Nike, the sportswear brand, has agreed to pay $1.5m (£970,100) into a fund for displaced workers in Honduras after apparently giving into pressure from trade unions and universities over the closure of two contract factories.
The move is a u-turn for the sports giant, which had previously claimed that the contract factories, which both had licenses to manufacture Nike branded apparel, were responsible for the workers’ severance packages. It is alleged that 1,800 workers employed by factory owners Hugger and Vision Tex were laid off in January without proper notice or redundancy pay.
In a statement in April, the brand said: “Nike will not be paying severance to workers that were employed by Hugger and Vision Tex.”
The move led the University of Wisconsin-Madison to end its licensing contracts with Nike in April, citing concerns about its treatment of employees in Honduras, and, last month, Cornell University threatened to follow suit.
Yesterday Nike pledged to pay the money into a fund that will be administered by the Central General de Trabajadores de Honduras (CGT), the Solidarity Center and the Workers Rights Consortium. It will also be supervised by a Cornell Professor. It will cover health care costs for former factory workers for the next year or until they find another job.
“Nike and CGT are concerned for the workers in Honduras and have agreed to take important steps to support former employees of Hugger and Vision Tex [the two shuttered factories],” Nike said.
Nike has been the subject of protests over its alleged mistreatment of workers over many years. It has the subject of a campaign, including demonstrations at stores, by United Students Against Sweatshops over the past year.