Luxury’s Italian Supply Chain Reckoning Isn’t Over

In 2024, Milan prosecutors uncovered sweatshop-like conditions within the Italian supply chains of major luxury brands, revealing that workers faced degrading living conditions, low pay, and 15-hour workdays. Nearly two years later, despite brands strengthening internal controls, increasing audits, and restricting subcontracting, labour groups report little fundamental change on the ground.

This week, BoF’s Sarah Kent and Sheena Butler-Young explore whether the luxury sector's response has addressed the root causes of this exploitation, or merely added layers of compliance to the same flawed business model.

Key Insights:

Luxury’s supply chain problems are structural, not isolated. The 2024 investigations exposed more than a handful of bad factories. Kent says exploitative suppliers had become an “open secret” within parts of Italy’s manufacturing ecosystem, enabled by a fragmented supply chain and commercial pressure for low prices, speed and flexibility. “Everyone knows, no one tells because it is convenient to have them exist,” says Kent. “At its heart, when you really press people, they say it’s because of the price brands are willing to pay for products and the speed and flexibility at which they want them produced.”

Brands have tightened oversight but audits are creating new pressure on suppliers. Luxury companies have increased inspections, consolidated suppliers and restricted subcontracting. But because each brand often uses a different audit system, manufacturers can face overlapping checks and conflicting requirements at a time when margins are already under pressure. “It’s a time cost, a financial cost, and a big burden to have this quite diversified system of audits that’s hitting suppliers at the moment,” Kent says.

Despite tighter controls, there is little evidence that conditions have meaningfully improved for workers. According to Kent, labour groups report little change on the ground, while the luxury slowdown and falling orders are adding more pressure to manufacturers. “ From what I understand from labour groups, there is not a sense that a huge amount has changed on the ground, and I think that's partly because it's quite a complex situation that isn't only linked to luxury supply chains,” Kent says. Without changes to commercial practices that shape working conditions, improvements could remain limited.

Compliance alone cannot fix the economics that helped create the problem. For years, luxury positioned craftsmanship, quality an