KiK CEO Patrick Zahn and PILER executive director Karamat Ali sign the agreement fulfilling KiKs compensation payments

KiK CEO Patrick Zahn and PILER executive director Karamat Ali sign the agreement fulfilling KiK's compensation payments

German retailer KiK says it has completed its commitment to pay compensation to the survivors and families of workers killed in the Ali Enterprises garment factory fire, Pakistan's worst industrial accident.

The company confirmed to just-style it had now fulfilled its obligations under the 2012 agreement, transferring US$5.15m to the International Labour Organisation (ILO) in December.

An agreement was finally reached in September last year to pay compensation, after four years of campaigning and months of negotiations, to fund loss of earnings, medical and allied care, and rehabilitation costs to the injured survivors and dependants of those killed in the 11 September 2012 fire.

KiK was the only known buyer at the Ali Enterprises factory, in Baldia, Karachi, where more than 255 workers lost their lives and 57 were left injured. Workers burnt to death trapped behind barred windows and locked doors, while others sustained permanent disabilities jumping from the upper floors.

KiK had previously paid $1m in emergency compensation in December 2012, and Ali Enterprises fire victims have received some payments from public social security schemes in Pakistan to compensate for loss of earnings and medical care.

Payment, however, will not reach the victims and dependants immediately. In a statement, a KiK spokesperson said: "The ILO is in charge of distributing the money to the affectees. Due to administrative reasons, however, ILO was not yet able to begin disbursing the money. It is expected that within the next three months, payments will begin.

"As soon as the payments begin, families will receive the money in monthly instalments."

A summary of the KiK payment arrangement is as follows:

  • The $5.15m to be funded by KiK will include a $250,000 margin for a fluctuation in costs, meaning that $4.9m will go to the affected families and survivors.
  • The implementation, administration and governance of the Arrangement will be developed in a process facilitated by the ILO. It will involve close consultation with relevant constituents and stakeholders, as well as a supervisory role for the Sindh High Court.
  • In total, the Arrangement will provide $6.6m for the compensation process, with $5.9m being provided by KiK and $700,000 being funded by social insurances schemes in Pakistan (SESSI and EOBI) as well as the owners of Ali Enterprises.
  • Claimants will be paid a monthly pension. The amount will differ according to the individual's financial situation and number of dependants.
  • The pensions will be not at living wage levels, as the international standards for workplace injury are based on actual wages earned. In the Ali Enterprises Arrangement however the proxy used for the actual earned wages is generous and pensions are indexed to meet the inflation rate.
  • The Arrangement does not cover damages for pain and suffering.