Licensed goods being made for next year's Beijing Olympic Games are being manufactured by child labour and "sweatshops" in China, the Playfair Alliance says in a report published on Monday.
Research found children as young as 12 producing Olympic merchandise. Playfair says that adults producing goods for the Beijing games earn as little as 14p an hour, half the legal minimum wage in China.
Some employees were being made to work up to 15 hours a day for seven days a week, while factory owners were falsifying employment records and forcing workers to lie about their wages and conditions, the alliance said.
Playfair groups together three international networks aiming to improve working conditions in the clothing and sportswear industries: the Clean Clothes campaign; the International Trade Union Confederation; and the International Textile, Garment and Leather Workers' Federation.
International producers and retailers of consumer goods are increasingly sensitive that their image could be damaged by adverse publicity about employment conditions. Nike, the official supplier of footballs to the English Premier League, has only just resumed production of hand-stitched leather balls in Pakistan after halting work because of concerns over child labour.
Undercover researchers working in factories in China's Guangdong and Shenzhen provinces reported one manufacturer of stationery for the Olympics employing more than 20 children - the youngest just 12 years old. They had been hired during the school holidays and were working from 7.30am to 10.30pm, doing the same jobs as adults. The manufacturer imposed forced overtime, fines and paid less than half the legal minimum wage.
A Shenzhen company, licensed to produce 50 different items for the games, was said to have used fake salary slips to dupe inspectors sent to check wages and conditions. Workers complained about health and safety, including fire hazards, skin problems from chemicals and respiratory problems from dust, said Playfair.
Another Shenzhen-based factory, operated by Mainland Headwear, was claimed to have instructed employees how to lie to inspectors about wages and conditions and sacked workers who told the truth. Peter Ho, chief executive officer of the group, vigorously denied the allegations, saying the factory was audited by leading international brands who are members of the US Fair Labor Association.
"Comparing our factory with a low margin sweatshop is outrageous when we so much believe in our social responsibility to help the poor and uplift the general well being of our future generations," he said in a statement.
Gus Ryder, general secretary of the International Trade Union Confederation, said: "We warned the International Olympic Committee at the time that failure to take the necessary action on labour standards would lead to situations such as those identified in the report."
Playfair's report coincides with the arrival in Britain this week of IOC officials for a progress report on developments for the 2012 games. Campaigners fear that production of branded goods for the London games in cheaper locations will lead to similar exploitation.
Maggie Burns, who chairs Labour Behind the Label, one of the UK representatives of Playfair, said: "The London Olympics has just spent Â£400,000 [â¬590,000 $788,000] on a logo. There is no reason why organisers cannot ensure a "sweat-free" games if they act now."
The International Olympic Committee said in a statement that it was concerned that licensed goods were sourced ethically, but stressed that Games licenses are issued by the organising committees of each Olympics, rather than by the IOC.
"The IOC does not directly manage and control the production of Olympic-related products across the world - it has to do this by influence, and by creating standards and policies that are an important part of the process and agreed on by everyone involved in staging the Olympic Games," it said.
Jiang Xiaoyu, vice president of the Beijing Olympics organisaing committee (BOCOG) said the committee "is investigating and if the issue really exists then BOCOG will tackle this issue very seriously".
- 116 Human Rights