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Gildan makes good on promises to laid-off Mexican workers

September 12, 2007

When Gildan Activewear announced the closure of two of its factories in the State of Coahuila in northern Mexico last March, workers had reason to be worried. But after a series of discussions with MSN and the local labour rights organization SEDEPAC, Gildan has set a precedent for workers who are used to being denied even their legal entitlements.

Monclova, Coahuila, has already been hard hit by the closure of a local Hanesbrands factory, eliminating 1,700 jobs. Hanesbrands made matters worse by pressuring workers to sign documents asserting that they had not suffered any work-related injuries or illnesses, thereby relinquishing their right to compensation, and by failing to provide employees with documents that would enable them to access government health care benefits.

There's no doubt that the closure of Gildan's factories in early April was bad news for Gildan's 1,300 workers and, coming on the heels of the earlier closures, another setback for general employment prospects in Monclova and surrounding communities.

But, unlike Hanesbrands, Gildan said from the start that it would support its former workers through the closure and opened the door to dialogue with MSN and SEDEPAC on what measures the company could take to ease the transition.

Positive outcomes of the company's willingness to engage in constructive dialogue included health insurance coverage for unemployed former workers, though not for their family members, severance pay beyond legal entitlements, and a financial contribution to a government job training program.

Gildan agreed to compensate workers based on the highest average wage over the 12 months prior to closure, and to provide an additional 45 days of severance pay in lieu of advance notice of the closure. Job training for workers is being provided by the State Employment Institute (Instituto Estatal de Empleo). Gildan has reportedly committed $2,300,000 pesos (Can $232,000) for re-training.

Significantly, SEDEPAC was mandated to verify that Gildan's commitments were being met, and to monitor the re-training program.

These are substantial and welcome measures in a country where workers often don't even receive their legal due.

"It was possible to negotiate with Gildan regarding demands that were important for the workers, such as 100% severance pay plus one or two months salary, and two months training to acquire extra working skills because employment in Monclova is shifting from the textile industry to the auto parts industry," says Betty Robles, Director of SEDEPAC in Coahuila.

"One important part of that negotiation was that the company agreed to search the labour market for available jobs and negotiated with the government and other companies to place their laid off workers in available positions. Another precedent was that the company accepted that a civil society organization like ours could monitor the closure and termination process."

On August 3, after back-forth correspondence and several meetings between SEDEPAC, MSN and Gildan, the company also committed to providing its ex-workers additional health-care coverage.

Workers in Mexico are legally entitled to eight weeks of health care coverage following termination. Gildan is now offering to subsidize health care for unemployed workers for one year following the closure through the state-run social security (IMSS) program.

The one-year coverage ensures that women workers who informed the company of pregnancies just prior to the closure will still have coverage when giving birth and immediately after. Health coverage is also important for workers who may have trouble finding new employment in the area or who may have suffered a work-related illness or injury.

"It really sets a precedent for how maquiladoras should act in a closure situation," says Robles. "Gildan had an open attitude to negotiating the best for their workers."

"We are committed to making a difference for our workers," says Corinne Adam, Director of Social Compliance at Gildan. "We want to be the best in our class. We are walking the talk."


Related article: Gildan announces closures of Canadian, US and Mexican factories

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