Wages row overshadows Banana Republic launch

Allegations that Banana Republic, part of the Gap chain, relies on cheap Indian labour cast a shadow over the opening of the company's first British shop.

The American corporation said it had begun an inquiry following claims by War on Want, which campaigns for ethical practices in the fashion industry, that labourers in Gap factories producing Banana Republic clothes were working for 15p an hour.

Yet most of the people coming out of the shop on Regent Street in central London at lunchtime yesterday seemed unaware of the allegations. Viv Steel, 50, said she was upset to discover the claims regarding the company's factories. "I've just bought a pair of jeans there but, if I'd known that, I think it would've changed my mind, particularly given the prices."

Banana Republic bases its corporate marketing on a late-20th century version of the American Dream. It pushes the image that its clothes are the sort that have been worn by young, middle-class American professionals for decades. But the labels inside the garments point to different countries of origin, including China, Indonesia, Turkey, Sri Lanka and Vietnam. And it was some men's shirts made in India which proved contentious yesterday. According to War on Want, the chain has been buying products from independently run factories near Delhi where machinists work 70 hours a week for a few pence an hour. It is not clear if the shirts in the shop were from the same factory but, retailing at £49.50, their price is equivalent to 300 hours of labour at such a factory.

A group of campaigners from War on Want gathered at 10am to protest against the shop opening. Simon McRae, a senior campaigns officer at War on Want, said: "This sweatshop shame represents the latest example of high street retailers breaking their pledges to ensure decent wages and conditions for overseas workers. Now Gordon Brown must act to halt this exploitation. The employees' pay contrasts with the reported $1.5m (£750,000) basic salary for the Gap chief executive, Glen Murphy, and the $2.5bn turnover for Banana Republic."

The first 100 customers were given £25 vouchers to spend, a promotion which prompted a large crowd to form before the opening.

Jennifer Mallon, 37, and her mother Susan Low, 55, had travelled from Glasgow. "We were queuing to make sure we got one of the vouchers", said Mrs Mallon, who spent £150. Mrs Low said they were unaware of the allegations over working conditions but said: "I think we would still have come. What shop doesn't use such labour these days?"

Joe Stringer, 33, a managing director from Surrey, who spent more than £200 in the shop, said he had not heard about the labour conditions, but was not sure it would have changed his decision to shop there. "I hadn't heard about the labour stuff, but I don't think it would have changed my mind," she said.

Dan Henkle, a senior vice-president in charge of social responsibility for Gap, said: "Gap Inc condemns unfair working conditions, such as the type of wage and hour violations described in this case. In fact, if we found that a factory deliberately concealed information or misled an investigation, we would immediately take steps that could ultimately lead to the termination of the factory.

"We have launched an immediate investigation into the allegations brought to our attention. We are looking at the factories in that area where production on our clothing is done – factories which also do work for a number of other retailers – and plan to take appropriate action."