Better late than never? That’s how thousands of garment workers who were stiffed millions of dollars in severance after they were dismissed from an Indonesian factory group nearly a decade ago might be feeling right now.
Wednesday marked the eighth anniversary of the day that Jaba Garmindo declared bankruptcy, resulting in the sudden closures of two factories in the towns of Cikupa and Majalengka that produced clothing for S.Oliver, Uniqlo and others. Last week, S.Oliver gave 100,000 euros ($109,800) to 2,000 of the affected workers, a payment that one union leader called “long overdue” but nowhere close to the outstanding sum, which the Clean Clothes Campaign (CCC) pegged at $5.5 million.
Teddy Senadi Putra, a member of Federasi Serikat Pekerja Metal Indonesia (FSPMI) and a former Jaba Garmindo employee, remarked on the silence from Uniqlo, which he said has turned its back on workers even though they made “products and profits” for “one of the richest brands in the world.” The Fast Retailing-owned retailer “pretends to be an ethical company but they still won’t pay us what we are owed,” Putra said. “After eight years, where is our justice? Where is Uniqlo?” Net profits at Fast Retailing jumped 4.5 percent from a year earlier to 153.39 billion yen ($1.14 billion) for the six months ended Feb. 28.
The CCC said Wednesday that the former Jaba Garmindo workers have tried “every available avenue” to claw back their earnings, including appealing to the Indonesian courts, which confirmed the amount owed to them, albeit to no avail. The company’s secured creditors had already received and mostly disposed of its major assets, the Worker Rights Consortium, an advocacy group based in Washington, D.C., wrote in a brief in 2019. Workers also had to contend with the “disadvantaged legal position” of their claims, the courts’ “lack of consistency and clarity” regarding the interpretation and application of bankruptcy laws, and the glacial speed of the country’s justice system.
In 2019, the CCC and FSPMI filed a third-party complaint with the Fair Labor Association (FLA), a multistakeholder initiative that included both Fast Retailing and S.Oliver as members at the time. (S.Oliver later left the FLA to join Fair Wear Foundation, another multistakeholder group.) The FLA in 2021 determined that Jaba Garmindo’s bankruptcy and closure was “not due to any wrongdoings” on the part of either S.Oliver or Fast Retailing but rather financial mismanagement by the supplier, including irregular and irresponsible use of credit. The organization suggested, however, that they other buyers “come together” to provide financial relief to address the “still-unmet” needs of impacted workers.
“Such an effort would be a huge benefit, even several years later, for the workers and their families and would at the same time demonstrate the brands’ willingness to assist—even in the absence of any legal obligation to do so,” the FLA said.
S.Oliver, which is headquartered in Germany, confirmed the payment, noting that it was “not a dominant buyer” of the manufacturer but that it wanted to help with a one-time donation, which it distributed with assistance from Fair Wear Foundation and the Trade Union Rights Center in Indonesia.
“The S.Oliver Group recognizes the general responsibility towards everyone working in its value chain and is looking back on long and successful partnerships with Indonesian production companies and their workforce,” a spokesperson said. “Indonesia is and in the future will be a market of great strategic importance to the Group. That is why the company has been in close contact with the Fair Labor Association and Fair Wear Foundation to discuss the process and engagement with former workers of the Jaba Garmindo factory.”
A Fast Retailing representative told Sourcing Journal that the FLA’s investigation found that it has “no obligation pertaining to this matter.” The Japanese retailer wrote in 2021 that a lack of unemployment protection for Indonesian workers was a “root cause of this issue” and that it has already acted to “effect system-level solutions to this type of problem” by partnering with the International Labour Organization.
“Under our partnership, we have sought to increase protection for Indonesian workers through the establishment of a new national employment insurance system, the expansion of reskilling programs for the unemployed, and through improved public employment services,” Fast Retailing said. This, it added, led the Indonesian government to enact the job creation omnibus law, establishing in November 2020 a new employment insurance system, including unemployment benefits.
But the fact that Fast Retailing has “willfully ignored” the FLA’s recommendation to provide financial support demonstrates that “relying on brands to do the right thing simply doesn’t work,” the CCC noted. The group continues to call all brands to sign a binding #PayYourWorkers agreement, establishing a global severance guarantee fund so garment workers don’t have to keep fighting for the money they’re entitled to. Severance theft, despite being illegal in most countries, continues to affect hundreds of thousands of workers worldwide, with cases “rising exponentially” since Covid-19 emerged, the CCC said. Because garment employees are chronically underpaid, this “vital” safety net can make the difference between survival and destitution.
“This case illustrates the lack of accountability in the garment industry, and ongoing corporate impunity,” it said. “No brand should be able to simply turn their back on their workers and walk away from abuse in their supply chain, as Uniqlo has done. And no worker should be forced to fight for eight long years for money that they have legally earned.”