Chinese factories are churning out licensed bags, caps and stationery for the 2008 Beijing Olympics using child labour and paying workers less than half the minimum wage, a report claims.
Brendan Barber, general secretary of Britain's Trades Union Congress (TUC).
As members of the International Olympics Committee (IOC) gather in London for a progress update on the 2012 Games, the report - No Medal for the Olympics- finds evidence of children as young as 12 producing Olympic merchandise.
The Playfair Alliance researched working conditions at four factories making 2008 Olympic bags, headgear, stationery and other products.
It found that factory owners are falsifying employment records and forcing workers to lie about their wages and conditions.
Researchers also found adults earning half the legal minimum wage in China and employees who were made to work up to 15 hours per day, seven days a week.
"Children and adult workers are being grossly exploited so that unscrupulous employers can make more profit," Brendan Barber, general secretary of Britain's Trades Union Congress (TUC) said. The TUC represents the Playfair Alliance in Britain.
Beijing authorities seized nearly 30,000 fake Olympic souvenirs in February, some made from toxic materials, state media reported earlier.
China regularly defends its record on fighting piracy, saying it is a developing country and needs time. Pirated goods ranging from drugs and designer bags to foods, movies and music discs are openly sold in shops and on the street.