253 kb) Get the WRC Factory Report/PT Dae Joo Leports (Indonesia)

From: Scott Nova
Date: August 27, 2003
WRC Factory Report/PT Dae Joo Leports (Indonesia)

I'm pleased to provide you with the WRC Factory Assessment Report concerning PT Dae Joo Leports, a facility in Jakarta, Indonesia producing college and university logo backpacks for VF Corporation (through its subsidiary, Jansport) and adidas-Salomon (through its licensee, Agron). The report addresses both code compliance at PT Dae Joo Leports and, as noted below, issues pertaining broadly to the export processing zone in which the factory is located.

The WRC, having identified a number of significant code of conduct violations at the facility, has been working with factory management, unions and workers, and the licensees on an ongoing process of remediation. This process, underway since March, has produced very significant progress on a range of issues, including health and safety, the rights of female workers, the factory's legal obligation to provide health insurance to workers, and freedom of association. The support of the licensees for remediation has been commendable, in particular the efforts of VF. As you know, where licensees and factory management have agreed to correct problems at a factory, and are in the process of doing so, the WRC prefers, where feasible, to report on the progress that is being made as well as on the original violations. Hence our decision to postpone release of our findings until the present date.

As the Report notes, there is still substantial unfinished business at PT Dae Joo Leports. The company has implemented an ad hoc mechanism to provide legally-mandated health benefits to workers while it puts in place a permanent program; the issue will not be resolved until this program is in place and it is verified that the program is in compliance with Indonesian law. The company has acknowledged its legal obligation not to force employees to work overtime, but adequate systems are not yet in place to prevent this. Also, the factory has been negotiating a collective bargaining agreement (CBA) with the factory's union. Recently a new, second union has formed in the factory and this union now represents a majority of the workforce. Management has a legal obligation to include this majority union in contract negotiations and to negotiate an agreement that is consistent, in all respects, with Indonesian law. It is not yet clear that management recognizes these obligations. The key question on remediation at PT Dae Joo Leports, as in all cases, is follow through. We have informed the factory (in a meeting yesterday in Jakarta) and the licensees that we will issue public monitoring reports that will assess whether the factory has fulfilled its outstanding obligations.

The WRC also identified a number of serious problems that obtain throughout the export processing zone in which PT Dae Joo Leports is located. The zone is known as Kawasan Berikat Nusantara, or "the KBN." The problems in the zone, which include abuse of laws concerning contract labor, failure of factories to pay severance when they close, failure of factories to provide legally mandated health benefits, and intimidation of workers who are exercising their associational rights, are a product not just of the practices of individual factories, but of the financial and economic arrangements that govern the zone as a whole and the policies of the zone administration. For this reason, licensees sourcing from any factory in this zone must recognize the substantial likelihood that problems of this nature may exist in their supplier's facility. This report addresses recommendations to licensees in this area, including the recommendation that licensees urge improvements on the part of the private company that operates the KBN.

The WRC has also conducted a full assessment of another factory located in the KBN. This report will be released in September.

The attached document is in PDF format. If you have any difficulty accessing it, please contact Anne O'Rourke at the WRC office: 202/387-4884; anne.o'rourke@workersrights.org.

If you have any thoughts or questions about the report, please contact me at the WRC office or by cell at 202-210-7835.

Please distribute this document to any and all interested parties at your institution.

Scott Nova
Worker Rights Consortium
5 Thomas Circle, NW
Washington DC 20005
phone 202.387.4884
fax 202.387.3292
nova@workersrights.org
www.workersrights.org