Major disputes between Adidas and universities across the country may be settled following the sportswear manufacturer’s announcement to compensate employees of a closed supplier factory.
Adidas stated Wednesday that it will provide severance pay to the 2,700 workers at the PT Kizone factory in Indonesia. The factory — shut down in April 2011 — produced collegiate and non-collegiate licensed apparel.
Seventeen colleges terminated their contracts with Adidas in the wake of country-wide student protests championing workers’ rights, a United Students Against Sweatshops press release stated.
The factory’s closing was precipitated by the owner fleeing Indonesia in Jan. 2011. He did not supply severance pay to his employees, leaving them unemployed and uncompensated for their labor.
The employees are entitled to $3.4 million of severance pay, according to a 2012 assessment by the University-affiliated Worker Rights Consortium and calculations by the Indonesian government. This figure represents the worker’s yearly salary — about $1200.
Nike and Green Textile, a buying agent for Nike and Adidas, have paid $1.5 million, the WRC stated. Nearly $2 million remains unpaid.
In a press release Wednesday, Adidas said the current payment will join previous aid contributions. Adidas has given $525,000 in aid, organized job placement programs and food vouchers, and advocates labor fairness to government officials.
Now, over 1,000 former PT Kizone workers are employed, Adidas Group spokesperson Katja Schreiber wrote in an e-mail interview.
Further details of the agreement, like the exact amount of money Adidas will grant to former workers, are confidential, Schreiber wrote.
“We are committed to long-term solutions and wanted to resolve this matter so we could ensure the focus moves to sustainable solutions for the future,” Schreiber wrote. “This additional assistance will provide additional relief to workers and their families still impacted from the unethical factory closure.”
The University and Adidas have a $60 million partnership, the largest collegiate contract in the country.
In a Sept. 21 letter to Adidas, Coleman wrote that the company’s efforts were respectable, but underwhelming. She urged Adidas to provide immediate, consequential relief to the workers and update the University monthly on its efforts.
“The failure to provide a satisfactory remedy for the specific harm done to P.T. Kizone workers — loss of compensation in the form of severance and death benefits — is not, in our view, consistent with the University Code of Conduct for Licensees,” Coleman wrote.
Coleman has also been in correspondence with the University chapter of USAS. LSA junior Isabelle Stamler-Goody, a member of USAS, said the group has been advocating for severance payment since early 2012 through protests, communication with Coleman and events where P.T. Kizone workers spoke.
At a Feb. 13 event, former PT Kizone employee Heni said Adidas’s vouchers did not meet her family’s specific needs. Former co-worker Aslam Hidayat said Adidas’ efforts did not help him obtain further employment.
Stamler-Goody said it was the legal and ethical responsibility of the companies to pay the severance rather than the factory owner.
“It’s just the system that it’s Nike and Adidas and all of the big companies that are supposed to pay this severance,” she said.
The WRC outlined that it’s the duty of licensees to ensure they meet the licenser’s code of conduct. The University has codes esteeming humanitarianism, which it may argue was violated by Adidas’ actions. The University, if correct in its argument, may revoke Adidas’ rights to license the block “M.”
“Whatever course of action the licensee chooses, the measure of code of conduct compliance is whether the workers are paid the compensation they are owed in full,” the WRC assessment said.
However, Schreiber wrote that the Adidas Group has no legal responsibility to provide severance — Adidas neither owned the factory nor did it unethically close it.
She wrote that Adidas’ last order was placed six months before the owner fled Indonesia, and that in June 2011 PT Kizone informed Adidas they would no longer fill their orders so they could fill the orders of another company.
Follow Rachel Premack on Twitter at @rr_premack.
Correction appended: A previous version of this article stated that Heni, a worker from PT Kizone, only disclosed a first name. However, many Indonesians do not use first names with family names. They often just use one name.