GERMANY: Adidas summit to discuss fund for garment workers
Sportswear giant Adidas AG is looking into the possibility of setting up an industry insurance fund to help workers who are left with no wages or benefits when supplier factories close.
Talks on the fund - which is being called a Provident Fund - are set to take place later this month in Switzerland at a summit convened by the Fair Labor Association's Global Forum for Sustainable Supply Chains.
Manufacturers, financing institutions and insurance experts are expected to attend. Adidas says it hopes to close "one of the critical gaps in governance" where countries have legislation providing for severance pay, but very few require the employer to make provisions for eventual severance obligations.
Although details of the workshop have not yet been made available, a spokesperson for the Fair Labor Association told just-style it plans to issue a statement on its website.
Adidas in particular has faced criticism from labour union groups and others over its approach to worker rights following the non-payment of severance to workers at a former Indonesian supplier factory.
Last month Cornell University said it was ending its eight-year contract with the sporting goods firm after PT Kizone shut down unexpectedly in April 2011, leaving 2,800 workers without outstanding severance pay totalling $1.8m.
For its part, Adidas 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."
Instead, it says it has provided food and humanitarian aid for the workers, and helped some find new jobs with Adidas Group suppliers - despite doing no business with the factory for nearly six months prior to its closure.
It also says the sale of the former factory's assets is intended to settle debts and help fulfil severance obligations - although this has been delayed following a challenge by the main creditor bank.
But US campaign group United Students Against Sweatshops (USAS) says the Provident Fund scheme is no solution to issues of compliance in the supply chain.
Companies: Adidas Group
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