices in their supply chains and that they are working with sourcing partners to address the problems highlighted by Transparentem. The investigation has also galvanised broader efforts to address the challenges at an industry level, led by the American Apparel and Footwear Association and Fair Labour Association.

“I don’t think these issues have ever gotten this level of attention… with so many more brands at the table, speaking with one voice, hopefully it will make a difference,” said Savage.

Barriers to Change

To date, brands pushing to end recruitment fees in Taiwan have run up against a series of economic, political and structural challenges.

To begin with, the practice is not only common in Taiwan, but largely legal. While regulatory protections for migrant workers in the country have increased in recent years, Taiwanese law doesn’t prohibit recruitment fees charged abroad or monthly recurring service fees.

Despite the well-established risks, these issues remain a blind spot for many brands and fabric producers.

That’s largely because the textile mills that make Taiwan an important part of fashion’s global supply chain are typically second-tier suppliers — factories brands don’t contract with directly. Though a handful of companies like Patagonia have spent years expanding supply chain engagement and monitoring beyond manufacturing partners, that still isn’t routine. And even best-practice systems are riddled with holes big enough that they fail to consistently catch serious labour abuses, industry watchdogs say.

The arms-length relationship has also made life harder for the handful of brands that have been trying to push for change in Taiwan. Limited industry engagement means suppliers are often unfamiliar with brands’ expectations for ethical sourcing. Individual brands have limited influence in factories where their orders are often only a small proportion of the overall business. For instance, in most of the mills Patagonia works with, the company makes up less than five percent of production.

“We’re asking [suppliers] to do something that goes way above and beyond their country’s legal requirements … when they have 10 other brands that are bigger than us and that are not asking for the same,” said Savage. “We’re willing to pay for a responsible product, but we are a speck in their production.”

Taiwan’s textile industry association said the sector operates within the law and has made strides to meet additional requirements included in client brands’ supplier codes of conduct. Some large companies have begun recruiting migrant workers directly to avoid risks associated with working with labour brokers, though this is costly and complex, especially for smaller businesses.

“We need to let more and more mills understand there are principles that need to be followed, but clients need to consider affordability as well,” said Justin Huang, president of the Taiwan Textile Federation.

Action Plans

Transparentem first alerted brands to the findings published this week last March. Many have joined forces to address the problems at shared suppliers. The AAFA helped coordinate working groups, which commissioned their own third-party audits to probe working conditions. The assessments largely confirmed the issues highlighted in Transparentem’s report, and in some cases uncovered additional problems.

Some brands showed particular leadership. Puma funded audits at four of the factories on its own. The sportswear brand was one of several, including Adidas, Nike and Patagonia, that took the lead on addressing problems at multiple factories. Zip maker YKK is working to negotiate a reimbursement plan at one of its suppliers for all current employees. Initial estimates of the pay out amount to around $400,000, over $6,000 per worker, according to information shared with Transparentem. YKK said it was verifying the details and reviewing the possibility of supporting repayment.

Negotiations over compensation plans at other suppliers have moved more slowly. “There’s a lack of sufficient infrastructure for this type of collaborative response when problems are identified at tier two,” said Karen Stauss, Transparentem’s director of strategic engagement. “It’s very problematic that it’s taken this long.”

Action plans designed to address the problems identified by Transparentem and subsequent audits are expected to be implemented and completed in between a month and a year, depending on the size of the supplier and issues identified, the AAFA said in a statement published on its website last week.

Efforts to push more structural change are also underway. The AAFA and FLA coordinated more than 50 brands to write to the Taiwanese government in September, asking for improvements to the country’s protections for migrant workers. Several joined the effort, even though no suppliers they worked with had been captured by Transparentem’s investigation.

“The report really helped galvanise support,” said Shelly Heald Han, executive vice president and chief of staff at the FLA. “These companies’ recognise they’re on the line too; they may not be named in Transparentem’s report but their supply chains are at risk.”

Late last year, the trade groups agreed to work with the Taiwan Textile Federation to define metrics for responsible recruitment and employment of migrant workers by textile mills. The organisations also plan to expand their advocacy to Vietnam, Thailand, Indonesia and the Philippines, the countries where most migrant workers in Taiwan’s textile industry are recruited from, according to Han.

“We need legal systems in place that prohibit payment of fees, not only in receiving countries but in sending countries,” she said. “We need to stop the practice of charging the lowest paid workers the highest fees.”