AMSTERDAM – German sportswear brand, Adidas, has dismissed claims it should use its leverage to pressure one of its suppliers to pay severance payments to a group of Indonesian workers who were dismissed following a strike. The calls for adidas to intervene have come from the Clean Clothes Campaign, which has complained to the German National Contact Point of the OECD that Adidas failed to provide “access to remedy” to 327 workers from Indonesian shoe supplier Panarub.
The story of the workers, which goes back six years, illustrates how NGOs are increasingly citing the OECD Guidelines for Multinational Enterprises as well as the UN Guiding Principles on Business and Human Rights in their dealings with apparel multi-nationals.
In 2012, 2,000 workers of PT. Panarub Dwikarya (PDK), part of the Panarub Group, went on strike over wages and working conditions, with 1,300 workers who participated in the strike dismissed by the factory. The Clean Clothes Campaign says 327 workers have still not received their severance payment.
The ILO eventually concluded that the dismissal of the PDK workers was unjustified and an abuse of the workers right to freedom of association.
The Clean Clothes Campaign is urging Adidas to use its bargaining power over Panarub to demand they pay former workers their severance. The NGO argues that Adidas has violated the OECD Guidelines for Multinational Enterprises as well as the UN Guiding Principles on Business and Human Rights which state that companies need to assess their human rights risks, carry out human rights due diligence and in the event of human rights abuses in their supply chain mitigate and provide access to remedy to rights-holders, in this case the PDK workers.
Mirjam van Heugten from Clean Clothes Campaign says: ‘In the last five years Adidas has insufficiently used its leverage over one of its main shoe suppliers Panarub to provide workers with severance payments. As a direct consequence of this, workers have been evicted from their homes or had their children drop out of school because they could not pay the school fees anymore.”
Adidas told the Business and Human Rights Resource Centre: “We see no justifiable grounds for such a complaint. Nevertheless, we are happy to share with the NCP our efforts and actions to date to seek remedies and to assist the parties resolve their longstanding dispute…
“We had no orders with PDB at the time the workers went on strike in July 2012, or at the time when they lost their employment, or at any time thereafter, up until the factory closed in January, 2014. Despite this fact, we stepped forward, based on our long-standing relationship with the union’s parent federation, to encourage an early resolution of the dispute.”
Adidas also claimed it reached out to PDB and encouraged it to extend the deadline for workers to return to work and facilitated the appointment of an independent third party. It also said it continues to urge both parties to negotiate and reach a mutual agreement.