Update on Implementation of Nike Agreement

I write to update you on the implementation of a central aspect of the agreement reached between Nike and worker representatives concerning the Hugger and Vision Tex factories: the disbursement of $1.54 million to workers through the “Worker Relief Fund” created under the agreement.

As we reported to you in July, the WRC agreed to oversee the disbursement of these funds in conjunction with the CGT union federation, which represents the workers, and the Solidarity Center. The goal of the organizations was to get the funds quickly and securely to the 1,445 workers eligible to be compensated under the agreement; not an easy task, considering the complicated logistics involved. I am happy to report that the goal has largely been accomplished. As of September 17, 2010, 94% of workers had received payment, with no problems reported.

The key elements of the distribution process were as follows:

· Immediately after the agreement was signed, the CGT announced the agreement and the Worker Relief Fund to former Hugger and Vision Tex workers, using various means of communication.

· The CGT took the lead in calculating the amount to be paid to each worker under the agreement, consulting with the other organizations as they proceeded. The CGT’s work in this regard, which the WRC reviewed in detail, was meticulous and precise.

· The mechanism of payment was the direct deposit of the funds into an individual account established by each worker at a local bank. This approach ensures that the funds are secure and that workers do not become targets for theft, as might be the case if payment was made in cash or by check. Workers began setting up accounts within days of the signing of the agreement.

· Nike wired the funds to the bank in Honduras on August 17, into an account established for the purpose of disbursing the funds, controlled by the CGT, the WRC and the Solidarity Center.

· Beginning the following day, workers were called in groups, in alphabetical order, to a designated site, where each worker provided identification, signed relevant documents, and then provided her bank account number, in confidence, to the staff of the CGT. This process was repeated on subsequent days. The WRC’s Field Representative for Central America was present to observe and assist with the process during the first several days, when most of the workers were called.

· Through this process, lists were generated by the CGT of disbursements to be made. Each list was reviewed by the WRC and the Solidarity Center. Each organization then conveyed authorization for payment, by electronic mail, to the bank and the bank made the direct deposits.

· 81% of workers were paid within a week of the receipt of the funds from Nike. By the end of the following week, 93% of the workers had been paid. As of September 17, the figure was 94.4%. The CGT is engaged in ongoing efforts to locate the relatively few workers who have not yet come forward to claim their portion of the funds.

· The amount received varies from worker to worker, depending on how much severance and other compensation each worker was legally owed. The average payment was $1,077 (203,463 Honduran Lempiras). This is about four months’ pay.

· Overall, including the modest amount of money generated earlier through the liquidation of factory assets, workers have now received 88% of the severance and other terminal compensation owed to them at the time the factories closed. Adding in the cash value of the health insurance that each worker and her family will receive under the terms of the agreement, total compensation received will exceed 100% of the original amount.

· Last week, the WRC provided a summary report on the amounts and dates of disbursement to Professor Lance Compa of Cornell’s School of Industrial and Labor Relations. Per the terms of the agreement, Professor Compa is charged with reviewing the disbursement process and reporting on its outcome to both Nike and the CGT.

We are very pleased with the disbursement process, which was rapid, smooth and efficient. Much of the credit for this belongs to the CGT, which tackled the work with great energy and consummate professionalism. The workers were, of course, extremely gratified and relieved to finally receive these funds, which will make an enormous difference for them and their families.

We are also monitoring the implementation of other elements of the agreement (health insurance and priority hiring) and will report to you on these aspects.

Please let me know if you have any thoughts or questions 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] 
www.workersrights.org