May 9, 2006

First Update concerning the case of Gildan Activewear in Honduras

In January 2005 the Worker Rights Consortium (WRC) and the Maquila Solidarity Network (MSN) reached an agreement with Gildan Activewear to remediate the mass termination of employees and closure of Gildan's El Progreso factory in September 2004. To review the agreement click here.

In light of evidence indicating that Gildan's decision to close the factory was motivated, fully or in part, by a desire to prevent workers from exercising their associational rights and to retaliate against workers for complaining to outside parties about rights abuses, the WRC concluded that the closure was a serious violation of university codes of conduct. The centerpiece of the January 2005 agreement called for Gildan to remediate the situation by providing preferential hiring opportunities to former El Progreso employees at other Gildan plants in Honduras. It was agreed that the company's compliance with this agreement would be monitored by the Independent Monitoring Team of Honduras (EMIH), a Honduran NGO.

Based on EMIH's verification, we can now provide an initial assessment concerning Gildan's adherence to the agreement. The results of our review are mixed. Gildan has made some good faith efforts to comply with the agreement, including maintaining a hiring outreach office, hiring former El Progreso workers, providing daily travel and relocation costs to rehired workers, and maintaining a health clinic for eight months for former El Progreso workers. At the same time, Gildan did not provide EMIH with sufficient access to related documentation and personnel to fully determine whether or to what degree Gildan complied with its key commitment to provide first-hire preference to former Gildan El Progreso workers. Our review also found that the recruitment efforts undertaken by Gildan were not as aggressive or effective as they could have been, leading to a relatively small number of former El Progreso workers being rehired by Gildan. Going forward, Gildan has agreed to provide the WRC, MSN, and EMIH with increased access to documents and personnel in order to complete the verification process. Gildan has also agreed to re-launch efforts to recruit more former El Progreso workers to apply for work at Gildan facilities.

This update provides a brief outline and assessment of Gildan's actions to mid-April, first with respect to the "first-hire" opportunity provision of the agreement, followed by a review of other elements of the agreement. The update concludes with new commitments made by Gildan at a meeting in Honduras on March 9 in order to comply with the original agreement.

Please note that MSN has worked closely with the WRC and EMIH in overseeing the implementation of the agreement and crafting this evaluation. All three organizations are simultaneously issuing a public statement containing the same content.

Compliance with the First-Hire Commitment

As noted above, the centerpiece of the agreement called for Gildan to provide first-hire preference to former El Progreso workers. Specifically, qualified former El Progreso workers would be offered job opportunities at three facilities in Honduras - San Jose, San Miguel, and the newly opened San Antonio facility - with priority over any other job candidate who is not a former El Progreso employee, based on the company's needs and the individual's skill set. The agreement applied to roughly 1,880 workers in total, including all 1,800 workers employed at El Progress at the time Gildan announced that it would be closing the factory, as well as a group of 78 workers whom the WRC determined had been terminated unlawfully during 2002 and 2003 in retaliation for union organizing activities.

Because EMIH was not given access to all of the documentation necessary to verify Gildan's implementation of the agreement, we are not currently in a position to make a conclusive assessment as to whether or not Gildan has fully adhered to the preferential hiring commitment. Gildan did provide EMIH with a range of documents, including information sufficient to verify that a number of former El Progreso workers were hired. However, this information excluded key documents requested by EMIH that are necessary to determine whether or not Gildan did in fact hire all qualified former El Progreso candidates over candidates with other backgrounds and that no discrimination has occurred. To make such a judgment, it would be necessary, for example, to cross-reference information contained in the archives of Gildan's hiring office on the identities of applicants and dates on which they applied for work with information in Gildan's hiring and personnel files on which workers were ultimately hired; access to this data was not granted.

While we cannot make a clear assessment regarding the company's adherence to the first-hire commitment, we are able to reach some general conclusions about the overall impact of the agreement based upon Gildan's self-reported summary data and EMIH's audit. In terms of impact, the most relevant figure to consider is the proportion of eligible workers who were reemployed by Gildan since the agreement was implemented. By this measure, the agreement's impact has been disappointing. According to figures supplied by Gildan, as of April 18 of this year a total of 391 former El Progreso workers had been hired in Gildan plants in Honduras, representing just 20.8% of the 1,880 eligible workers. Thus, nearly four-fifths of the workers eligible for the agreement have not been re-employed by Gildan. It has also been verified that only 2 of the 78 Gildan El Progreso workers fired unlawfully in 2002 and 2003 for their union activities have been rehired at a Gildan facility.

In discussions regarding implementation of the agreement, Gildan has stressed several points that merit consideration.

First, in addition to individuals who have been rehired by Gildan, a number of additional workers have found work at other non-Gildan facilities through the hiring office operated by Gildan. As of April 18 of this year, 396 workers - an additional 21.1% of the 1,880 eligible workers - had found employment at non-Gildan facilities with the assistance of this office. The bulk of these workers were hired before the preferential hiring agreement took effect. The assistance Gildan provided these workers is clearly valuable and worthwhile. At the same time, employment at non-Gildan facilities is not directly relevant to compliance with the rehire agreement, as the agreement speaks only to preferential hiring at Gildan facilities. Gildan and non-Gildan facilities should not be taken as equivalent. Indeed, 72% of the thirty-two former El Progreso workers interviewed by EMIH who had found work in other facilities stated that they would have chosen to work at Gildan if they had known about the priority re-hire opportunity and been offered reinstatement.

Second, according to Gildan's figures, while just 21% of all eligible workers were rehired by Gildan, a substantially larger portion - roughly 41% - of the 952 workers who proactively sought work at the hiring office were hired by Gildan. An additional 42% of this group of workers was able to find employment at non-Gildan facilities. Gildan is, of course, correct in pointing out that it can only hire workers who seek employment. The company cannot be faulted if workers fully informed about the priority rehire agreement simply opt not to exercise the opportunity. The concern here is the extent to which workers were effectively informed of the preferential hiring opportunity. Gildan did undertake a number of recruitment activities, in accordance with the agreement, including the use of newspaper and radio advertisements and cars with loudspeakers in worker communities during March through November 2005. EMIH's interviews in worker communities indicated, however, that the vast majority of community members and eligible workers interviewed were unaware of the first-hire opportunity. Indeed, through its own interview efforts, EMIH identified at least 50 workers who, having learned about the opportunity through the interview, stated that they would like to obtain work at Gildan. These findings indicate that the outreach efforts by Gildan were not as targeted or effective as they could have been. For this reason, the WRC and MSN have asked Gildan to renew its outreach efforts and have provided Gildan with a number of specific recommendations in this regard, including contacting the individuals who expressed an interest in the opportunity to the EMIH investigators. Gildan has agreed to undertake these efforts.

Compliance with Other Elements of the Agreement

Our review reached more conclusive findings with respect to Gildan's adherence to other elements of the agreement. The following list details our findings in these areas.

• The agreement called for Gildan to provide free transportation to and from work for former employees who were hired at the new facility and other Gildan-owned sewing facilities in Honduras. Gildan's compliance with this commitment has been verified. Gildan contracted with three bus companies to provide free transportation to the San Jose and San Miguel factories.
• Gildan also committed to provide reasonable moving expenses for employees (and their immediate families) that were hired at the new facility or other Gildan sewing facilities but chose not to commute to and from work on a daily basis from their current homes. It was verified that Gildan did provide relocation expenses to 45 workers who sought such assistance.
• Gildan committed to maintaining the El Progreso hiring office and health clinic as long as it was justified by demand from El Progreso workers. It has been verified that the clinic was open for a total of eight months, until May 2005. The hiring office, which was opened August 9, 2004, remains in operation.
• Gildan committed to a policy banning discrimination based on union activities as a part of the hiring process. EMIH's review verified that Gildan has taken some steps to address anti-union discrimination generally. Gildan has asserted and provided some documentation demonstrating that it posted and read a statement acknowledging there were no restrictions to freedom of association and committing to a discrimination-free workplace at its San Miguel, San Jose, and Hontex (Rio Nance) facilities. It has also been verified that Gildan contracted a non-governmental organization from the U.S. to provide training to workers on freedom of association. However, at this time, we cannot make any conclusive statement as to whether or not anti-union discrimination has occurred with respect to the hiring process, job assignments, compensation, or treatment of rehired former El Progreso workers. Gildan did not provide EMIH with sufficient access to employee files and personnel to conduct a thorough assessment in this area. As noted above, only 2 of the 78 workers who were terminated unlawfully for union activities in 2002 and 2003 have been rehired by Gildan. According to the information available, these two workers are the only two individuals from the group of 78 who have reapplied for work; the remaining 76 individuals apparently were not aware of the rehire opportunity, were no longer interested in employment with Gildan, were not effectively persuaded that they would be welcome as employees, or had migrated outside of the region in question. Gildan has agreed to provide expanded access to personnel files and personnel, which we hope will allow for a final, credible review, and to undertake renewed outreach to encourage former employees to apply for work.

New Commitments

On March 9 of this year, the WRC, MSN, EMIH and Gildan held a joint meeting in San Pedro Sula, Honduras to discuss Gildan's compliance with the agreement and the results of EMIH's verification efforts. It was determined that EMIH has encountered barriers in the verification process and that Gildan could more fully implement the agreement. As a result of the meeting, Gildan committed to taking a number of positive actions to a) provide more extensive access to documents and personnel in order to complete the verification process, and b) to extend and strengthen its efforts to inform former El Progreso workers of the first-hire opportunity.

With respect to the verification, Gildan has agreed to provide expanded access to relevant documentation (including access to hiring office archives and employee hiring and payroll records) and to enable a process by which EMIH can conduct interviews with former El Progreso workers. The information provided by Gildan should allow the WRC, MSN, and EMIH to verify Gildan's adherence to the agreement.

In order to recruit additional workers, Gildan has agreed to a series of recommendations made by the WRC, EMIH, and MSN. These recommendations include contacting individuals that have expressed interest, sending letters to former El Progreso workers, and renewing its public campaign to promote the rehire opportunity.