Raids and recriminations: how luxury’s ‘Made in Italy’ label came unstitched
Sweeping crackdown on alleged labour abuses in nationally cherished industry poses big questions for fashion elite
The “Made in Italy” label has long been a byword for sophisticated craftsmanship and a means of selling some of the most expensive dresses, handbags and shoes money can buy. In 2025, its reputation as a mark of quality for luxury goods has come under unprecedented threat.
Labour issues in Italy’s fashion supply chain have been an open secret for years. But neither the brands, nor their customers, appeared to pay much attention to media reporting on allegations that some of the workers producing haute couture were being paid a pittance.
But a recent series of probes instigated by Milanese prosecutor Paolo Storari — targeting some of the most powerful names in the industry, including Loro Piana, Dior, Tod’s and Armani — has turned a fringe issue into a national scandal.
Senator Adolfo Urso, the minister of enterprise and Made in Italy, declared in October that “the reputation of our brands is under attack”.
In court documents filed last year, prosecutors said they uncovered a system of exploitation “so entrenched and proven [that it could] be considered part of a broader business policy exclusively aimed at increasing profit”.
The authorities’ inquiries are ongoing. Prosecutors this month named 13 luxury brands, including Gucci, Versace and Yves Saint Laurent, it suspected of subcontracting to manufacturers that exploited migrant workers in Italy. None of those brands is under formal investigation.
“What has been happening in the Italian supply chain is nothing new. What is different now is the presence of a determined prosecutor working in a systematic way to work out what has been going on, a luxury industry which is loudly fighting back and a real escalation in tensions between the two,” said Michael Posner, professor of ethics and finance at the Stern School of Business at New York University.
As the number of investigations, raids and charges mount, most brand executives are either on the defensive or refusing to comment at all.
But industry association Confindustria Moda said it was “gravely concerned” about the growing media spectacle, which risked inflicting “an unjustified and profound damage” on the Italian luxury sector.
While the fast fashion industry has become synonymous with allegations of labour exploitation, the high prices charged by luxury brands has created an assumption that their wares are made by highly skilled, fairly paid artisans.
But like fast-fashion retailers, luxury brands outsource some production — whether that be a zip for a bag or the stitching on a dress — to third-party manufacturers.
Strong demand for luxury goods over the past two decades, especially from Chinese consumers, has placed increasing strain on manufacturers, pushing some of them to outsource more of their production. Those underlying pressures were then exacerbated by a fresh surge in demand during the pandemic-era boom.
In Italy, where there is no national minimum wage, workers are at particular risk of being exploited. Under Italian law contractors are required to obtain companies’ written permission to subcontract, but the brands embroiled in the investigations all say they did not give consent and errant suppliers went behind their backs.
Diego Della Valle, founder and chair of luxury shoe and bag maker Tod’s, said in October that it was the supplier’s responsibility to inform them “if it hands off parts of production to subcontractors, but if they hide it from us . . . that will escape our [audits]”.
Italy’s luxury suppliers are often small, artisanal businesses based in the countryside and working to exacting deadlines.
Deborah Lucchetti, national co-ordinator of the Clean Clothes Campaign in Italy, said suppliers “are at the mercy of big brands that impose commercial conditions, starting with prices that are too low to cover all costs”.
“That, in turn, fuels a system in which first-tier suppliers turn to subcontractors, imposing ever more stringent terms, which leads to labour abuses, most often against migrants. It’s a chain of exploitation,” she added.
Dior and Armani said the relationships uncovered between their suppliers and Chinese-owned subcontractors that were found to have exploited workers were rare glitches in otherwise robust systems of control.
Investigations found that workers at a supplier to Loro Piana were paid as little as a few euros a day and forced to work up to 90 hours a week in unsafe, unsanitary conditions.
The LVMH-owned cashmere brand, which said it had cut ties with the supplier on the basis that it violated its labour code by subcontracting, was placed into a one-year court administration to address shortfalls in its supply chain.
Loro Piana is not under criminal investigation and the order will be lifted if it complies with legal requirements before the 12-month deadline given by the court. Dior and Armani had similar restrictions placed on them lifted early.
At a breakfast event during Milan Fashion Week in September, many luxury executives complained that the investigations had blown small issues in their supply chains out of proportion.
Less than a month later, Della Valle broke cover to attack Storari personally, saying that the prosecutor “should be ashamed” of the damage he was inflicting on the country’s luxury industry.
“It is absolutely inexcusable for the prosecutor to wake up one day and tarnish [our] reputation, treating us like criminals and spreading falsehoods,” Della Valle said. “This is the sixth investigation by the same prosecutor targeting the luxury sector. The whole system is in peril.”
Only weeks later Storari placed Tod’s and three of its executives under investigation for suspected labour abuses.
At the breakfast event Carlo Capasa, president of industry lobby group Camera Della Moda, said that “only” 30,000 workers out of the 600,000 employees in the Italian luxury supply chain were “irregular”, meaning that they were working without a legal contract.
Capasa added that he and other senior industry figures had been working on new protocols to help brands ensure they were working with suppliers certified annually by a third party.
Industry moves come alongside politically initiated reforms. The Italian Senate approved a first package of measures for the fashion sector in October, including the establishment of a production chain certification system to help improve traceability.
“We are taking concrete measures to firmly defend Italian fashion,” Urso, the minister, said in October. “We have a duty to protect the Made in Italy label and to make it stronger, including in terms of legality,” he added.
The Prefecture of Milan, a local branch of the interior ministry, has also been looking to formulate a common framework of best practice and to establish a centralised database where suppliers can upload certification documents.
But participation is optional. Critics say that voluntary pacts will do little to combat the structural issues that give rise to labour abuse.
“A database or system in place is good, but at the end of the day that’s ultimately a smokescreen that protects the companies,” said Posner, the Stern professor. “The brands want to say they are doing the right thing without fundamentally changing their business model.”
Two luxury executives said the main problem was that the inherent limitations of audits meant that if a supplier was determined to outsource without telling them, it was very difficult to stop.
Some luxury companies, such as Zegna, Chanel and Hermès, have tried to insulate themselves from subcontracting by buying some of their suppliers outright. Others, like Brunello Cucinelli, pay suppliers above-average rates, arguing that accepting a lower margin is the only way to limit supply chain risks.
The spotlight has now turned on Storari, the combative prosecutor going after the leading lights in a nationally cherished industry — for whom reputation is paramount.
Storari has led important investigations, notably into Mafia infiltration of football hooligan groups, for which he ended up under police protection, and takes a particular interest in labour exploitation cases.
He has criticised the business models of food delivery platforms and taken on the likes of Amazon over alleged tax evasion.
His approach to his work makes him a divisive figure in Italy: some commentators have commended Storari’s initiatives, while others say he is pursuing an aggressive political agenda.
Last month the prosecutor struck a defiant note, telling a Milan conference that “the state should be proud” of his work rooting out bad actors in the luxury world, as he signalled he had no intention of backing down.
“Some may say we have [gone overboard] or that we make up the rules . . . but carta canta.”
