By David Teather
Thursday July 14, 2005

Gap said yesterday that conditions at the factories that make its clothes were improving but admitted that many problems still existed, including cases of child labour violations and factories where workers could not quit their jobs.

In its second annual corporate social responsibility report, the retailer gave what appears to be another candid snapshot of its factories. The full report is available on the website gapinc.com. The company produces clothes in 3,000 factories across 50 countries. Over the year, 90 inspectors visited almost all of them, it said.

The company said it revoked approval for 70 factories that violated its code of conduct during 2004, down from 136 in 2003. The retail group, which also owns the Banana Republic and Old Navy chains, turned down applications from 15% of factories seeking contracts.

Gap has become a lightning rod for anti-globalisation activists and is seeking to combat its image as a sweatshop operation. The chief executive, Paul Pressler, admitted it had been difficult to read headlines such as "Gap admits factory abuses" after its first audit last year but said that its candour had been appreciated by media and workers alike.

"The social responsibility issues across the industry remain immensely complex," he said in the report. "I'm optimistic, however, that progress in our industry over the next decade will be more profound than anything we've seen, including improved labour standards, factory conditions and business practices." The report said the most common problems included discrimination and enforced overtime, admitting that unreasonable demands from Gap were partly to blame.

One Chinese factory was found to forbid workers resigning at peak production periods, while three others hired child labour. In each case, the contracts were revoked. More common is a lack of proper age documentation for workers.

In another factory in Honduras, doors were locked to stop workers leaving; a follow-up inspection said this no longer happened. There were three cases - in Egypt, Morocco and Vietnam - where workers had to pay a fee if they quit before the end of their contracts. In each case, the clause had been removed, Gap said. "We recognise our responsibility to be a catalyst for sustainable change," Mr Pressler said.

The report was prepared with help from the Public Reporting Working Group. A statement from the group issued through Gap said: "We believe Gap has made substantial progress in focusing on the connections between its core business, systemic global concerns and workers' lives."