ZARA has become the latest retailer to be dogged by child labour allegations, after reports that Portuguese children as young as 11 are being paid just €20 (£13.70) a day to make shoes bearing the Spanish fashion chain’s brand.

Inditex, Zara’s parent company, said yesterday that it had started an investigation into the “extremely grave” accusation that one of its sub-contractors is paying the children 20 cents to sew the interior of a shoe. If the children make 50 pairs of shoes a day, they earn €20.

The allegations in Expresso, a Portuguese magazine, have sparked calls from United Left for Madrid, the left-wing Spanish party, to punish companies that use child labour. David Chica, a United Left deputy, said: “These are alarming claims, which, if true, are a repugnant example of the use of child labour.

“The Government should take every measure possible to guarantee that no Spanish company collaborates with or sub-contracts any company which uses child labour.”

Expresso reported how two children, Carlitos, 11, and Miguel, 14, are employed by the sub-contractor to make the shoes in Felgueiras, a depressed area where many textile factories have closed in recent years.

It described how the children work at home to make the shoes. Once made, the shoes are sold in shops in Oporto, northern Portugal’s biggest city, for €40 a pair.

The magazine also published pictures of the children sewing shoes displaying the Zara brand name. The children are shown wearing protection against the thick needles that they use to sew the shoes.

The sub-contractor was not named in the report.

José Guimarães, of the Portuguese Footwear Union, said that the material to make the shoes is taken by lorry to homes. At the end of the day, the lorry collects the finished product and the children are paid between €20 and €30.

Senhor Guimarães said that this “miserable” pay was often the only money that families received.

In 2002, the International Labour Organisation said there could be as many as 200,000 child workers under the age of 14 in Spain and that many worked in the shoe industry.

Inditex says in a statement on its website that it audited the sub-contractor last year with a “favourable outcome”. Inditex said: “This is an extremely grave case. We have a code of conduct which bans the use of child labour in our external companies.

“We are going to investigate the matter first, but, if it is true, Inditex will be implacable. This company will not be working with our group.”

The company denied yesterday that any of the shoes made by the children were sold in its stores. Inditex said that in the past year it had stopped working with 400 companies that had “violated our code on child labour, freedom of association, health, security or the environment”.

Last October, Inditex signed up to the international Ethical Trading Initiative to improve the conditions for its suppliers’ workers. The group reported a 26 per cent rise in net profits to €803 million for the year to January 31.

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