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Response to CCC letter regarding alleged discrimination against former union officials and implementation of report "Sector-Wide Solutions for the Sport Shoes and Apparel Industry in Indonesia"

February 19, 2009

Herzogenaurach, 19 February 2009 – On 9th February 2009, the Clean Clothes Campaign (CCC) issued a communication to the adidas Group to express concerns regarding the ongoing discrimination of union officials and labour activists in adidas supplier factories in Indonesia. Furthermore, the CCC calls on the adidas Group to implement ‘Sector-Wide Solutions for the sports shoe and apparel industry in Indonesia’ put forward by them and Oxfam Australia.

We have set out below our response to the concerns which were raised in the communication.

1. Alleged blacklisting of former SBGTS union leaders by the factory Ching Luh Indonesia

When this allegation was first raised by Oxfam Australia in their letter dated 10th September 2008, the adidas Group’s Social and Environmental Affairs (SEA) department immediately launched an investigation. We provided Oxfam Australia with a written response and also met with their advocacy officer in Hong Kong on 17th November 2008, to go through our findings.

As part of our investigations we spoke with workers, former trade union officials and the factory management of Ching Luh Indonesia (CLI), but could not find any solid evidence that supports the claim of blacklisting former PT Spotec trade union leaders. The management of CLI insists that they have not acted in a discriminatory manner, citing the fact that at least two other former SBGTS union leaders and leaders from other former Spotec unions – SBKU and SPN –, had already found employment in the factory.

The factory management also claimed that they had no record of having received job applications from the former Spotec trade union officials named in the CCC letter. The adidas Group’s Social and Environmental Affairs staff cross-checked the factory’s recruitment database which holds records on over 18,000 applicants. No applications of the seven individuals could be found.

In an effort to find a way forward, the SEA team met with the former Spotec union officials at the end of November 2008 to discuss their situation. As an outcome of this meeting it was agreed that the former union officials would resubmit their applications to CLI. Ching Luh agreed to allow this, despite the fact that the window for the last round of factory recruitment had closed. SEA confirmed that the applications were received and processed by CLI in accordance with the factory’s internal recruitment procedure.

Since December 2008 the SEA team has visited CLI on three separate occasions as part of the monitoring work. Each time we have checked the status and progress with the former trade union leaders’ applications. The HR department of CLI confirmed the receipt of the seven applications and that these will be considered for any suitable job openings. However, due to the current economic downturn all recruitment at the factory has been frozen, but applications will be held on file.

Our Workplace Standards, which set out our expectations for suppliers, state that we do not accept any form of discrimination directed against trade unions or their members. Indonesian law also prohibits such discrimination. It is our firm position that everyone, including the former union leaders cited in the CCC letter, must receive equal treatment when applying for a job. We believe that our business partner Ching Luh Indonesia fully understands these requirements and the consequences should they breach our Workplace Standards or the law.

2. The case of former SBGTS union leaders from PT Panarub

In April 2007, 30 members of the union SBGTS, including union leaders, were dismissed by PT Panarub following an alleged illegal strike. The dismissals were upheld by the Ministry of Manpower and the Labour Court. The Indonesian Human Rights Commission however called into question the legal basis for the dismissals and the adidas Group, supporting that position, asked PT Panarub to reinstate the workers. The factory refused to do so. To settle the dispute, the dismissed workers and PT Panarub negotiated a financial settlement, in lieu of reinstatement. At the same time, SBGTS asked the adidas Group to ’guarantee’ jobs in other adidas Group supplier factories. We made it clear that we could not do so but we confirmed however to share the contact details of adidas Group suppliers with the former union officials so they could submit applications for any job openings.

Since then the SEA team has engaged in a number of communications (through letters, emails and meetings) with the representative of the former union leaders, Mr. Mohammad Ali. We have offered the former union officials assistance in monitoring any job application submitted to adidas Group suppliers and to intervene should they encounter any form of discrimination when applying for a job.

We have been asked by the former trade union officials to provide them with letters of recommendation and to formally sponsor their applications. We have declined to do so. All job applications must follow the individual hiring procedures of the factory concerned and appointments must be determined solely based on the qualification and competency of the individual applicant. The adidas Group cannot compel independent contractors to take on specific hires, whatever the merit of their individual circumstances or previous employment history.

More recently (as of December 2008), we responded to a request from the former trade union officials to furnish them with an updated list of adidas suppliers, including the contact name of each factories’ HR manager. To date our field team in Jakarta has received no information regarding the status of any job applications by these former union officials, or whether or not they have encountered problems when applying for jobs.

As we stated earlier, we will taken enforcement action against suppliers where discrimination is proven. However, we have no material evidence that these former union leaders have been blacklisted or otherwise discriminated against by our suppliers.

3. Call on adidas to ensure freedom of association in supplier factories and implement "Sector-Wide Solutions for the sport shoe and apparel industry in Indonesia"

On 25th April 2008, we posted our response to the ‘Sector-Wide Solutions’ report on our corporate website. A link to the statement can be found at the top right side of this page.

In our statement, we explained the steps we have taken to advance freedom of association and collective bargaining in our supplier factories in Indonesia and detailed our views on the various recommendations set forth in the report. These recommendations were carried forward and included in the Play Fair Alliance’s April 2008 ‘Clearing the Hurdles’ report. Again we posted a public statement on the Play Fair report, explaining specifically areas where we are aligned, areas where further dialogue is required and those areas where we cannot support the actions which have been requested of the sports good industry. You can download our full statement from the top right side of this page.

In terms of implementing the recommendations given in the ‘Sector-Wide Solutions’ report, we have committed to join a workshop in Indonesia later this year to discuss the report’s recommendations. The arrangements for this workshop have yet to be finalised, but we understand that it will be a multi-stakeholder forum, one which will allow brands, suppliers, NGOs and trade unions to meet and hopefully reach agreement on concrete actions that can be taken to ensure the ongoing improvement of worker rights.