Nike has agreed to compensate over 1,500 Honduran factory workers who were laid off abruptly in January 2009 when two Nike-contracted factories closed.
In addition to contributing $1.5 million to a worker relief fund, the company said in a July 26 statement that it will pay to enroll the workers and their families in the Honduran national health-care program for one year. Over the next two years, Nike will also work with its Honduran suppliers to place those affected in other Nike-contracted factories while offering vocational training programs to prepare them for these jobs.
This move has the potential to improve the company's relations with UW-Madison. The university terminated its contract with the company last April citing concerns over more than $2 million in unpaid severance packages.
The corporation said in a statement at the time that it was the subcontractors' responsibilities to compensate the workers, and has not paid the sum to date.
The Central General de Trabajadores represented the workers. Jeff Hermanson, CGT representative from the United States, met with Nike to reach an agreement in the spring of 2010.
According to Hermanson, the steps Nike has taken in addition to contributing to the relief fund likely amount to more than the original $2 million in severance pay.
""It was a big step for them, a big step for a major brand to realize that their responsibility extends to workers of companies from whom they get product,"" he said. ""It's more about the jobs and employment for these workers than it is about money. Obviously they need money to pay their debts and get back on their feet, but if they don't have jobs going forward, the money will run out.""
Both UW-Madison and the Student Labor Action Coalition, a university group that called upon Chancellor Biddy Martin to drop the Nike contract, recognized the significance of the agreement.
""Nike's action does two things: it provides one example of a tangible solution in the case involving the failure to pay severance, and it acknowledges the strength in the language of the Code of Conduct as it pertains to subcontractors,"" Dawn Crim, special assistant to the chancellor for community relations and liaison to the Labor Licensing Policy Committee, said in an e-mail.
Daniel Cox, a member of SLAC, also said this was a step in the right direction, though it is too early to tell if the industry leader is turning a new leaf.
""Nike is the kind of company that doesn't often admit mistakes,"" he said. ""For a company like Nike to do this, to recognize that they were in the wrong and take responsibility and meet all the workers' demands is a huge development.""
The university ""applauded"" Nike's actions in a statement July 26, but said they will not renew the contract immediately.
""Once this full remediation plan is carried out and Nike re-applies for a license, we will consider re-contracting with them,"" Crim said.
