Government outreach

We recognise the value of having a broad range of engagements with governments in a number of countries. They help us to improve working conditions and secure worker rights in the countries where we source our products.

Three typical engagements with governments we undertook during 2008 were in Indonesia, El Salvador and Bangladesh.

Working with government, Indonesia

In mid 2007, PT Prima Inreksa Industries, a footwear factory in Indonesia, revealed that it was in serious financial trouble, following the abrupt departure of its management team. The former managers left behind a factory that was on the brink of bankruptcy. Faced with this situation, the adidas Group agreed to support the factory owner by putting in place measures to help the factory regain financial stability. After one week's temporary closure, the factory reopened and the 6,000 employees returned to work.

For more than a year adidas supported the factory through direct financing of material supply, mobilising a team of experts to support the new factory management and continuing to place orders to provide time for the factory's owner to develop a restructuring plan. Despite our best efforts, an assessment of the factory's financial position by independent auditors in mid 2008 concluded that the factory could not achieve the level of solvency required to support the basic needs of the business. This situation left the adidas Group with no option other than to end the business relationship by giving PT Prima six months' notice.

The adidas Group informed the Indonesian government and the Indonesian Footwear Manufacturers Association (Aprisindo) of its decision and its commitment to work closely with PT Prima's owner during the six-month transition period. The factory raised its concerns about the volume of orders placed during the transition period and asked the adidas Group to modify its termination agreement. In response, the adidas Group agreed to participate in a series of discussions with the factory, facilitated by the Minister of Industry and Aprisindo, to find the best possible solution for both parties. The Minister was supportive and provided constructive feedback during the negotiation.

In the end, the adidas Group and PT Prima reached a final agreement on terms, signed in the presence of the Minister, which would ensure business continuity and allow time for the factory management to find new investors and alternative buyers.

Government engagement, El Salvador

SEA continues to work with a noted local jurist, Juan Jose Zaldaņa, to engage senior government officials from the Ministries for Labour, Economy and Social Security as well as unemployed workers and educators to resolve the employment issues and consequences from the closing of the Hermosa factory in 2005.

One approach focused on closing breaches in the regulatory enforcement. They included the lack of contributions to employee benefit entitlements, and the non-payment of severance and seniority indemnification. The government legislated for two regulatory improvements to employer benefit compensation. A third piece of legislation was being drafted at year-end 2008 to make worker severance and seniority compensation entitlements more secure.

Another approach focused on healthcare access, job training and job placement for unemployed Hermosa workers. Two of these points were completed in 2008, and the third is ongoing.

Job training

A national agency for professional formation and the Albert Einstein University sponsored twelve weekends of skills training for unemployed Hermosa workers. Classes included language, computer and sewing competency.

Job fair

The second of two sessions agreed between the government, workers and stakeholders was a job fair organised exclusively for unemployed Hermosa workers. This May 2008 event gathered HR administrators from twelve factories, five of which produce for the adidas Group, to a single venue for workers to interview and apply for open positions. 15 former Hermosa workers attended the job fair but none took applications from the factory employers.

Healthcare

The Ministry of Health has ensured all unemployed Hermosa workers are registered at one of the public hospitals in San Salvador. Workers have had easier access and faster treatment in a number of cases.

Food

Workers who participated in the job training received food baskets of rice, beans, milk, sugar, oatmeal, pasta, corn meal and cooking oil at every session they attended.

The engagement in 2008 showed the strongest progress since 2005, and the engagement is expected to continue maturing in 2009. Recovery of the workers severance compensation and the repatriation of social security funds remain important targets in 2009.

Human rights advocacy, Bangladesh

On 24 January 2008, Mehedi Hasan of the Worker Rights Consortium (WRC) was arrested and detained by National Security Intelligence in Dhaka. His arrest was believed to be directly linked to the labour rights monitoring that he carried out for WRC, a non-governmental organisation which investigates labour practices on behalf of US colleges and universities.

Hasan was held incommunicado and was subject to interrogation over a number of days. His arrest was attributed by Human Rights Watch to 'a recent pattern of harassment of labour rights activists that has followed clashes between workers and police' in Dhaka. The WRC wrote to foreign buyers, including the adidas Group, asking them to support a call for the Bangladesh caretaker government to release Hasan. The adidas Group responded by writing to the acting Minster of Justice. We attested to the independence and credibility of the work of the WRC and their international standing as an NGO.

The combined efforts of foreign governments, brands and NGOs, both in Bangladesh and internationally, secured Hasan's release. All pending charges were dropped and he was freed from police custody on the afternoon of Sunday, 3 February 2008.

We were happy to reach out to the Bangladesh government because we felt it was an issue where we could bring our influence to bear. We were able to vouchsafe Hasan's NGO employer because it operates in the realm of worker rights as we do. This example stands in contrast to requests made of us to engage the Chinese government over the issues of Darfur and Tibet. Our view is that those are not issues we can influence. See what steps we did take on these issues.