Response to the Oxfam Australia Report "We are not machines" on factory working conditions in Indonesia

Background

adidas-Salomon has a policy of listening to the views of all stakeholders, and therefore we have studied the Oxfam Australia report closely. We share a common concern: the wellbeing and safety of the workers who make our products.
 
We have a code of conduct called the Standards of Engagement (SOE) which requires our suppliers to comply with the core labour standards outlined by organisations such as the International Labour Organisation (ILO). To ensure that the SOE is a reality in our suppliers' factories we have an international team of 30 people who monitor factories and work with suppliers to develop action plans and ensure a process of continuous improvement. In Indonesia, which is one of our main sourcing countries, we have 2 SOE team members: a specialist in labour issues, and a health and safety specialist. Other members of the team also visit to support the SOE programme and through our membership to the Fair Labour Association we also require independent third party monitors to regularly audit our suppliers in Indonesia.
 
The report acknowledges that improvements have been made during the last 2 years in the factories of our suppliers, but does not present a completely balanced picture. For instance, it does not credit us for the results of our work. Progress has been made in the following areas:

Freedom of Association

The right of workers to organise themselves and to represent their views to management is one of the core principles of our Standards; a principle which we defend vigorously. If a factory has an atmosphere that promotes freedom of association and collective bargaining, many of the common labour problems will be resolved. As a company which has union representatives on our Supervisory Board and an active Works Council, we recognise the importance of workers organisations. Consequently some of our suppliers in Indonesia have now allowed independent trade unions to operate alongside or instead of the former official government union SPSI. We recognise that some suppliers do not see the importance of workers organisations, and we are working constantly to change their view through training and consultancy services.
 
The case of Ngadinah, who was imprisoned for a short time following her involvement in strike action, is also mentioned in the report. Again insufficient credit is given to adidas-Salomon for our role in writing and speaking to government authorities and ensuring she had a fair trial and was reinstated. Following this case we organised, with the assistance of the ILO and the Manpower Department, a workshop to improve communication between unions and the factory management in all our footwear factories. Majority and minority unions alike were invited to attend.
 
The wording of our manufacturers' agreements with our suppliers makes it clear we do not tolerate any retaliation against workers who are active in legal worker organisation activities. The reduction in harassment of workers, which the report admits, is partly due to this.

Health and Safety

The report draws on health and safety information, which is 2 and 3 years old, and fails to acknowledge the very significant progress which has been made in improving the air quality in our suppliers' factories in the last year. On average 40 grams of VOCs (Volatile Organic Compounds) are required in the cement in a pair of our shoes, compared to 70 grams a year ago. In 2002 this will be reduced further to around 25 grams per pair. This means the air quality in factories is at, or exceeds, internationally accepted standards. The health and safety experts in our team work with factories on issues such as fire safety and machinery safety to ensure that accidents are reduced to the only acceptable level - zero.

Working Hours

The report acknowledges that progress has been made in reducing working hours to between 45 and 60 hours a week, but fails to recognise that this is the result of improved efficiency. This has reduced worker turnover and made the workforce more effective and content.

Wages

The legal minimum wage, paid to all our suppliers' workers, increased in January 2002 by 38%, meaning that it is keeping better pace with cost of living increases than previously. Our Standards state that workers should earn enough to cover their basic needs and be able to earn some discretionary income, and one important way we enforce this is to make sure that workers are paid the legal rate for overtime work. In Indonesia, factory workers are paid at levels comparable to teachers and university professors.

Conclusion

Provided that there is no political meltdown, adidas-Salomon remains committed to buying products from Indonesia. We have invested considerable resources in developing new products, and in ensuring that factories are more efficient, fairer and safer places to work.