WRC Update: Positive Resolution of Nike/Honduras Case

To:Primary Contacts, WRC Affiliate Colleges and Universities
From:Scott Nova
Date:July 26, 2010
Re:WRC Update: Positive Resolution of Nike/Honduras Case

I am very pleased to share with you the attached statement, issued jointly today by Nike and worker representatives, announcing an agreement concerning the former workers of Hugger de Honduras and Vision Tex. Under this unprecedented agreement, Nike will:

  • Pay $1.54 million to the workers – to be distributed by the WRC, the Solidarity Center, and worker representatives
  • Provide the workers and their families with a year of health insurance
  • Take several measures, reviewed below, that will lead to the re-employment of many of the workers

As we reported to you in October, these two Nike subcontract factories closed without paying legally mandated severance to their employees. We recommended in that report, and in subsequent updates, that Nike take the steps necessary to make the workers whole.

The agreement announced today will fully accomplish this goal and it represents a heartening resolution to this important case. Below, we provide additional information on the agreement, which was negotiated over the last month, and its implications.

Under the agreement, Nike will contribute $1.54 million to a worker relief fund, to be distributed to roughly 1,500 eligible workers by the WRC, the Solidarity Center, and the CGT union federation, which represents the workers. The WRC is a signatory to this element of the agreement. Nike will also cover the cost of enrolling the workers, and their families, in Honduras’ national health program for one year.

The combined financial value of these measures is sufficient to fully compensate workers for what they are owed (after the previously completed liquidation of factory assets). The agreement thus fulfills the WRC’s recommendations and constitutes full remediation of the violations we reported.

In addition to this financial assistance, Nike has agreed to ask five of its contract suppliers in Honduras to provide a strong and enforceable hiring preference to former Hugger and Vision Tex workers, for a period of two years. These suppliers will be asked to reserve future job openings for workers formerly employed at the two factories and Nike will fund a paid vocational training program designed to ensure that the skills of former Hugger and Vision Tex workers match these job openings. Nike will coordinate with worker representatives on all aspects of the priority hiring program. This is the right approach to priority hiring and we expect the program to be effective.

This package of measures represents the most positive resolution to a case of unpaid severance in the supply chain of any university licensee or major apparel brand. The assistance fund and health insurance will be of enormous benefit to nearly 1,500 families that have faced severe hardship since the factories shut down. (We hope to have the funds disbursed to workers within a matter of weeks.) In addition to making workers financially whole, the agreed-upon measures offer many workers the legitimate prospect of re-employment in the near term.

And the impact may go well beyond this case and this group of workers. By taking responsibility for correcting the violations committed by its subcontractors, Nike has now charted a course for its competitors to follow. If this leads other companies to step in when their contract factories fail to pay workers the money they have earned, it will be a major advance for the apparel industry. We also look forward to further discussion with our affiliate universities and colleges concerning comprehensive solutions that would prevent severance crises like that experienced by the Hugger and Vision Tex workers.

As with other important labor rights successes, the positive results achieved here would not have been possible without the leadership and engagement of students and universities. This case demonstrates that the university community remains very much at the forefront of labor rights efforts in the global apparel industry.

We will update affiliates as the process of disbursing funds to workers proceeds and as other aspects of the agreement are implemented. As always, please contact me with any questions or thoughts about this information.

Scott Nova 
Worker Rights Consortium 
5 Thomas Circle NW 
Washington DC 20005 
ph 202 387 4884 
fax 202 387 3292 
[email protected] 

Nike and CGT Statement