Behind the Curtain: The Truth About ‘Sweatshop’ Conditions in Proudly South African Fashion

On 6 February this year, South Africa’s clothing industry experienced major upheaval. In Pietermaritzburg, Chantal Naidoo, serving as the secretary general for the National Bargaining Council for the Clothing Manufacturing Industry, presented an affidavit to the high court. She accused Drake Clothing of operating sweatshops, taking advantage of workers, and paying wages below the legal minimum.

Naidoo is pushing for the liquidation of Drake Clothing. The case also involves several notable South African apparel retailers, including Mr Price Group, Pep, and The Foschini Group, all of which have placed orders with Drake.

Read: Sweatshops: Action taken against another clothing manufacturer

A legal expert familiar with the situation described it as “somewhat ambitious,” as it aims to dissolve the company rather than pursue better compliance.

This case has sparked considerable concern within the industry. GroundUp reported on the matter, alongside Drake’s firm denial of the allegations.

On the same day, 170 kilometers away in Newcastle, where a significant portion of clothing production occurs, MP Juliet Basson from the Patriotic Alliance was conducting a parliamentary oversight visit. She released a video allegedly filmed inside what she called a “Sjinese [Chinese] sweatshop,” claiming that workers are paid R8 an hour for 19-hour shifts.

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“Most South Africans assume that clothes produced in such a manner are intended for the informal market,” Basson noted. However, she pointed out several items branded with Pick n Pay and Jet labels.

“Factories like this one,” she remarked, “are highly sought after because our retailers source from them. Pick n Pay is one of them.” Basson later informed GroundUp that the factory she visited was “the best of all those we toured,” emphasizing that its owner was “the most open to dialogue.” Yet, the video gained significant online attention.

During this same day of factory inspections, clothing items labeled by major retailers, including Mr Price Group, Pepkor, and Ackermans, were also identified.

The MPs, along with inspectors from the Departments of Labour and Home Affairs, observed numerous violations, such as undocumented workers living in poor conditions, unregistered steam generators, and widespread non-compliance with both the Unemployment Insurance Act and the Compensation for Occupational Injuries and Diseases Act.

Richard Erasmus, a lawyer for the National Bargaining Council, informed GroundUp that around 300 clothing manufacturers operate in Newcastle—some independently and others in cooperatives—with an astonishing 92% found to be non-compliant, lacking a Certificate of Compliance from the National Bargaining Council. GroundUp has not independently verified these statistics.

According to Teboho Thejane, spokesperson for the Department of Labour and Employment, the department has recognized non-compliance in Newcastle’s clothing sector only since 2024. However, earlier inspections done by the National Bargaining Council revealed most employers were non-compliant, as noted by Thejane.

Read: Why people from landlocked Lesotho cross the border illegally

During the parliamentary oversight inspections, several business owners were detained, with two facing immigration-related charges. One factory, Qing Xiu Clothing, received a prohibition notice, effectively stopping its operations immediately.

The Labour Minister, Nomakhosazana Meth, later announced that the department is pursuing R6 million from six Newcastle textile companies for unpaid contributions to the Unemployment Insurance Fund and the Compensation Fund.

Retailers rely on these factories

The connection between the Drake Clothing case and the factory inspections in Newcastle is clear, as Drake and many other clothing suppliers for South Africa’s leading retailers source orders from Newcastle factories.

“Most of the local manufacturing capacity for basic garments, such as T-shirts, is situated in Newcastle. I doubt you’ll find a retailer that doesn’t stock clothing made here,” stated Ferdie Alberts, former director of economic development at the Newcastle municipality.

Retailers don’t engage directly with clothing factories, known in the industry as Cut Make and Trim (CMT) suppliers. Instead, they work with design houses like Drake Clothing, which handle all necessary materials and place orders with CMT factories.

“This method allows retailers to somewhat distance themselves from factory-level issues,” Alberts explained.

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In her affidavit, Naidoo identifies 11 allegedly non-compliant manufacturers she claims are linked to Drake, 10 of which are based in Newcastle.

In a counter-affidavit, Roger Drake asserts that his company had a contractual agreement with only one of the manufacturers mentioned by Naidoo. He stresses that the CMT manufacturers collaborating with Drake are required to sign annual compliance declarations and argues that Drake cannot be held accountable for the internal employment practices of “independent manufacturers.”

A compliance officer from a major retailer, speaking anonymously, claimed that Drake has been unjustly singled out.

“Almost all CMTs in Newcastle are non-compliant, and all of us [retailers] source clothing there because the demand for local production exceeds the capacity of compliant manufacturers in the country,” the source explained.

On 11 May, the National Bargaining Council initiated another case against a different design house, Gemelli (PTY) Ltd, accusing it of “knowingly and deliberately” violating labor laws. Again, several of South Africa’s top clothing retailers are implicated.

Not so proudly South African

Recently, various retailers have highlighted their dedication to local production. However, Alberts argues that South African retailers “didn’t suddenly become altruistic and proudly South African.”

“Retailers seek competitively priced items that are affordable for their customers. Their sourcing choices are indifferent to the origin of the products,” he remarked.

A senior procurement officer at a major retailer, speaking anonymously, suggested that the shift towards local sourcing was primarily due to “strictly economic factors.”

“Orders from South African factories typically take 30 to 45 days for delivery if all necessary materials are available, while garments from China take roughly 90 days. There’s a strong push to reduce dependence on China and India, especially after the disruptions experienced during the COVID-19 pandemic. Additionally, exchange rates have favored local sourcing,” the source elaborated, highlighting that the number of CMT factories in Newcastle “has surged in recent years to meet increasing demand.”

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Concrete data on CMT factories in Newcastle is limited (the municipality notes that engaging with the sector is complicated due to language barriers and a culture of opacity). But Alex Liu, the former chairperson of the town’s Chinese Chamber of Commerce, indicated that the number of CMT factories rose from “around 20” between 2000 and 2005 to over 200 by 2021, though currently sits between 120-140.

He disputes the Bargaining Council’s claim that there are 300 CMT factories in Newcastle.

As the number of CMT factories has increased, competition for orders intensified, leading to lowered fees paid to factories, Alberts noted.

Factories are offered a specific price for producing a specific garment, known as the CMT price. Retailers do not determine this CMT price; rather, design houses do. However, Alberts points out that the prices factories receive are indirectly influenced by the fees retailers pay their design houses.

“I consistently urge the major retailers to increase their payments to suppliers slightly, to uplift the CMT prices,” he stated, advocating for factory owners to establish a minimum unit price per item.

“We have worked towards forming Taiwanese and Chinese business chambers, yet no consensus on minimum pricing has been achieved, as the Chinese owners are excessively competitive,” Alberts explains, noting that suppliers consequently “view Newcastle as a prime place for bargain basement prices.”

“They get a quote from one factory and then check with another to see if they can secure a better deal. Often, after searching for prices, the lowest bid falls below economic viability, forcing the factory owner to accept it just to stay operational,” he detailed.

One factory owner, preferring anonymity to avoid repercussions, disclosed to GroundUp that in some instances, the CMT prices for T-shirts are even lower than they were in 2015.

“For a basic T-shirt priced at R80, retailers will pay the supplier [design house] between R30-40, and the supplier will pay the factory a CMT rate of around R3.50,” claimed the source, noting that the ANC placed a direct order for 1.5 million T-shirts with a Newcastle factory before the 2021 municipal elections, offering a CMT price of only R2.85 per shirt.

“The factory was responsible for covering costs for cotton, cutting, sewing, cleaning, and pressing the garment—all for just R2.85. While I don’t defend factory non-compliance, it’s critical to grasp the driving factors: businesses are aiming for survival. If they are constrained by CMT pricing, that inevitably affects the wages paid to workers,” the source added.

GroundUp reached out to the ANC for comments regarding these allegations but received no response.

Liu, who also owns a factory, expressed concerns about the rising overhead costs associated with operating a business.

“Cotton thread must be imported, and costs fluctuate based on the dollar exchange rate. In 2018, the rate was R13.25 per dollar. Currently, it ranges between R16 and R17, leading to a 50% increase for cotton threads. Additionally, all other input costs are rising, including electricity,” he explained.

On average, labor costs make up about 50% of total operational expenses in CMT factories. Given the escalating input costs and low CMT prices offered, most factory owners with whom GroundUp spoke expressed their inability to meet the minimum wage standards set by the National Bargaining Council.

Read: New rebate on certain imported yarns and textiles is complex

“The prevailing public narrative surrounding Newcastle is rife with allegations of severe labor abuses, Chinese sweatshops, and so forth. While these issues do exist—such as the employment of undocumented workers—it’s vital to underscore the tangible market pressures contributing to these conditions,” Alberts affirmed.

Fallout

In the aftermath of the parliamentary oversight in Newcastle, South Africa’s major retailers reached out to their design houses, demanding accountability regarding factory conditions. Consequently, Pepkor informed GroundUp that it has blacklisted one factory; The Foschini Group mentioned imposing a penalty against a third-party supplier, while Pick n Pay confirmed that after discovering a design house was employing an unapproved CMT, “the relationship was terminated immediately. The product was also withheld from sale.”

Alberts noted that since February, several factory owners in Newcastle have ceased operations, with others contemplating relocation to Eswatini and Lesotho.

Read: Future of Lesotho’s textile industry hangs in the balance

Flouting the law

To be considered fully compliant, a clothing factory in South Africa must adhere to a comprehensive framework of labor laws, negotiate industrial bargaining agreements, and follow health and safety regulations along with tax requirements.

Among other prerequisites, it must hold a Certificate of Compliance (CoC) from the National Bargaining Council, where employers and trade unions collaborate to negotiate collective agreements concerning wages, working conditions, and benefits across specific industries.

This agreement is officially extended by the Minister of Labour to all employers nationwide.

Fachmy Abrahams, the national bargaining officer for the Southern African Clothing and Textile Workers’ Union, highlighted that minimum rates established by the bargaining council often surpass the national minimum wage, which was adjusted to R30.23 per ordinary hour in March 2026.

The current minimum rate set by the bargaining council for an experienced mechanist in a non-metro area like Newcastle stands at R1 443.50 weekly (for 45 hours), translating to R32 per hour.

Typically, factories pay less than 80% of the national minimum wage.

Read: National minimum wage rises to R30.23 per hour

“What we are witnessing in Newcastle is a scenario where many employers not only fail to comply with bargaining council rates but also significantly overlook even the most basic employment standards,” Abrahams remarked.

The rise of clothes manufacturing in Newcastle

The story of the CMT sector in Newcastle dates back to the late 1990s, as Ferdie Alberts recalls, who encouraged investment from Taiwan when Arcelor Mittal—then the economic pillar of Newcastle—began downsizing.

“We attracted significant investment [from Taiwan], primarily within the knitwear industry and also in plastics, but the clothing sector started gaining momentum, particularly after 1997 when South Africa established formal diplomatic relations with the People’s Republic of China. Many entrepreneurs who settled in the area lacked the financial resources to create fully operational factories, leading to compliance challenges from the start,” Alberts noted.

According to Liu, the current number of operational CMT factories in Newcastle fluctuates between 140-160, employing tens of thousands of workers, albeit some claim that the factory count is still in decline.

GroundUp engaged both the Newcastle Municipality and the KwaZulu-Natal office of the National Bargaining Council regarding CMT numbers in Newcastle, but neither could provide concrete statistics.

The rapid expansion of CMT factories is intricately connected to a unique Chinese business culture, Liu, who is Taiwanese, points out.

“During the years 2000-2005, wages in South African factories were significantly higher than those in China, enabling Chinese-owned businesses in Newcastle and beyond to recruit experienced Chinese line supervisors and skilled machinists, particularly because obtaining work visas was relatively easy at that time.”

Liu stated that these supervisors could save between R2,000 to R5,000 a month, enabling them, after a year or two of work, to accumulate around R100,000 to start their own small factories with merely one production line and perhaps ten workers. The growing demand for locally produced garments spurred the rise in factory establishments.

© 2026 GroundUp. This article was first published here.