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KARACHI – Families affected by the Ali Enterprises garment factory fire of 2012 which killed more than 250 garment workers will receive pensions out of a fund financed by the factory’s main buyer, German retailer KiK. The decision to pay out follows years of international pressure and could potentially set a new precedent for the garment sector. The families will receive life-long pensions matching international standards as set by the International Labour Organisation (ILO).

The Ali Enterprises garment factory fire killed more than 250 workers only days after it had been audited and certified in 2012. Ali Enterprises produced clothes for German garment company KiK, which paid US$1m in immediate aftermath of the fire. The company later agreed to pay US$5.15m into a fund to provide for pensions for affected families.

The factory was granted SAI8000 certification only weeks before the fire by private auditing company RINA, which has never acknowledged any responsibility for the tragedy.

A note from the Clean Clothes Campaign says the Ali Enterprises agreement is “ground-breaking in many respects.” It adds: “Contrary to earlier large-scale compensations in the garment industry, this arrangement was set up in order to pay life-long pensions in full alignment with ILO Convention 121 on employment injury benefits. This however also meant that the processes of preparation, calculation, the setting up of a fully representative oversight committee, the distribution process and the finding of a solution that respected national circumstances and met international standards were pioneer work, which involved many domestic and international partners. This further lengthened the process.”

German Development Minister Gerd Müller, for his part, said: “The case of Ali Enterprises is a dramatic reminder of how important it is that social and labour standards are implemented in the global textile sector. We are pleased that more than five years after the incident the victims will finally receive compensation. The Partnership for Sustainable Textiles was able to play a key role as mediator between civil society and the industry.”

Nasir Mansoor, deputy general secretary National Trade Union Federation Pakistan (NTUF) added: “This is an historic moment. The families affected by the Ali Enterprises fire are compensated in line with ILO compensation standards. This will set a precedent to be followed in the future. International support from the ILO, IndustriALL Global Union and Clean Clothes Campaign were instrumental to make this agreement on long-term compensation possible. Now, it is high time to start recognising the fundamental right to a safe and healthy workplace in Pakistan, to prevent any future factory incidents.”

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