Big brands have refused for decades to take responsibility for the payment of workers’ settlements when their suppliers close, even though they are often directly responsible for the sustainability of the factories.
When 41-year-old Saepudin read in the newspaper that Jaba Garmindo, the Indonesian factory where he worked, had been sued by two banks, he knew something was wrong. For weeks, he tried unsuccessfully to get an explanation from the company. Two months later, the factory stopped paying him, until in April 2015 it declared bankruptcy, leaving him and another 2000 workers without work. When the company ended his contract, they owed him four months’ salary as well as severance pay for the 19 years that he had worked there.
Nearly three years later, the Jaba Garmindo workers have succeeded in getting their back pay, but not their severance package. “Nobody wants to take responsibility for paying us what we are owed,” says Saepudin, who like many other Indonesians only has a first name. The Jaba Garmindo case, however, is not exceptional. The sudden closure of factories has become commonplace in the textile industry and workers are rarely compensated when companies declare bankruptcy.
“It’s a big problem because in most countries, especially in south-east Asia and Latin America, companies do not have money set aside for settlements,” says Bent Gehrt, field director for south-east Asia for the Worker Rights Consortium. He says that in part this is because “[profit] margins for factories in the textile industry are very small.”
Most countries in the world recognise some form of compensation for unfair dismissals, with the amount generally depending on the number of years worked. In the case of Indonesia, the law recognises compensation of one month’s salary for each year worked up to a maximum of nine months. The law also includes compensation for long service that can go up to ten months’ salary, which in the case of textiles, rarely exceeds the minimum established by law. In total, the unions calculate that Jaba Garmindo owes workers at least US$5.5 million (about €4.45 million).
However, for Jaba Garmindo workers it is not clear whose door they should be calling at.
The big brands have refused for decades to take responsibility for the payment of workers’ settlements when their suppliers close, even though they are often directly responsible for the sustainability of the factories. “The big brands have a responsibility. The way they work, changing from one supplier to another, makes the whole industry very unstable,” says Samantha Maher, international urgent appeals coordinator for the global alliance Clean Clothes Campaign.
In the case of Jaba Garmindo, although the factory supplied several brands, the factory marched to the beat of its biggest customer, the Japanese brand Uniqlo, says Tedy Senadi Putra, one of the union leaders at the factory. “When they made the first order in 2012, they bought new machines and hired more workers,” says the trade unionist. The factory’s money problems also began when Uniqlo started cutting orders. “Uniqlo cut orders in September 2014 and the payment of salaries was delayed,” says Senadi Putra.
The workers are now demanding that the Japanese brand pay for their severance packages after Jack Wolfskin, another brand that bought from the factory, gave workers €32,227. “Brands prefer it to appear as though they have no responsibility. But it is the brands that benefit most [from the labour of these workers]. So they should be there to make sure that workers receive what is stipulated by law,” says Liana Foxvog, director of organising and communications at the International Labor Rights Forum (ILRF). Including funds for compensation in audits would avoid problems after closure, adds Gehrt of the Worker Rights Consortium. “When brands have a stable relationship with a factory or make a large order, they should make sure they have sufficient funds to pay compensation,” he says.
The only way out of poverty
For Sri Paryani, after 19 years working in the factory, the closure of Jaba Garmindo changed her life at a stroke. Overnight, her entire family was left without an income, since her husband also worked there. “It is very difficult to find another job. We are not young anymore,” says the 37-year-old. “It can take years to secure the payment of severance packages. It is a disaster for workers. They leave them with nothing while they are waiting and if they challenge the factory, they can be blacklisted and no other factory will hire them,” says Foxvog.
This is what happened to Senadi Putra. His role as a union leader led him to lose his job even before the factory closed and his reputation as a ‘revolutionary’ has blocked him from accessing any other factory in the area, even though a court ruled in his favour after Jaba Garmindo had already closed. Without a salary coming in, his wife and five children, the youngest of which is a newborn, had to return to their hometown, on the island of Sumatra, in order to survive. “Living there costs less,” explains Senadi Putra. However, he stayed in the area to try to find a new job and keep fighting for his severance package. “I have many debts. If they paid me what they owed me I could pay them off and start a new business.”
Other workers in the world are fighting the same battle. In Turkey, workers at the Bravo factory are trying to get paid back wages and compensation after the company’s sudden closure. In Indonesia, 200 workers from the PT Hansoll-Hyun factory also found themselves in the street overnight without receiving their compensation. In Cambodia, some 2,000 workers have organised protests over the closure of the three factories, belonging to the same company, which closed at the beginning of February.
There have also been some victories, however. In Indonesia itself, workers from the PT Kizone factory, which closed suddenly in 2011, managed to get both Nike and Adidas, the latter after two years of pressure, to pay the compensation they were owed. In Honduras last year, Rio Garment workers got some of the factory’s principal buyers, including the clothing giant Gap, to pay US$1.3 million (about €1.05 million) in compensation.
The Jaba Garmindo workers will not settle for less. Sri Paryani and her husband worked for almost two decades in the factory with the dream of being able to send their only son to college. Now, the only hope left for them to be able do so is to get the compensation they are owed. “I do not want my son to have to follow the orders of another person to get money and live without freedom. I do not want my son to have to work in a factory.”