PT Mulia Knitting

The WRC’s investigation of PT Mulia Knitting was triggered by a worker complaint alleging serious violations of worker rights in the area of freedom of association. Consistent with the allegations, the WRC’s inquiry found overwhelming evidence that the company violated workers’ associational rights and did so in a systematic and brazen fashion. On May 21, 2007, workers at Mulia Knitting submitted to management the registration documents of a newly formed trade union known as SBGTS-GSBI-Mulia Knitting Union.

On the following day, the factory commenced a campaign to destroy the unionization effort by forcing all of its founding members to resign from the union or be removed from the factory. Over the next ten days, each of the nineteen founding members who did not resign were dismissed, suspended, or transferred to another factory located at such a great distance that a commute would be impossible. Management’s actions effectively eliminated the union from the factory. These practices represent violations of workers’ rights of association, as protected by Indonesian law and applicable codes of conduct.

On the basis of these findings, the WRC recommended to factory management that it reinstate, with back pay, each worker who had been removed unlawfully from the plant and take measures to address the climate of fear in the facility created by the dismissals. Management denied that it. In light of the factory’s response, the WRC sought to engage Mulia Knitting’s buyers. Unfortunately, the university licensee that had done business at the factory – Antigua Group – responded that it had in prior months ceased all production at the plant. Thus although Antigua Group was doing business with the factory when the most grave violations occurred, it was not in a position to press the company to take corrective action. This development highlights the problem that the standard licensee practice of frequently changing suppliers poses for code of conduct enforcement. As occurred in this case, by the time the violations are uncovered licensees have all too often moved on to other suppliers, and the associated leverage to compel remediation is lost.

The WRC also sought assistance from brands that are not university licensees, but were sourcing from the factory. Phillips Van Heusen acknowledged a small business relationship with the factory and agreed to help seek remediation. Very much to its credit, since late 2007, the brand has actively pressed the company to take the actions recommended by the WRC. Management has to date declined to do so. Neither of the facility’s two major clients – Tommy Hilfiger and Polo Ralph Lauren – has taken action to compel remediation. It is clear that positive steps by these two companies along the lines already taken by Phillips Van Heusen will be necessary if the factory is going to be persuaded to remedy the violations documented by the WRC’s investigation. had violated any law or applicable standard and declined to take any corrective action.

Read More:

• WRC Findings, Recommendations, and Status Report – September 15, 2008