Children as young as 14 have been employed to make clothes for some of the most popular names on the UK high street, according to a new report.

New Look, Sports Direct’s Lonsdale brand and H&M have all used factories found to have employed children, after several major brands switched their production to low-cost factories in Myanmar. Workers told investigators that they were paid as little as 13p an hour producing clothes for UK retailers – half the full legal minimum wage.

Labour rights campaigners say that the use of children in factories supplying household names is the result of a “race to the bottom”, as brands chase ever lower labour costs.

The Netherlands-based Centre for Research on Multinational Corporations (known by its Dutch initials as Somo) interviewed 400 workers in 12 factories supplying international brands and worked with the Observer to finalise the report.

“We thought that brands were getting the message on child labour but this investigation shows the risks involved in constantly trying to cut labour costs,” said researcher Pauline Overeem. “The widespread use of children in Myanmar to manufacture clothes for western brands is alarming and depressing and we urge all companies to take responsibility and to ensure that children are getting the education they need and deserve.”

Brands have had some success eliminating child labour from their main supplier factories in recent years, but as wages have risen in countries such as China, companies are increasingly moving production to cheaper markets, including Myanmar, where children can legally be employed for up to four hours a day from the age of 14.

Daw Khine Khine Nwe, secretary of the Myanmar Garment Manufacturers Association Photograph: Gethin Chamberlain

The legal minimum wage in Myanmar is 3,600 kyat (£2.12) for an eight-hour day – equivalent to 26p an hour. Workers in all the factories investigated worked six-day weeks. Labour NGOs argued when the minimum wage was set that a minimum of 6,000 kyat a day was required for a basic standard of living.

All the factories investigated employed workers below the age of 18. Several workers at factories supplying Lonsdale and New Look stated in detailed interviews that they had started work at the age of 14.

A German brand that sourced from the same factory as New Look reported that it had found “misconducts” at the factory, including evidence of child employment. Researchers said the factory subsequently dismissed all workers below the age of 18. But one of the workers, asked her age by the researchers, replied: “Do you want to know my real age or my age at the factory?” A worker at another factory told researchers: “When buyers come into the factory the child workers are being told not to come to work that day.”

There were also reports of several workers below the age of 15 at a factory supplying H&M and Muji. H&M confirmed that it had found two 14-year-olds but that an inspection in November found no one under 14.

Researchers found wages below the full legal minimum at factories supplying Sports Direct, Henri Lloyd, New Look, H&M, Muji, Pierre Cardin and Karrimor (owned by Sports Direct).

The lowest wages of just 13p an hour were found in factories supplying H&M, Karrimor, Muji and Pierre Cardin. The day rate for those workers was £1.06. Myanmar’s labour laws permit factories to pay newer workers at reduced rates.

Workers say they struggle to live on such low wages. Thiri and Yadana, who both worked at a factory supplying Lonsdale, said they could only afford to live in a makeshift hut in a squatter area without electricity or running water.

Thiri said: “The upside of living here is that we don’t need to spend money on rent which makes it easier to get by.”

According to Myanmar’s factories act, workers should not be expected to do more than 60 hours a week, including overtime, but workers reported longer hours in factories supplying New Look, Sports Direct, Henri Lloyd, Karrimor and H&M. Forced overtime was reported by workers in factories supplying H&M, Muji, Sports Direct and Henri Lloyd, while there were reports of unpaid overtime at factories supplying New Look, Pierre Cardin and H&M.

Factory owners in Myanmar say they are under intense pressure from brands to cut costs. Daw Khine Khine Nwe, secretary of the Myanmar Garment Manufacturers Association, urged UK shoppers to think about how budget clothes are produced. “We are asking the buyer to increase the rate and we’ll share it with the worker. But they’re not willing.”

In an interview with the Observer in Yangon last year, she said: “The consumer also needs to understand – the consumer asks for better quality but when it comes to the price they always look for the cheapest one. Which do you want?”

The low labour costs in Myanmar have encouraged international brands to switch production from more expensive countries and between 2010 and 2014 exports tripled to £787m. There are now more than 400 factories in the country, employing 350,000 people, 90% of them women.

In its report, Somo urges the companies to pay workers a living wage: “Clothing companies are constantly on the lookout for production locations that can make clothes quickly and at low costs,” it says. “Over the past few years, Myanmar has rapidly become a popular sourcing destination for the garment industry due to a huge pool of cheap labour and favourable import and export tariffs.

However, working conditions in this industry are far from acceptable. Labour rights violations are rife. Asian suppliers are setting up shop in Myanmar in an unseemly ‘race to the bottom’, pushed by foreign buyers that are eager to secure the cheapest possible prices.”

New Look said: “We recognise the issues highlighted in this report. We are working with our suppliers and local partners in Myanmar to address the findings and to support the development of an ethical garment industry in the area.”

H&M said the report raised “industry-wide challenges”. “It is of utmost importance to us that all our products are made under good working conditions and with consideration to environment, health and safety. We want people to be treated with respect and that our suppliers offer all their workers good, fair and safe working conditions.”

The company stressed that child labour was totally unacceptable, but pointed out that the legal age for working in Myanmar was 14.

Sports Direct dismissed the interviews with the workers as “anecdotal and uncorroborated”, with a spokesman adding: “We would therefore strongly advise you not to publish.” But in a statement the company said: “However, we do not condone these types of abuse and we have policies in place which reflect this view. Details of these policies are published on our company website in our statement about the Modern Slavery Act.”

A spokeswoman for Muji said: “We are committed on a global scale to always ensure good working practices, both internally and in cooperation with our external partners.”

Pierre Cardin said it would investigate the matter further and take the appropriate measures.

Henri Lloyd did not respond to repeated requests for comment and did not respond when offered an opportunity by Somo to react to the report.