Major street fashion brands are paying factories in Bangladesh less than the cost of making their clothes, researchers say.
A survey of 1,000 factories showed that many were paying the same prices as before the pandemic two years ago – despite soaring material costs.
One in five said they were struggling to pay Bangladesh’s minimum wage of £2.30 a day.
Aberdeen University’s Business School carried out the research alongside justice charity Transform Trade.
The report covered the period from March 2020 to December 2021.
It found that 90% of larger brands purchasing from four or more factories were reported as unfair purchasing practices.
These practices included cancellations, non-payments, late payments and discount requests with side effects including forced overtime and harassment.
Several retailers denied the claims made in the report.
The project was led by Muhammad Azizul Islam, professor of sustainability accounting and transparency at Aberdeen University.
He said: “Two years on from the start of the pandemic, Bangladeshi garment workers have not been paid a living wage, with one in five manufacturers struggling to pay the minimum wage, while many fashion brands that use Bangladeshi labor have increased their profits.
“Rapidly rising inflation rates around the world have probably made it worse.”
He said larger brands buying from many factories are more likely than smaller brands to engage in unfair purchasing practices, according to suppliers.
The garment industry accounts for 85% of Bangladesh’s export earnings, with more than 12 million Bangladeshis dependent on the industry.
The study also found that after the pandemic, factories employed only 75% of the workers they had before, suggesting that up to 900,000 may have lost their jobs.
Professor Islam spent 17 years researching the lives of workers in Bangladeshi fashion factories. He grew up in the city of Dhaka surrounded by them.
He hopes policy makers in the UK listen to his findings.
Professor Islam added: “Retailers say in their reports that they have a commitment to workers and have made progress, but transparency is a big issue in the industry and it is difficult to determine whether certain products are produced ethically.”
Fiona Gooch of Transform Trade called the research “an awakening”.
She told the BBC: “When retailers mistreat suppliers by breaking pre-agreed terms, workers suffer.
“If the merchant doesn’t pay the agreed amount or is late, the supplier has to cut costs in other ways, and this is often passed on to its workers, who have the least power in the supply chain.
“We need a fashion watchdog to regulate UK clothing retailers, just like the existing supermarket watchdog.”
In July last year, the Fashion Supply Chain Bill was introduced into Parliament with cross-party support.
It proposed the establishment of a watchdog to oversee fair buying between UK clothing retailers and suppliers worldwide.