Last Updated: 2021.07.09
Regarding Result of Fair Labor Association Investigation into PT Jaba Garmindo Bankruptcy
Fast Retailing Co., Ltd.
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In October 2019, international NGO, the Clean Clothes Campaign, and a labor union representing workers of former UNIQLO supplier in Indonesia, PT Jaba Garmindo, filed a formal complaint with the Fair Labor Association (FLA), alleging that UNIQLO purchasing practices contributed to the PT Jaba Garmindo bankruptcy. Upon receipt of this filing, the FLA conducted a thorough, independent investigation and today published its report.
The FLA investigation found unequivocally that the actions of UNIQLO, and its parent company Fast Retailing, did not contribute in any way to the PT Jaba Garmindo bankruptcy. Additionally, the investigation concluded that neither UNIQLO, nor Fast Retailing, has an obligation of any kind pertaining to this matter, including the responsibility to financially compensate former PT Jaba Garmindo employees. The key findings of the report are as follows:
- PT Jaba Garmindo's bankruptcy was caused by financial mismanagement of the factory, including irregular and irresponsible use of credit.
- In view of the its order volume relative to factory production capacity, UNIQLO was not a dominant buyer from the factory. UNIQLO's order volume was approximately 10% of factory capacity in 2014, the year prior to bankruptcy.
- UNIQLO suspended its business relationship with the factory appropriately, primarily due to production quality issues.
- During its relationship with PT Jaba Garmindo, UNIQLO handled all ordering and payment appropriately. The investigation found no examples of late payments or return of completed products.
- Neither UNIQLO nor Fast Retailing is responsible for unpaid wages or severance pay to former employees of PT Jaba Garmindo. In 2015, and as of today, no national or international regulation, or other widely recognized standard, holds companies sourcing from Indonesia responsible for unpaid wages or for termination payouts, including severance pay.
While the report concludes that neither UNIQLO nor Fast Retailing is in any way responsible for the bankruptcy, it recommends that UNIQLO and the nineteen other brands previously sourcing from PT Jaba Garmindo at that time come together to provide relief to its former workers. The report also states that severance payment responsibility is solely on the employer and recommends to the Indonesian government to improve job loss guarantees for laid-off workers.
As the report describes, a lack of unemployment protection for workers in Indonesia was a root cause of this issue. Accordingly, Fast Retailing has already acted to effect system-level solutions to this type of problem, partnering with the International Labor Organization (ILO) since 2019. Under our partnership, we have sought to increase protection for Indonesian workers through the establishment of a new national employment insurance system, the expansion of reskilling programs for the unemployed, and through improved public employment services. As a result, the Job Creation Omnibus Law was enacted in Indonesia in November 2020, which includes the establishment of a new employment insurance system, including unemployment benefits, by the Indonesian government.
In addition, Fast Retailing is working to help protect apparel industry workers from similar scenarios in the future. We regularly consult with production partners to understand the current financial health of their business and provide support and guidance, as needed. We also conduct risk assessments in sourcing countries to identify the level of legal protection provided for workers in case of business closure or bankruptcy.
Fast Retailing is committed to the safeguarding of labor rights and continues working towards good working conditions at all its manufacturing partners.
Full version of FLA report available here:
https://www.fairlabor.org/report/jaba-garmindo-indonesia
About Fast Retailing partnership with ILO:
https://www.fastretailing.com/eng/sustainability/news/1909040900.html
Details of the ILO/UNIQLO project available here:
https://www.ilo.org/jakarta/whatwedo/projects/WCMS_736748/lang--en/index.htm
Background details are available at:
https://www.fastretailing.com/eng/sustainability/news/1801180900.html
