Indonesia: Adidas increases severance to former workers
13/05/2013
The factory in question, PT Kizone, had closed in 2011 leaving 2,800 workers without pay. USAS claimed adidas was refusing to pay $1.8 million in legally mandated severance owed to workers and its campaign led to 17 colleges cutting ties with the brand, and Wisconsin launched a lawsuit.
Adidas has always maintained that it had placed its last orders with the factory months before it “unethically” closed, and that it was not liable to pay workers after the owner fled. However, last week it announced it will contribute additional aid to workers, which has been described by the workers parts as a “substantial sum”. This is on top of the $525,000 it paid in humanitarian aid as well as job placement services, and advocating issues related to workers’ rights.
“We remain sympathetic to the plight of all former PT Kizone workers,” said Glenn Bennett, responsible for global operations at adidas. “This additional assistance will provide direct relief to workers and their families still impacted from the unethical factory closure. At the same time, we strongly encourage our university partners, industry leaders and workers’ advocates to join our efforts to pursue socially responsible and sustainable business practices to influence positive change within the global supply chain.”
The Indonesian district labour union representing former PT Kizone employees will ask the Wisconsin state court to dismiss its claims against the company as a result of the settlement.
“The union and the workers are very pleased that adidas has made this settlement, which will have a real impact on the workers’ lives,” said a representative of the Indonesian district labour union. “Now we can put the lawsuit behind us.”
“We are continuously exposed to complications resulting from lapses in governance across the global market economy and supply chains. This poses risks to all stakeholders – buyers, workers and consumers alike,” Mr Bennett continued.
“The industry-wide initiative led by the Global Forum for Sustainable Supply Chains represents a meaningful step towards long-term change in addressing what workers’ advocates, industry experts, universities and brands are all after – an end to the problem of unethical factory closures and better protection of workers’ unemployment and severance rights. This remains an ongoing priority for the adidas Group and is critical to our business. It is also the right thing to do.”
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