Unveiling Luxury: The Hidden Costs Behind High-End Fashion

Luxury fashion is synonymous with exclusivity, craftsmanship, and prestige—but beneath the polished surface lies a hidden reality of exploitation and questionable labor practices. While brands like Prada and Dior command staggering price tags for their products, the true cost is often borne by the workers at the bottom of the supply chain. Migrant laborers in Italy’s fashion hubs endure grueling hours, low wages, and poor working conditions to produce the handbags and garments that define luxury. Recent legal investigations have exposed systemic abuse within this network, revealing that the pursuit of profit has come at the expense of basic labor rights. This article examines how the luxury industry's opaque production model enables these practices and the growing pressure for greater accountability.

What Lies Beneath the Label?

The demand for exclusive, high-end products has propelled LVMH into one of Europe’s largest companies, with a market value of €308.33 billion ($335.71 billion) as of today. This rapid expansion of the luxury sector has been fueled by a complex and opaque production network, where brands outsource manufacturing to a web of contractors and subcontractors to scale production quickly when demand spikes and downsize just as rapidly when it drops.

In Italy’s textile hub of Prato, Abbas and Arslan Muhammad—both Pakistani migrants—shared their experiences working under harsh conditions in workshops supplying luxury brands. Abbas, who arrived in Italy in 2015 through the Balkans without a work permit, described working 14-hour shifts dyeing leather for bags and accessories at a Chinese-run workshop near Florence. He worked alongside around 50 Pakistani, Afghan, and Chinese migrants, earning between €600 and €700 per month from a part-time contract, with an additional €400 to €500 paid off the books for extra hours. Abbas recounted severe physical strain, including chronic leg pain that left him unable to sleep or use the restroom comfortably. His health issues eventually led to his dismissal. In 2019, he found work in Prato under similar conditions until 2022, when with the help of the SUDD Cobas union, he secured a formal contract paying €1,400 per month.

Arslan, another Pakistani migrant who arrived in Italy in 2017, reported working over 12-hour days, six days a week, leaving him with no time to handle basic personal tasks like grocery shopping or laundry. Initially working without a contract, he later secured a part-time contract with Z Production before obtaining a full contract in 2022 with union support.

Exploitation within the Supply Chain

Court documents from Milan have exposed the structural issues within luxury supply chains. Brands often outsource production to a lead subcontractor, which in turn delegates the work to smaller workshops with lower costs and minimal oversight. Prosecutors in Milan have described these practices as part of a "wider business model" designed to maximize profit through labor exploitation.

Italy produces between 50% and 55% of the world’s luxury goods, according to Bain & Company. However, monitoring working conditions across this vast network is nearly impossible. Carlo Capasa, chairman of the National Fashion Chamber, highlighted the scale of the problem: "An average brand has 7,000 suppliers. If each supplier has two subcontractors, that’s 21,000 potential production sites. Conducting that many audits annually is unfeasible, making it inevitable that some violations will go undetected."

Legal Consequences and Industry Response

Investigations into Dior’s supply chain revealed that Pelletteria Elisabetta Yang Srl, a contractor assembling Dior handbags, paid workers significantly below legal standards. The company charged Dior only €53 per bag despite the retail price exceeding €2,600. Dior has since severed ties with the contractor.

Some suppliers have started shifting production to regions like Veneto, Campania, and Apulia to avoid increased scrutiny in Milan. Industry experts warn that when production costs are unsustainably low, the likelihood of worker exploitation rises.

Antonio Franceschini from CNA Federmoda, representing Italian fashion artisans, noted that adhering to labor laws and environmental regulations increases production costs. "The price of labor cannot drop below a certain threshold without sacrificing workers' rights," he stated.

Prada's labor practices have been under the spotlight as well, particularly concerning its supply chain operations. These workers reported excessive working hours, lack of proper contracts, and inadequate compensation.

Conclusion

The luxury sector's reliance on complex, multi-tiered supply chains has created conditions where exploitation and poor working standards can thrive. While high-profile brands like Prada and Dior face increasing pressure to address these issues, the structural nature of the industry’s business model remains unchanged. Legal actions and increased oversight may force greater accountability, but until the economic incentives driving these practices are reformed, meaningful change will remain elusive.