INDONESIA: Adidas stands firm in factory severance row
Sporting goods giant Adidas continues to be pressured to make US$1.8m in severance payments to workers at a former Indonesian supplier factory after its owner fled without paying them.
Worker rights activists in the UK, US and Germany have this week delivered a petition signed by nearly 50,000 people to the company, calling on it to settle its share of the payments for the 2,800 workers at subcontractor PT Kizone.
Goods in the factory, which closed unexpectedly in April 2011, were produced on behalf of several major apparel brands, including Nike and the Dallas Cowboys. Other buyers have paid the $1.6m they owed, after a court in Indonesia ruled workers were entitled to a total of US$3.4m in severance.
The petition is timed to coincide with the London Olympic and Paralympic games, where Adidas has spent $156m on a sponsorship deal.
Campaigners say former workers, who were paid $0.60 an hour, are struggling to make ends meet without the severance, which amounts to half a year's wages.
For its part, Adidas in July launched a food aid programme for the workers, and says 1,200 workers have found new jobs - 200 of which are with Adidas Group suppliers. Other local workers may also be offered jobs at the former PT Kizone plant which has recently re-opened under new ownership.
The assets of the former PT Kizone factory were sold at auction in December 2011. Proceeds from the sale will go towards settlement of debts - and part will be paid out to workers to fulfil severance obligations, Adidas says.
"We understand that the court-appointed receiver has proposed to settle 20% of the severance owed to workers, but this has been challenged by the main creditor bank. Workers therefore continue to wait, uncertain as to when and what amount of severance will be paid by Indonesia's Commercial Court."
The Adidas Group says it has fully honoured its contractual obligations at the plant, and "will not accept nor assume the financial duties of the former PT Kizone owner and pay severance to the workers, as some labour groups and business partners have asked us to do."
The company adds it has taken actions "that are guided by our humanitarian aid policies and the remedial approaches we have developed in managing factory closures, which continue to prove troublesome in many regions of the world."
It adds that its main focus is "to pursue sustainable business practices that address the systemic root cause of illegal factory closures and protect workers' benefits and severance due from their employers."
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