Pakistan's textile industry, which generates more than 60% of the country's export earnings, is fighting on two fronts. Shipments are recovering, with textile exports rising by 8.07% year-on-year to $1.814bn in July 2026. Yet a British advocacy group, Label Behind Labour, has accused the garment export trade of systemic wage violations, forced overtime and compliance systems that do not work. With European rules on supply-chain due diligence tightening, the dispute over how factories treat their workers is no longer a matter of reputation alone; it may decide who keeps their customers.
The stakes are considerable. The sector contributes about 8.5% of GDP and supports millions of direct and indirect livelihoods. Clothing, hosiery, denim, home textiles and athletic wear made in Faisalabad, Karachi, Lahore and Sialkot are sold by major brands in Europe and North America. Such a global footprint brings scrutiny, and campaigners have also questioned weak grievance mechanisms and the limits of conventional social audits.
Defenders of the industry reject the portrayal. They point out that exporters operate in one of the world's most heavily inspected businesses, with factories assessed under frameworks such as SA8000, WRAP, SMETA, BSCI, ISO 45001, ISO 14001, OEKO-TEX and GOTS, alongside buyers' own protocols. Leading manufacturers, they say, have invested in medical facilities, day-care centres, transport, subsidised meals, digital attendance systems and whistle blower channels, as well as wastewater treatment, water recycling and renewable energy.
Independent evidence suggests the truth lies between these accounts. The ILO's Better Work Pakistan synthesis report for 2022-25 found that, among factories assessed in 2025, only 4.6% were non-compliant on minimum wages and 2.3% on overtime pay. Those lapses need fixing, but they hardly suggest that abuse defines the sector. The bigger gaps, analysts argue, lie further down a sprawling chain of contractors, subcontractors and small workshops that big exporters do not always see.
Nor are audits a cure-all. Brief inspections, limited worker interviews and reliance on records supplied by employers can miss problems well known on the factory floor. Critics within Pakistan argue that compliance cannot amount to certificates hung in head offices; it must shape operational management, purchasing decisions and board-level accountability. Most established firms already ban forced and child labour, harassment and discrimination. The harder question is whether those rules are applied consistently and verified independently.
Time may be short. European sustainability-reporting and due-diligence requirements are pushing brands to document the labour and environmental records of their suppliers. Pakistani firms unable to produce structured, verifiable proof may face no immediate legal penalty, but could quietly be dropped from preferred-supplier lists by procurement teams eager to limit regulatory exposure.
Examples of good practice exist. Interloop has placed women prominently on its board and in senior management and funded more than 650 scholarships. Gul Ahmed has policies on forced and child labour backed by grievance and due-diligence mechanisms. Soorty Enterprises has trained people with hearing and speech impairments, while Sapphire Finishing Mills has employed over 150 deaf workers. Masood Textile Mills has built ILO and Better Work principles into supplier assessments, and Liberty Mills, Crescent Bahuman and Kamal Limited have invested in health, safety and education.
Such efforts remain fragmented, however. One proposal is a Pakistan Textile 100 Index, an independently governed annual assessment of leading companies across export performance, labour practices, environmental sustainability, governance and compliance with GSP+ and due-diligence rules. Its backers say it would generate verified evidence, offer recognition useful for winning buyers and green finance, and give outsiders data rather than isolated allegations or corporate publicity.
Credibility would be everything. Participation fees could fund the scheme, but firms must not be able to buy favourable scores; the methodology would need to be public; assessors would have to declare conflicts and worker representatives should sit in oversight roles. Proponents also argue that international brands share the blame: buyers cannot demand impeccable standards while imposing prices and deadlines that make lawful wages and reasonable hours commercially impossible.
Meanwhile the trade figures offer some relief. Readymade garments rose by 15% to $460m in July, knitwear by 4.06% to $533.8m, bedwear by 4.16% to $308.5m and towels by 13.37% to $106.4m, while cotton cloth edged down to $141.6m. Textile exports jumped 43.13% from June. Overall exports reached $2.962bn, up 10.4% on a year earlier, though imports of $9.94bn left a monthly trade deficit of $6.978bn.
The wider backdrop is sobering. Total exports fell by 5.93% to $30.139bn in the 2025-26 fiscal year, from $32.04bn the year before. For a country so reliant on a single industry for foreign exchange, a monthly rebound offers little comfort if the sector's standing with Western buyers erodes. The industry's future, its own reformers concede, will depend on evidence strong enough to withstand scrutiny.