GUATEMALA: Groups claim Alianza workers deprived of $6m
Workers making clothing for JC Penney, Macy's, Kohl's and Wal-Mart at the Alianza Fashion factory in Guatemala were deprived of more than $6m in back wages, benefits and pension funds when the company shut down last year, a new report claims.
The allegations from the Institute for Global Labour and Human Rights and CEADEL (Center for Studies and Support for Local Development) in Guatemala follow an investigation after the collapse of the company in March 2013.
The groups are releasing a new report, 'Corruption and Greed: The Alianza Fashion Sweatshop in Guatemala' as part of a joint campaign to hold major US and Canadian apparel companies accountable.
More than 60 US labels and retailers are said to have sourced 52m garments in the last 12 years from Alianza, which employed between 1,050 and 1,500 workers, mostly indigenous Maya.
But the report claims $1.44m was stolen when the factory's owner fled in March 2013 and over $4.7m in payments management never made to the Guatemalan Social Security Institute, denying workers and their children health care and pensions.
Lavish 100% tax breaks are also said to have saved the Alianza Fashion factory and US companies millions of dollars.
In contrast, the workers earned a base wage of just $1.05 an hour, which is the lowest wage in Guatemala and well below subsistence levels, the labour rights groups say.
"From the very beginning at the Alianza Fashion factory, management's policy was to plunder the workers in every way possible - robbing them of over $6m in back wages and benefits over the years in collusion with corrupt officials of the Guatemalan Social Security Institute and Ministry of Labor, who totally failed to defend the rights of the workers," says Gabriel Zelada, director of CEADEL in Chimaltenango.
The groups want around 59 US brands and retailers who sourced from the factory to follow the example of PVH Corp, which is donating $100,000 to around 800 workers employed at the time of Alianza's collapse.
"The labels should have been more vigilant all along," the report says - noting that they "profited from huge mark-ups on garments produced at Alianza."
Examples include a Wal-Mart women's blazer produced at Alianza for $4.25 but retailed for $21.88 - a markup of 415%. Likewise, a Calvin Klein boys' suit with vest made for Burlington Coat Factory cost $9.23 to make, but retailed for $59.99 - a markup of 550%.
Also singled out for criticism is the Guatemalan Ministry of Labor which "has done nothing to enforce compliance with Guatemala's labour laws and internationally recognised worker rights standards."
There are also calls for the US government to respond with serious sanctions for the violation of fundamental workers' rights at Alianza and "many other Guatemalan garment factories." These "represent a failure of the Guatemalan government to uphold its commitments under the Central America Free Trade Agreement."
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