Factory: PT Victory Chingluh
Key Buyers: adidas, Nike
Last Updated: 2021
Case Summary
The apparel industry’s chronically low wages left most garment workers with no savings on the eve of the Covid-19 crisis. Since most governments in apparel exporting countries provide little or no unemployment benefits, the only thing standing between an out-of-work garment worker and immediate poverty for her family are the legally mandated severance benefits that most garment workers are due upon termination.
Research by the Worker Rights Consortium (WRC) reveals that many garment workers who were fired during the pandemic have been denied some or all of this essential compensation, in violation of the law and the labor rights obligations of the brands and retailers whose clothes they sewed.
PT Victory Chingluh is one of the 31 export garment factories identified in the WRC’s report, Fired, Then Robbed: Fashion brands’ complicity in wage theft during Covid-19, which still owed workers legally mandated terminal compensation as of April 2021.
In April and May 2020, PT Victory Chingluh dismissed 5,549 workers. As of April 2021, these workers were still waiting for $2,140,000 in legally owed compensation.
PT Victory Chingluh, a footwear factory located at Tangerang, Banten, Indonesia, is owned by the Taiwan-based Ching Luh Group. Ching Luh Group employs over 78,000 people in Taiwan, China, Vietnam, and Indonesia, and manufactures athletic clothing for brands that include adidas, Nike, Reebok, and Mizuno. Import records throughout 2020 and early 2021 show shipments for adidas. In a January 2021 letter to the WRC, Nike acknowledged it has worked with PT Victory Chingluh and claimed that severance was paid in full. Indonesian law requires, however, that unless an employer proves that workers’ dismissal was necessitated by at least two successive years of economic losses, or by force majeure, the employer must pay workers two times the ordinary severance entitlement PT Victory Chingluh did not provide proof to the workers’ union of two years’ economic losses, nor a claim of a force majeure incident; therefore, by law, workers are owed two times ordinary severance. They received only one times ordinary severance.
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