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Update on the current situation at the supplier factory PT Panarub in Indonesia

April 14, 2008

Herzogenaurach, 14 April 2008 – In our previous statement posted on May 2007, we provided an update about the resolution of a case involving the dismissal of 30 workers, who were affiliated to the SBGTS trade union (formerly known as ‘Perbupas’). The workers were dismissed by PT Panarub following a strike in 2005. The dismissal was upheld by the Ministry of Manpower, but disputed by the Indonesian Human Rights Commission. For many months the workers remained unemployed and relied on a humanitarian grant from the factory that, despite repeated requests from the adidas Group, refused to reinstate the workers. The case was eventually resolved by mutual agreement between the workers, the union and PT Panarub. A financial settlement was made, with each worker receiving a compensation package in mid April 2007.

Immediately following of the resolution of the case, SBGTS requested that the adidas Group offers a guarantee to secure employment for each dismissed worker in other adidas Group suppliers. We responded to this request by committing to seek gainful employment for any of the dismissed workers in other suppliers, and in doing so, to ensure they are not subject to discrimination or unfair treatment. However, as a buyer, we are unable to provide any individual with a blanket guarantee of employment. We stressed to the union that every job applicant must meet the performance requirements and fulfil the internal hiring policies and procedures of the factory in which they are seeking employment.

Several meetings and discussions were held with SBGTS and in August 2007 we wrote to them outlining our proposals for a job placement scheme for the dismissed workers. The job placement scheme comprised an offer by the adidas Group’s social compliance team to:

  1. Notify the union of available job openings; and
  2. Monitor the handling of the application by our suppliers.

To date, we still not received a response from SBGTS to our offer. This is regrettable, as it is not viable for us to move forward with any job placement, without the direct support and cooperation of the union and the dismissed workers.

As a 3rd party, we also continue to support the union membership verification process in PT Panarub, which was first highlighted by the WRC in 2005. However, we are facing an increasingly difficult task as both unions involved show no desire to work together to reach a mutual agreement on the verification process. It is deeply frustrating for all concerned, that despite extensive efforts spanning several years, we have seen no final resolution to this issue. The latest setback has been a unilateral decision by SBGTS to withdraw their support to a verification exercise proposed by the local Manpower office, as mandated by Indonesian law.

Notwithstanding these setbacks, we remain hopeful that both unions will eventually reach a consensus, so the verification process can move forward.