In its September communication to U.S. universities, Adidas announced it was convening a summit in Switzerland to discuss a new scheme, termed the Provident Fund, which is the company’s latest attempt at evading its obligation to pay the $1.8 million in severance owed to 2,800 former PT Kizone workers. According to the company, the fund “would provide coverage to workers affected by factory closures and non-payment of wages and benefits.” While we welcome comprehensive, long-term solutions to abuses in Adidas’ supply chain, four fundamental flaws undermine the Provident Fund scheme as such a solution.
First, the scheme is being developed under the aegis of the Fair Labor Association and its project, the Global Forum for Sustainable Supply Chains. The FLA is funded and controlled by the very brands they ostensibly monitor, which has resulted in monumental failures like the FLA’s assessment that Foxconn factories were “improving” shortly before worker riots broke out last month. This conflict of interest is also at the root of the FLA’s extreme position that brands are not responsible when their subcontracted workers are laid off without payment of legally owed severance, including at PT Kizone, Hermosa, Hugger, Vision Tex, and other shuttered factories.1 Thus, the FLA’s involvement compromises the fund’s credibility from the start.
Second, Adidas’ summit excludes both the former PT Kizone workers, as well as the former Hermosa workers who, seven years after their factory closed, still have not received any of the severance owed to them by Adidas. Directly affected workers are the most important party in any discussion of solutions to non-payment of severance: it is their livelihoods that are on the line. Moreover, to ensure fairness and accountability in the distribution of any severance fund, workers and their legitimate representatives must jointly administer it. Unfortunately, Adidas’ has shown no signs of including worker representatives in the fund’s administration.
Third, in the brand’s own announcement of the Provident Fund scheme, Adidas pledges only to “facilitate a discussion and evaluate options” on non-payment of severance – an empty rhetorical gesture reminiscent of the company’s pledge to “reopen discussions” with the government of El Salvador about severance for the former Hermosa workers in 2007, which failed to result in a single cent of severance payment. While we can understand why Adidas would want to propose a vague panacea for non-payment of severance in response to public embarrassment and university contract loss at Cornell and Oberlin, these PR stunts have no track record of advancing workers rights.
Fourth, so-called long-term solutions are no substitute for Adidas fulfilling its present severance obligations. In the words of the Worker Rights Consortium, “such programs cannot – from a legal, moral or code of conduct standpoint – be used as Adidas is trying to use them: as a substitute for paying workers the money they legally earned.” Adidas’ subcontracted workers are not demanding glitzy Alpine summits – they’re demanding the severance they are legally owed.
We’ve received word that Adidas has invited several universities to attend the Provident Fund summit. In the absence of full payment to PT Kizone workers and a commitment to including legitimate worker representatives in the discussion and administration of the fund, it would be a grave miscarriage of justice if university representatives were to attend the summit and legitimize Adidas’ hollow Provident Fund scheme. Instead, we call on our universities to uphold their codes of conduct by severing ties with Adidas until the company agrees to take responsibility for its subcontracted workers.
1. Furthermore, this is not the first time that a corporation who violated workers rights called in the FLA to whitewash its violations. In 2008-09, when Russell Athletic, an FLA board member at the time, illegally shut down its unionized factory, Jerzees de Honduras, the FLA released a report clearing the company of wrongdoing, which contradicted the report of the independent Worker Rights Consortium, and even ignored the findings of its own investigator, Adrian Goldin.