Threadbare: rags and riches; how South Africa’s retail giants profit from sweatshops

A birth inside a locked factory, twenty-five years on

In 2001, Nokuthula Hlatshwayo gave birth to twins inside a clothing factory in Newcastle, KwaZulu-Natal, where she and other staff were allegedly locked in overnight. One twin died at birth; the other died on the way to hospital the next morning. The South African Clothing and Textile Workers’ Union condemned the tragedy at the time. A quarter of a century later, the union’s deputy general secretary, Vilina Membinkosi, recalls the case not to show how far the industry has come, but to show that the South African sweatshop is not a new phenomenon.

That is the starting point of “Threadbare”, an investigation published by Daily Maverick on 8 November 2026, which draws on court documents and government raids to describe the reality inside the textile factories of Newcastle, a manufacturing hub in the former homelands where unions have long struggled to gain a foothold. The factories sew garments for the country’s biggest clothing retailers, and the labels found inside them carry names every South African shopper knows: Pep, Mr Price and Jet, the brand owned by The Foschini Group.

What the raids and the court papers actually show

The numbers come first from the state itself. In 2022, an inspection by the Department of Employment and Labour found that only 8% of 70 Newcastle textile factories, employing about 30,500 people, complied with labour laws. In 2023, four workers were killed when the Newcastle factory where they also lived burnt down in an electrical fire. A year later, the then labour minister, Thulas Nxesi, visited the same company and found the same appalling conditions: workers paid below the minimum wage, sleeping in a single poorly ventilated room, with bathrooms that had no soap or toilet paper.

The enforcement drive sharpened in February 2026. On 5 and 6 February, a joint operation by the labour department, the police and Home Affairs inspected factories in the Newcastle industrial park during a parliamentary oversight visit to the Amajuba district. Two Chinese employers were arrested after 34 undocumented foreign nationals were found working inside a factory, and Qing Xiu Clothing was served with a prohibition notice after inspectors found unsafe electrical installations and failures on unemployment insurance and compensation registrations. The department described the workers’ quarters as “a fatal hazard waiting to happen” and published photographs from inside the factory showing clothing carrying Jet labels.

On the same day, 6 February, Chantal Naidoo, general secretary of the National Bargaining Council for the Clothing Manufacturing Industry, filed an affidavit in the Pietermaritzburg High Court alleging that a design house called Drake Clothing had been using sweatshops, exploiting workers and paying below the minimum wage, and asking for the company to be liquidated. The case names Mr Price Group, Pep and The Foschini Group as respondents. Naidoo named 11 allegedly non-compliant manufacturers she says Drake does business with, ten of them based in Newcastle; in a counter-affidavit, Roger Drake says his company had a contractual relationship with only one of them. On 11 May, the council opened a second case, against Gemelli, accusing it of knowingly flouting labour law. At one Drake-linked factory, the council found workers paid between R90 and R120 a day; at another, workers who missed production targets received R70 a day; at a third, staff worked seven days a week for R350 to R700. The council’s minimum for an experienced machinist in a non-metro area is R1,443.50 a week.

The machinery of evasion is part of the story. The council says a growing number of factories operate as “bogus cooperatives”, sham fronts that dodge the bargaining council’s jurisdiction, and it has singled out the cooperatives trading with Drake. Drake’s lawyer, Michael Maeso, says the law allows cooperatives to operate independently of the council’s jurisdiction. The council has asked the courts to liquidate both Drake and Gemelli; the companies’ lawyers argue they should not be shut down if they are solvent, and both design houses deny any wrongdoing.

The questions the papers cannot yet answer

The court cases are unresolved. The liquidation applications against Drake and Gemelli are pending before the Pietermaritzburg High Court, and no date for argument has been set; whether the courts will close the design houses, or accept the argument that solvent companies should not be shut down, is unknown.

The basic facts of the sector are still foggy. The municipality itself lacks reliable data on how many clothing factories operate in Newcastle, estimates run from 140 to 300, and the bargaining council’s claim that 92% of them are non-compliant has not been independently verified, a caveat GroundUp states plainly. What the retailers knew, and when they knew it, is also unestablished: Pep says it has no future orders planned with Drake, Mr Price says it was aware of the situation, and The Foschini Group says it will not comment on an ongoing case.

Enforcement remains the open wound. Since September 2025, about 40 Newcastle factory owners and more than 500 employees have been arrested, yet only three owners are currently facing criminal charges. Whether those charges lead to convictions, and whether the raids change anything beyond frightening the most vulnerable workers, is the question the next year will answer.

Why the price on the tag stays so low

The chain is the point. Retailers set the price per unit they are willing to pay the cut-make-and-trim suppliers, Membinkosi explains, and suppliers that demand a higher price risk losing the order. The squeeze travels down the chain and lands on the worker: the wage, the hours, the room where she sleeps. The retailers, meanwhile, market local manufacturing as a virtue, clothes made in South Africa, for South Africans, while the conditions behind the label stay out of sight.

The scale is national, not local. The Localisation Support Fund’s chief executive, Irshaad Kathrada, told Daily Maverick that of the roughly R7.5 billion the government spends on clothing procurement each year, only about 30% can be traced to local, compliant manufacturers; the rest is imported or comes from non-compliant sources. And the workforce is overwhelmingly female: more than two-thirds of clothing manufacturing workers are women, which makes the exploitation a question of women’s dignity and economic power as much as of wages.

The state is implicated twice over: as the enforcer that has known about Newcastle since 2024 at ministerial level, according to its own spokesperson, and as the buyer whose procurement does not match its localisation policy. That contradiction is what gives the story its weight beyond one town in KwaZulu-Natal, and it sits alongside the wider strain on South African institutions; the governing party’s weakened standing in local government has left enforcement thinner just when the bargaining council needs the state behind it.

The chain that makes the sweatshop profitable

Follow the money and the structure explains itself. The retailer names the price; the design house takes the order and places it with cut-make-and-trim factories; the factory, squeezed on price, squeezes labour. Everyone in the chain can point to someone else: the retailer to its code of conduct, the design house to its contracts, the factory to the price it was given. The cooperative is the newest link in that chain of deniability; a legal form that, the council argues, exists to place the factory outside the bargaining council’s reach, and that the factories’ lawyers insist is legitimate.

The state’s ambivalence is the second structural fact. The department’s pilot project offered 31 factories an 18-month phase-in; the bargaining council went to court to stop it; the department conceded it had no power to grant an amnesty, and the Durban Labour Court confirmed in October 2026 that the factories cannot bar inspectors. That sequence, a grace period offered, challenged and withdrawn, shows a government torn between protecting jobs in a poor region and enforcing the law, and it explains why the council chose the most aggressive remedy available: liquidation, as a signal to the whole chain rather than a punishment of two companies.

The relocation threat is the chain’s last defence. Factory owners and their lawyers warn that work will move to lower-cost neighbours, Lesotho and Eswatini are named, and that compliance will cost jobs. The council’s answer, through its lawyer Richard Erasmus, is that there is no excuse for the conditions found, and that threatening to leave is not an argument after thirty years of democracy. Both sides are describing the same arithmetic; they disagree about who should pay for it. The same arithmetic shapes industrial bets across the continent, where governments court billions for new plants even as existing ones evade the law; Nigeria’s $25 billion gas pipeline push with Morocco shows how much capital is chasing African industry, and how little of that scrutiny reaches the factory floor.

What happens if the courts close the design houses

If the Pietermaritzburg High Court liquidates Drake and Gemelli, the immediate effect is disruption: retailers lose two suppliers, orders scatter, and the factories that depended on those design houses face closure or a scramble for new buyers. Prices would rise or orders would move; to compliant South African factories, to imports, or across the border to Lesotho and Eswatini. The council would have its precedent, and every other design house in the country would read it.

If the cases fail, the cooperative model survives its first serious legal test, and the lesson for the sector is that the structure works: the design house stays solvent, the factory stays outside the agreement, and the worker stays where she is. The bargaining council would still have its inspectors’ access, confirmed by the October court orders, but access without consequences is a weaker instrument.

Either way, the deeper second-order effect is on the “proudly South African” label itself. The Master Plan for clothing, textiles, footwear and leather, which Pep, Mr Price and the government all invoke, rests on the claim that local manufacturing is worth supporting. If the public concludes that local means exploitative, the plan loses its moral case, and the government’s R7.5 billion in procurement becomes a lever the public will ask it to use: buy only from factories that comply, and publish the list.

The cases, the inspections and the price tag to watch

Three things to watch. First, the Pietermaritzburg High Court, where the Drake and Gemelli liquidation cases will be set down for argument once all the papers are filed; the dates are not yet fixed. Second, the bargaining council’s inspectors, whose access to the Newcastle factories is now backed by court orders; whether they are admitted without obstruction, and what they find, will show whether October’s settlement changed anything on the factory floor.

Third, the retailers. Pep has said it has no future orders planned with Drake; Mr Price and The Foschini Group have said less. The test is whether they publish supplier lists, audit results or the names of the factories behind their labels, and whether the department, which has promised sustained inspection blitzes, turns arrests into prosecutions. Public pressure has moved governments before, tens of thousands marched in Amsterdam this weekend to press a government on its promises; and it has not yet gathered around Newcastle’s workers.