WELCOME TO THE ARCHIVE (1994-2014) OF THE MAQUILA SOLIDARITY NETWORK. For current information on our ongoing work on the living wage, women's labour rights, freedom of association, corporate accountability and Bangladesh fire and safety, please visit our new website, launched in October, 2015: www.maquilasolidarity.org
January 26, 2007
At the Hermosa factory in San Salvador, violations of legally-required wage and benefit payments had been occurring repeatedly over the years, including illegal deduction of wages for illness, delaying of payments, failure to pay overtime salaries or maternity benefits. For example, the owner deducted quotas for credits and the social housing fund from workers’ salaries, but did not transfer the deductions to the banks and/or the fund, leading the housing fund to send eviction orders to the workers.
When workers asked the owner, Mr. Montalvo, to pay them regularly he told them he had no money. However at the same time he opened a second factory in Guazapa ("MB Knitting"), which is still producing today.
Around Christmas 2004 a group of workers decided to form a union at Hermosa. They registered their union at the Ministry of labour on April 3, 2005.
On April 18, 2005 the union applied for an investigation of the Hermosa factory at the Ministry of Labour. The workers informed the Ministry about the debts Hermosa had with them and about the labour rights violations.
In a meeting at the Ministry on May 2 the Hermosa owner admitted there were problems in Hermosa but asked for more time (until he had new orders) to pay outstanding wages. That same week he brought the raw materials from Hermosa to MB Knitting and also some of the machines. He told the workers that he was would be stopping production and suspending the workers for three months.
From May 11 to June 8, 2005, some Hermosa workers protested the suspension by occupying the factory’s cafeteria. The labour court ruled that their occupation was illegal and that they should return to work on June 10. But when workers came to the factory on June 10 they found a sign saying the factory would re-open on July 13. It never did.
Some workers (none of whom were members of the union) were rehired by the second plant owned by Mr. Montalvo. The remainder were discharged with the promise they would be rehired. None of them were rehired.
Since then, workers have been protesting the closure, demanding that the factory re-open and that their legal severance, pension fund money, outstanding wages and overtime payments be paid. The owner claims to have placed many of these employees on unpaid suspension, a legal status that enables an employer to delay payment of severance when a factory is temporarily closed, pending the resumption of operations. The time period allowed for this status however has elapsed.
In El Salvador several civil society groups formed a coordination to support the Hermosa workers. These include the women's organizations Las Melidas, Las Dignas, ORMUSA, MSM, the unions CSTS and FEASIS, FESPAD and La Mesa Sindical de la Maquila (Round union table of the Maquila). The workers have protested in front of the Hermosa factory for months, demonstrated at the Ministry of Labour, blocked the streets to the second factory owned by Mr. Montalvo, and demonstrated in front of a hotel where an adidas representative was staying.
There is strong evidence that Hermosa workers who supported the union have faced blacklisting by other garment factories in the area. This group of workers has also been subjected to acts of intimidation and threats of violence in response to their vocal criticism of Hermosa.
Not only did the Hermosa workers work for years in a factory that failed to respect national and international labour standards, they also lost their jobs due to organizing (which is their right), are blacklisted at other factories, and have not received the severance pay they are legally entitled to.
On October 10 2005 the Christliche Initiative Romero (CIR) contacted adidas. Adidas sent a representative to El Salvador and asked GMIES (a local independent monitoring group) to assist them in their investigations.
On 7 December the European Clean Clothes Campaign (CCC) contacted Nike and Russel Athletic. Both indicated they would investigate the matter and cooperate with adidas. As these three brands all are Fair Labor Association (FLA) members CIR filed a complaint with the FLA as well. CCC also contacted Reebok and Speedo.
The Maquila Solidarity Network (MSN) contacted Wal-Mart on December 20, 2005.
The US based Worker Rights Consortium also contacted several of the brands, and has raised the issue with the universities, who hold licensing contracts with adidas, Nike and Russel.
The groups told the brands that even though legal responsibility to pay severance belongs to the direct employer, in this case it is clear that given the many outstanding debts of the owner (who faces criminal action due to fraud) this will not happen in the foreseeable future. Also, workers reported an anti-union attitude by management and irregular payment of wages for a long time prior to the closure.
Most of the brands sourcing from Hermosa have codes of conduct and monitoring programs which clearly failed to identify and address these violations. Given the long history and systemic character of the violations, the monitoring programs should have picked them up, especially since violations at Hermosa had been brought to adidas’ attention since the year 2000 and to the FLA in 2003/2004.
Brands therefore share the responsibility for the current situation of the workers, and should take concrete action to settle the matter to the satisfaction of the labour groups.
Adidas has taken some steps to address the severance and back pay issues, in cooperation with Nike, Russell Athletic and the FLA. Representatives met with government officials, worker representatives, and factory representatives to discuss how the factory's remaining assets, including machinery, can be liquidated in order to generate the necessary funds. The possibility to re-open the factory subject to future orders was also looked at. However these prospects were complicated by legal claims on the factory's assets from other creditors.
International supporters urged the brands to set up a fund to make sure that the workers receive money now rather than waiting for ongoing negotiations between the authorities, the owner and the brands to be settled.
On December 22, 2006, the Fair Labor Association reported that they had established an emergency fund intended to “provide immediate and direct assistance to the workers while efforts continue to hold the government of El Salvador and the factory owner responsible for carrying out their legal obligations to workers”. The fund, set at an initial sum of US$36,000, is being administered by the Fundacion de Estudios para la Aplicacion del Derecho (FESPAD), who has cooperated closely with the group of organized workers and with the other organizations involved in the case. Former Hermosa workers who have not been able to find employment, particularly because of blacklisting, are eligible to receive the payments.
On December 29, 2006, FESPAD reported that 57 workers were identified as eligible for assistance (all of whom belong to the group of 63 organized workers) and have received and cashed their cheques. Representatives of the organized workers were present and report that the process went smoothly and transparently.
With respect to the issue of blacklisting, adidas and Russell have acknowledged that this may be a problem and have indicated that they are willing to encourage their other suppliers in the area to consider former Hermosa workers for positions on a non-discriminatory basis.
In January, 2007, the Fair Labor Association asked MSN to review the impacts of the Emergency Fund and consider further measures to remediate the situation of the ex-Hermosa workers. MSN released its report in June, 2007.
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