--- title: "Rags and riches — how SA retail giants profit off sweatshops" description: "Court documents and government raids have exposed the ‘deplorable’ reality of our textile factories: Southeast Asian sweatshops might have the world’s attention, but buying local can be equally exploitative." type: "NewsArticle" publisher: "Daily Maverick" site: "https://www.dailymaverick.co.za" section: "Threadbare" author: "Holly Munks" author_url: "https://www.dailymaverick.co.za/author/holly-munks/" canonical_url: "https://www.dailymaverick.co.za/article/2026-11-08-rags-and-riches-how-sa-retail-giants-profit-off-sweatshops/" published: "2026-11-08T19:44:18" lang: "en-ZA" word_count: 1892 --- # Rags and riches — how SA retail giants profit off sweatshops > Court documents and government raids have exposed the ‘deplorable’ reality of our textile factories: Southeast Asian sweatshops might have the world’s attention, but buying local can be equally exploitative. By Holly Munks · Published 8 November 2026, 21:44 SAST ## Key points - South Africa’s clothing sweatshops are not a relic of the past: raids and court documents reveal unsafe housing, poverty wages and workers treated with shocking disregard. - In Newcastle, only 8% of 70 inspected factories complied with labour laws in 2022. Fires, raids and repeated warnings have done little to shift the needle. - Alleged sham cooperatives and middlemen supplying major retailers have exposed a murky supply chain, while government enforcement sends mixed messages and undocumented workers bear the brunt. - Retailers and government benefit from “local” manufacturing while workers – mostly women – carry the cost. ## Content In 2001, [Nokuthula Hlatshwayo](https://mg.co.za/news/south-africa/2001-12-02-kzn-sweatshop-closed-after-twins-death/#google_vignette) gave birth to twins inside a Newcastle clothing factory, where she and other staff were allegedly locked overnight. One of the twins died at birth, the other on the way to the hospital the next morning. The South African Clothing and Textiles Union (Sactwu) condemned the tragedy, but a quarter of a century later, the union’s deputy general secretary, Vilina Membinkosi, mentioned it not to highlight how far things have come, but to remind us the South African sweatshop is not a new phenomenon. [For context What the Newcastle sweatshop crisis reveals about manufacturing in SA March 26, 2026 ![Image](https://cdn.dailymaverick.co.za/authors/1004812731486242759.jpg)](https://www.dailymaverick.co.za/opinionista/2026-03-26-what-the-newcastle-sweatshop-crisis-reveals-about-manufacturing-in-sa/) Hlatshwayo’s case illustrates a pattern of “modern slavery” prevalent in the non-metro clothing manufacturing hubs of KwaZulu-Natal. According to Membinkosi, the problem specifically plagues former “homelands”– as designated under apartheid law – where it has been more difficult for trade unions to gain traction. ### **The needle is not moving** Fast-forward to 2022, and a Department of Employment and Labour (DEL) [inspection](https://www.labour.gov.za/Media-Desk/Media-Statements/Pages/Notorious-clothing-and-textile-factories-in-Newcastle-shows-a-paltry-eight-percent-compliance-rate-with-labour-laws.aspx) found that only 8% of 70 Newcastle textile factories, employing about 30,500 people, complied with labour laws. In 2023, four workers were [killed](https://www.citizen.co.za/northern-natal-news/news-headlines/2023/07/05/factory-community-grapple-with-the-aftermath-of-the-buy-and-pay-fire/) when the Newcastle factory where they also lived burnt down in an electrical fire. A year later, Labour Minister Thulas Nxesi [visited](https://www.gov.za/news/media-statements/minister-thulas-nxesi-makes-surprise-visit-textile-and-clothing-company) the same company again, “only to find the same appalling conditions prevailing”. Workers, who were paid less than the minimum wage, were “sleeping in a single poorly ventilated room” without an area to eat. Their bathrooms had no soap or toilet paper. ![South Africa’s Minister of Employment and Labour Thulas Nxesi. On 15 April 2025 his department gazetted the Employment Equity Amendment Act, which contains new sectoral equity targets for employers. (Photo: Deaan Vivier / Beeld / Gallo Images)](https://cdn.dailymaverick.co.za/i/ysq8U7KDzD56IaNI_UewoDOzw-s=/200x100/smart/filters:strip_exif\(\)/file/dailymaverick/wp-content/uploads/2025/04/ED_457740.jpg) *Thulas Nxesi served as minister of employment and labour from May 2019 to June 2024. (Photo: Deaan Vivier / Beeld / Gallo Images)* In February 2026, the DEL conducted another raid and served a prohibition notice to one company for compliance failures, saying: > “The workers’ quarters were a fatal hazard waiting to happen.” The DEL also posted photos from inside the factory showing clothing with labels from Jet, a brand owned by The Foschini Group. ![Shoppers walk past the entrance of a Jet clothing store, operated by Edcon Holdings Ltd., in Johannesburg, South Africa, on Monday, Feb. 4, 2019. (Photo: Waldo Swiegers/Bloomberg via Getty Images)](https://cdn.dailymaverick.co.za/i/pvvp1MHW7pfzfwsVuMntyu_zluk=/200x100/smart/filters:strip_exif\(\)/file/dailymaverick/wp-content/uploads/2021/10/BM-Ray-TFG-option-2.jpg) *A Jet store in Johannesburg. (Photo: Waldo Swiegers/Bloomberg via Getty Images)* Some suppliers change names after receiving compliance orders, making enforcement more difficult. “That’s the game that they’re playing,” said Membinkosi. Also in February, Chantal Naidoo, the general secretary of the National Bargaining Council for the Clothing Manufacturing Industry (NBC), filed an affidavit alleging horrendous conditions at factories supplying the likes of Pep and Mr Price. [Media: "Chart: Not one of six inspected Newcastle factories complied with UIF"](https://charts.dailymaverick.co.za/chart/e14faade62915afc9fc0527a) GroundUp’s [extensive](https://groundup.org.za/article/the-clothing-industry-is-being-hammered-from-all-sides/) reporting on this is more than worth your time. In short, Naidoo called out unacceptable [conditions](https://groundup.org.za/article/kzn-sweatshops-taken-to-court/), “akin to an overcrowded prison”, coupled with underpayment. The NBC has honed in on “design houses”, specifically [Drake Clothing](https://groundup.org.za/article/drake-clothing-implicated-in-sweatshop-scandal-cries-foul/), and in May, [Gemelli](https://groundup.org.za/article/action-taken-against-another-clothing-manufacturer/). These middlemen source garments from the allegedly exploitative factories to supply big retailers. At one Drake-linked factory, the NBC [found](https://groundup.org.za/article/kzn-sweatshops-taken-to-court/) workers were paid between R90 and R120 a day. At another, workers who missed production targets received R70 daily and at another, worked seven days a week for a weekly wage of R350 to R700. ### **Uncooperative co-ops** A growing trend is “bogus cooperatives”, which the NBC argues have become a means of dodging regulations. “The cooperatives Drake Clothing has trading relationships with are not operating as genuine cooperatives but as sham fronts. It is inconceivable that Drake is unaware of this,” said Naidoo. GroundUp quoted Michael Maeso, the attorney representing Drake and Gemelli, as saying: “The law allows co-ops to operate in South Africa independently of the bargaining council’s jurisdiction.” Maeso told Daily Maverick: “If the bargaining council believes they have a case against Gemelli or any of the entities that they’ve identified, then they need to enforce that through the Labour Relations Act – that’s the proper remedy. > “Gemelli has been in the business for 40 years and has an immediate interest in maintaining the clothing industry in KZN, and its attempts to engage have been blocked.” Chothia Attorneys, which represents Newcastle factory owners, acknowledged that some of their clients operated as co-ops, but stressed that this “is a legitimate business model and is by no means intended to avoid labour legislation or compliance obligations”. The NBC made a bold move by seeking Drake and Gemelli’s liquidation – the defendants’ lawyers say they should not be shut down if they are solvent. Arguably, the NBC chose this route as a wake-up call. Unfortunately, we could not query their strategy directly, as they did not respond to phone calls and emails, but NBC’s legal counsel Richard Erasmus told us: “There will be no quarter given in order to ensure that there is full compliance with the bargaining council’s statutory mandate.” [Read more SA’s clothing and textile industry caught between global trade, local development July 9, 2025 ![Image](https://cdn.dailymaverick.co.za/i/77qepAUqmcRtITmP4JIvlH05VgQ=/450x0/smart/file/dailymaverick/wp-content/uploads/2025/07/Image-2-1.jpg)](https://www.dailymaverick.co.za/article/2025-07-09-sas-clothing-and-textile-industry-caught-between-global-trade-and-local-development/) ### **Foreign rhetoric** Running in the background is the DEL’s consistent emphasis on the fact that many undocumented foreigners work in these factories. During Nxesi’s 2024 factory inspection, according to the DEL, “Some of the workers had to be pulled out of heaps of clothing offcuts as they hid, fearing arrest. Realising this, Nxesi said: ‘We do not fight workers, we want employers to respect our laws.’” Still, critics say the 2026 DEL raids were political pageantry in the lead-up to the elections, foregrounding the issue of foreign labour. Theatre can quickly supersede the [deeper problems](https://www.dailymaverick.co.za/opinionista/2026-03-26-what-the-newcastle-sweatshop-crisis-reveals-about-manufacturing-in-sa/), and undocumented workers – the most vulnerable people in this equation – end up further victimised by the attention. According to [GroundUp](https://groundup.org.za/article/the-clothing-industry-is-being-hammered-from-all-sides/), since September 2025, about 40 Newcastle factory owners and more than 500 employees have been arrested, but only three owners are currently facing criminal charges. The word on the ground is that raids have achieved little more than scaring people. Layered on top of this, many factories are run by Chinese nationals. We are wary of feeding into China-scapegoating here, but this has been a big enough issue to prompt meetings with the Chinese diplomatic mission in SA, which is [concerned](https://saccawu.org.za/minister-zhou-maoyi-calls-for-strict-adherence-to-south-africas-labour-laws-by-chinese-businesses/) about its impact on China’s credibility. Deputy Minister of Employment and Labour Jomo Sibiya [met](https://admin.labour.gov.za/DocumentCenter/Publications/Newsletter-%20I-%20DEAL/2026%20Newsletter%20I-DEAL/I-DEAL%2003_2026.pdf) with Newcastle’s Chinese textile factory owners back in March. A group of 31 factories, known as the G31, had approached the government for guidance, and after hearing them out, the DEL agreed to an 18-month grace period to phase in compliance. ![Deputy Minister Jomo Sibiya Conduct An In Loco Inspection In Ormonde](https://cdn.dailymaverick.co.za/i/GKdRtZLk8VquVdE8uqG_nV2HymU=/200x100/smart/filters:strip_exif\(\)/file/attachments/orphans/Lunga-Masuku-ANC6_459848_619769.jpg) *The deputy minister of employment and labour, Jomo Sibiya. (Photo: Fani Mahuntsi / Gallo Images / Fani Mahuntsi)* ### **Mixed messages** This plan has been the subject of much debate. To start, the factories excluded from the G31, which include those supplying major retailers, were fed up. Membinkosi said Sactwu found the arrangement “very strange”. The NBC filed an urgent court [application](https://groundup.org.za/media/uploads/documents/NBBCCIvMinisterLabour.pdf) to have the matter reviewed, arguing the government had overstepped. Ultimately, the DEL [agreed](https://groundup.org.za/article/labour-department-concedes-no-amnesty-for-chinese-owned-factories/) it could not offer amnesty, and the court ruled that factories must grant access to NBC inspectors, but can still challenge whether they fall under its collective agreements. The NBC’s legal counsel told Daily Maverick there is “no tension” with the DEL, but that “we just all need to stay in our lane”. The DEL did not respond to a request for comment. Chothia Attorneys said “factory owners have experienced uncertainty” in their communication with the DEL and NBC. They also cited pressure from “lower-cost labour markets in other SADC \[Southern African Development Community\] countries”. “It is causing factories to be unable to compete for work orders. Some businesses have already had to relocate their operations, creating a genuine risk of further factory closures and significant job losses,” noted Chothia Attorneys. “The factories are not opposed to compliance or the protection of workers. They are advocating for a balanced approach… That is the reality of competition within SADC.” Erasmus does not appear to buy this argument, but he also pointed further up the value chain: > “The conditions are far worse than they have been portrayed. Far worse. There’s no excuse whatsoever, and it’s the supply chain who are to blame. There is no escaping here and trying to suggest: ‘Oh, then we’ll take our work and go to Lesotho, and you just be thankful for what you get.’ That’s not where we’ve come to after 30 years of democracy.” ### **Ascending the value chain** Retailers determine the price per unit they are willing to pay to Cut, Make and Trim (CMT) suppliers, Membinkosi explained, and those suppliers risk losing business if they demand a higher price. “You can see now, this is a chain,” he added. “It’s a serious problem.” Indeed. The people suffering most are the workers, many of whom are terrified to speak up, with good reason. At the top of the ladder, the big guys, the names we all know – who are not only sourcing from non-compliant factories, but using local manufacturing as a marketing tactic – are managing to float above the fray, unharmed. Pep explained to Daily Maverick that it had “no future orders planned with Drake Clothing” and that “Pep requires their suppliers to comply with the Pepkor group’s supplier code of conduct and remains committed to supporting fair and responsible local sourcing.” ![Pep Store. (Photo: Supplied / Source)](https://cdn.dailymaverick.co.za/i/YrrEaKrE2QcXdH_oglJqVW65aE8=/200x100/smart/filters:strip_exif\(\)/file/attachments/orphans/Holly-clothingfactories4_139533.jpg) *Pep says it has no future orders planned with Drake Clothing. (Photo: Supplied / Source)* Mr Price said it was aware of the situation and that no financial relief had been sought from the group, adding that “input cost pressures for local manufacturers make it difficult for suppliers to sustain their competitiveness.” Both Pep and Mr Price highlighted their support of the government’s Retail-Clothing, Textile, Footwear and Leather [Master Plan](https://www.thedtic.gov.za/wp-content/uploads/the-dtic-Retail-CTFL-Master-Plan.pdf). The Foschini Group (TFG) said that its “focus remains on ensuring that suppliers manufacturing merchandise for TFG meet our required standards, and that any identified non-compliance is appropriately addressed.” It acknowledged the Drake allegations, but did not want to comment on an ongoing case. ![Workers iron trousers ready for packaging at the Prestige Clothing (Pty) Ltd. textile factory, operated by The Foschini Group Ltd., in the Maitland district of Cape Town, South Africa, on Thursday, Dec. 10, 2020. South African retailers including The Foschini Group and Woolworths Holdings Ltd. are increasing investment in local clothing manufacturers -- both to reduce a dependency on Chinese imports and secure a supply chain thrown into disarray by Covid-19 restrictions. Photographer: Dwayne Senior/Bloomberg via Getty Images](https://cdn.dailymaverick.co.za/i/sdpaWTiI58HBasv8WYkD9dj-if4=/200x100/smart/filters:strip_exif\(\)/file/dailymaverick/wp-content/uploads/2025/02/GettyImages-1230067143.jpg) *Workers iron trousers ready for packaging at the Prestige Clothing textile factory, operated by The Foschini Group in Maitland, Cape Town, on 10 December 2020. (Photo: Dwayne Senior / Bloomberg via Getty Images)* It’s not just retailers that have questions to answer. Irshaad Kathrada, CEO of the Localisation Support Fund, said of the estimated R7.5-billion the government spends on clothing procurement each year, “we could only find that about 30% of it was sourced from local, compliant manufacturers, meaning the rest of it was either imported or it’s coming from non-compliant sources. “That’s quite an indictment if government is, on the one hand, saying, this is our policy, to localise, to drive local manufacturing … why is it not using its spending power to effectively do so?” ### **Who bears the load?** The NBC’s Erasmus said this about visiting textile factories in Newcastle: > “It’s a life-changing moment – not one that you want to repeat, but it does inform your views, going forward.” He found it particularly gut-wrenching to see “grannies” subjected to these conditions. This brings us back to where we started the story: a woman giving birth inside a factory. “There’s a very strong gender dynamic that needs to be taken into consideration,” noted Kathrada. “Where most of manufacturing is quite male-dominated, more than two-thirds of the people working in clothing manufacturing are women.” The sector has massive potential to put women in a stronger economic position, but currently, it is stripping away their dignity. We cannot afford to get lost in arguments over profit margins or litigation. No matter the cost of compliance to factories, design houses, retailers, consumers and the government, things have to change. **DM**