Update on Hong Seng Knitting (Thailand)

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To:WRC Affiliate Universities and Colleges
From:Scott Nova
Date:April 19, 2022
Re:Update on Hong Seng Knitting (Thailand)

A number of affiliate universities have contacted the WRC in the last few weeks seeking updated information concerning unpaid wages at Hong Seng Knitting, a Thai supplier of university logo apparel to Nike. In light of these inquiries, I want to provide the following update.

Our 2021 report on this case can be found here; however, to recap in brief:

  • Hong Seng Knitting responded to declining orders in early 2020 by putting 3,360 workers on a series of temporary furloughs; Thai law requires employers to pay workers partial wages during such furloughs.
  • Management refused to pay these legally mandated wages to workers, declaring instead that this leave would be completely unpaid.
  • Evidence shows that management pressured workers to sign documents acknowledging that they would not receive pay for the days of furlough; management then used those documents to claim that workers voluntarily chose to forgo wages during the furloughs.
  • In total, workers were deprived of an estimated $600,000 in legally mandated wages (the amount owed to workers is now larger due to interest mandated by Thai law).
  • Management threatened, and in some cases carried out, various forms of retaliation against workers who resisted signing those documents and/or filed complaints with the government about the unpaid wages.
  • Most troublingly, management reported one Burmese migrant worker to the Thai police after he criticized the company’s actions in a Facebook message; this worker, fearing arrest, then fled the country with his spouse and infant child.
  • The workers who suffered the largest loss of wages, and who are owed the most in arrears, are 50 women who were pregnant when management began the furloughs and who were unlawfully subjected to more days of unpaid leave than other members of the workforce.
  • Nike has declined to ask the factory to remedy most of the violations, insisting that workers made a voluntary decision not to be paid at all during the furloughs—even though they had a legal right to partial wages (Nike did ask management to provide back pay to a small number of employees, but the latter represent less than one percent of the affected workers).

Unfortunately, there has been no progress since the WRC reported to universities on this case last year.

The factory continues to refuse to provide back pay to more than 99 percent of the affected workers and continues to refuse to pay meaningful compensation to the Burmese migrant worker who was forced to flee the country after management reported him to the police.

Nike’s position remains unchanged. Nike discounts the evidence of coercion gathered by the WRC and continues to assert that thousands of workers at Hong Seng voluntarily chose to forgo wages that management was legally obligated to pay them. Nike has not provided the WRC with a clear explanation as to why workers would make such a choice. In support of its position, Nike cites an audit it commissioned from a contract monitoring firm; however, Nike has declined to share this audit report with the WRC.

Nike’s approach to this case remains difficult for us to understand. The evidence that its supplier violated the law, and university standards, is extensive and clear cut. Nike’s alternate explanation for management’s failure to pay workers—that the workers preferred not to be paid even when they had a legal right to be—defies credulity.

The result of Nike’s unwillingness to ask its supplier to provide back pay is that thousands of workers at a factory making collegiate apparel continue to be deprived of wages that they now have been legally owed for nearly two years. Pay is low for garment workers in Thailand to begin with; this kind of wage theft has a material impact, worsening workers’ quality of life and that of their spouses, children, and other dependents.

It remains Nike’s obligation, under its university licensing agreements, to ensure that its supplier’s violations of worker rights are addressed. The WRC continues to hope that Nike will fulfill those obligations and that the workers of the Hong Seng factory will be paid what they are owed. The WRC is prepared, as in all such cases, to work with Nike to facilitate the distribution of back wages to all affected workers.

Please feel free to contact me if you have any questions about this update.