A new report links public funds to labour abuses in Pakistan’s textile sector

A new report from Swedwatch, the Swedish NGO focused on business, human rights and environmental responsibility, has exposed troubling failings in Europe’s procurement framework, failings that are allowing exploitative labour practices in Pakistan’s textile industry to persist, despite stated commitments to sustainability and human rights.

The report, Public Money, Private Harm, based on interviews with 89 workers in factories supplying hospital textiles to the European market, reveals systemic labour violations: below-minimum wages, excessive hours, union busting, and the widespread absence of formal contracts or social protections. Crucially, these factories are part of supply chains that deliver hospital linens and uniforms to Swedish public healthcare providers—institutions bound by sustainability codes of conduct, yet still vulnerable to abuse through opaque sourcing networks and weak enforcement.

While textiles from Pakistan represent only a fraction of the EU’s 2 trillion euro in annual public procurement spending, the implications are significant. The report illustrates how voluntary sustainability guidelines, codified in the EU’s 2014 Public Procurement Directive, remain inconsistently applied and rarely enforced. As a result, contracts often go to the lowest-cost suppliers, even when there is evidence of labour rights violations in their supply chains.

“This is not a story about Pakistan alone,” said Sofia Käll, Programme Officer at Swedwatch. “This is about structural weaknesses in European procurement policy that allow public money to fund exploitation, undermining both ethical businesses and basic human rights.”

The findings come at a critical time. The European Commission is currently reviewing the Procurement Directive, and advocates, including Swedwatch, are urging lawmakers to introduce binding human rights due diligence obligations for all public contracts. Unlike the current patchwork of voluntary codes, mandatory due diligence would require buyers to engage more deeply with supplier networks, incorporate worker voice, and move beyond box-ticking compliance.

For the fashion and textile sector, the message is clear: sustainability pledges must be backed by legal and operational rigour. The textile supply chain, already under pressure from environmental scrutiny and calls for greater transparency, now faces growing demands for ethical accountability—not only from consumers, but from regulators and watchdogs as well.

The report serves as a pointed reminder that the tools to improve global supply chains already exist. With Europe’s public sector representing nearly 15 percent of GDP, it holds considerable leverage. Whether that leverage is used to drive systemic change, or simply to secure the lowest bid, remains a pressing question for policymakers and industry stakeholders alike.