Update: Hermosa (El Salvador)

January 4, 2007 

Dear Colleagues, 

On the Friday before Christmas, the FLA announced the creation of an “emergency fund” for the former employees of the Hermosa factory in El Salvador, with money contributed primarily by Hermosa’s former customers, including adidas and Nike. As you know, Hermosa closed in May of 2005 without paying back wages and severance to 260 employees. The purpose of the emergency fund is to pay the workers part of the $825,000 they are owed. The value of the fund is $36,000. Reports from El Salvador indicate that $33,000 of this amount was distributed on December 29, to 57 of the workers. 

A number of universities have asked the WRC for our perspective on this news. We are very happy to see some money go to these workers. Any amount that the workers receive is a positive development and we applaud the FLA’s efforts in persuading the licensees to act. We also applaud the efforts of the workers themselves and of the numerous advocacy groups that have toiled over the last twenty months to keep this case alive. NGOs in the US and Europe have campaigned vigorously on behalf of the Hermosa workers and have consistently pressed adidas, Nike and the other brands involved to accept financial responsibility for the unpaid wages and severance. 

I wish that we could report to you that the disbursement of these funds constitutes adequate remediation of the code violations at Hermosa, but unfortunately it does not. The funds paid represent 4% of the total owed to the 260 former Hermosa workers. (Most of the funds went, appropriately, to members of the core group of 63 workers who have pressed the case for remediation. The funds paid represent 20% of the amount owed to this smaller group of workers.) These percentages do not count interest on the unpaid wages and severance nor the additional $350,000 in pension and health insurance contributions that Hermosa deducted from workers’ paychecks but never paid to the government (for a discussion of the latter issue, see the WRC’s update of December 15).
Thus, as the FLA notes in its statement of December 22, the fund will ameliorate the hardship faced by some of the former Hermosa workers, but it leaves the issue of unpaid severance and back wages still largely unresolved. Indeed, 96% percent of the money owed to the workers remains unpaid. The FLA has indicated that it will accept additional contributions to the fund – additional payments by the licensees and other brands are unquestionably the best hope the workers have for obtaining a more substantial percentage of what they are due, since meaningful action by Hermosa’s owner and the Salvadoran government is very unlikely. 

In summary, we are pleased to see the workers receive some money, but we recognize that the amount is small relative to what is owed and that the code violations at Hermosa therefore remain largely unremediated. I have attached to this update a communication issued on January 3 by the Clean Clothes Campaign (CCC), which may be of interest, as it provides an NGO perspective on the case. The CCC has helped to coordinate NGO efforts on Hermosa and has worked with the FLA, the WRC and the workers. We have also attached the FLA communication of December 22, for those universities that may not have seen it. 

Please let me know if you have any thoughts or questions about this update. Best wishes for a happy new year, Scott Scott NovaWorker Rights Consortium5 Thomas Circle NWWashington DC 20005ph 202 387 4884fax 202 387 [email protected]www.workersrights.org