Severance as Seed Money: Kahoindah Workers Weather the Pandemic


August 12, 2020

Dear Colleagues,

These days, it sometimes feels like we are all bobbing in an ever-flowing river of bad news. Certainly, the WRC has been sharing plenty of sober tidings with you from the global apparel supply chain. Today, I would like to share a bit of positive news. It is specific to one factory’s workforce, but it illustrates the broader impact of university labor codes. It shows how progress achieved at some collegiate factories in the months and years before the pandemic has put workers in a better position to weather the current storm.

As we have reported, PT Kahoindah Citragarment, a collegiate factory in Indonesia, failed to pay workers half of their legally mandated severance when it closed in 2018. However, after a WRC investigation and extensive brand engagement, the factory agreed to provide $4.5 million in back pay to 2,001 workers. 

When garment workers receive their full severance—in this case, seven months’ wages, on average—it can be life-changing, even in non-pandemic times. Many workers used the money to open up new futures by advancing their children’s education, settling debts and getting a clean slate, or by starting a small business that will provide for their families for years to come. While an estimated 80 percent of Indonesian garment workers have faced furloughs and major reductions in pay due to the pandemic, many of the former Kahoindah workers are, thanks to such investments, doing okay comparatively.

This memo shares the stories of three women who used their severance money to start businesses that have sustained their families through this difficult time—including sewing masks, selling juice drinks, and serving coffee and snacks to neighbors. As one worker, Eti, notes, her businesses means that “we haven’t had trouble eating” during the pandemic—which places these women and their families in sharp contrast to all too many Indonesian garment workers. 

We find these stories uplifting, and we hope you will as well.