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Labor Groups ‘Disappointed’ by Complaint Dismissal Against Adidas

Labor rights groups have hit out at the Organisation for Economic Co-operation and Development (OECD) after its German National Contact Point (NCP) dismissed a complaint against Adidas for alleged wage and freedom of association violations at a subcontractor in Indonesia.

The Clean Clothes Campaign, Indonesian labor law organization LIPS and the German SUEDWIND-Institute said Wednesday that NCP’s decision to close the case without resolution was “disappointing” in light of both established patterns of union busting and Adidas’s “failure to carry out suitable risk management.”

The NCP had accepted the complaint in 2018 after more than 1,300 workers, including several union members, were fired from PT Panarub Dwikarya (PDK) in February 2012 following protests over minimum wage, back pay and freedom of association rights.

The groups said Adidas refuted that the dismissals were violations of freedom of association rights, and, by not giving its own assessment on the case, the NCP has let the sportswear giant’s “version of events stand.”

The NCP has also “failed to acknowledge” the established business relationship between PDK and one of Adidas’s main Indonesia shoe suppliers, Panarub, they said.

“Substantial evidence indicates Panarub is the parent company of PDK, including shared management personnel between the two factories,” the groups said in a statement. “This is a vital point. Adidas is a major and ongoing buyer from the parent company and therefore has significant power and influence over both factories.”

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Adidas, they noted, has been less than forthcoming throughout the complaints procedure, and the NCP “has not demanded further cooperation.”

“This lack of transparency puts workers’ rights at risk and makes it challenging for NGOs to offer tailored recommendations on better risk management for future cases of suspected trade union discrimination,” they added.

A spokesperson for Adidas said the company “rejects” the allegation because it was not a contractual supplier at the time in question. The German firm also claims it was “instrumental” in reaching an agreement between PDK and local unions and securing compensation for the affected workers.

“The published OECD statement summarizes the results of a longstanding mediation process to which Adidas has significantly contributed,” the spokesperson told Sourcing Journal.

Adidas was named one of the most transparent fashion companies in a recent index of 250 of the world’s leading brands.  A November report found the company was leading efforts to supply a living wage to garment workers, though the entire sector had a long way to go in terms of meaningful progress.