$4.5 Million in Back Pay Delivered to Workers in Indonesia

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To:WRC Affiliate Universities and Colleges
From:Scott Nova and Jessica Champagne
Date:December 4, 2019
Re:$4.5 Million in Back Pay Delivered to Workers in Indonesia

We are very pleased to report that the 2,001 workers of the PT Kahoindah factory, who made university apparel for many years, have now received the final installment of the $4.5 million in back pay owed to them.

It is hard to overstate how meaningful this money is to workers and their families. It will enable parents to pay their children’s school fees (required for public schools in Indonesia). It will enable people to obtain medical treatment they have been forced to delay. It will allow some workers to open small businesses—at a time when apparel employment opportunities in Indonesia are declining. The impact will be both large and lasting.

This fulfills the commitment the factory’s parent company made to remedy the violations the WRC uncovered. As you know, Nike, the collegiate buyer at the factory, ceased producing there in 2018. The factory closed that October. A WRC investigation revealed that the factory had failed to pay $4.5 million of the compensation legally due to workers. The WRC asked buyers—including Fanatics, Gap, and Under Armour—to press the parent company, Hojeon, to pay the workers. First Fanatics, then the others, agreed to do so. As a result, Hojeon agreed to correct the violations and pay the money owed (in two installments, in August and November of this year). Hojeon has honored this commitment.

The WRC worked with the factory to organize the payment process and confirm the amount due to each worker. We have now verified that the payments were made.

Without university codes, and the WRC’s independent monitoring, these workers would never have received the money they earned. Other monitors and regulators failed to identify the violations. This is true not only of the Indonesian government and the brands, but also of the ILO Better Work program, which gave the factory a clean bill of health, even as it was denying workers millions of dollars in legally mandated compensation.

This case perfectly illustrates why universities’ labor standards are indispensable. And it shows how the commitment of your institution and many others to enforce these standards produces enormous benefits for thousands of workers. Thank you for your continued commitment to this work.

Below are three photos, taken when workers gathered earlier this year to sign agreements to receive their back pay. As always, please feel free to contact us if you have any questions.