November, 02 2007 |  Share

Another CAFTA Disaster

Korean Garment Owner Flees El Salvador
Leaving 1,884 workers out on the street, owed $1.5 million in back wages!

Sweatshop abuses also continue in Guatemala and Honduras


November 2007




The Lido garment factory closed on September 26.  It's major clients were Sears' "Sag Harbor," Russel Athletics, "Alfred Dunner," Wal-Mart's "George by Mark Eisen," Cintas, J.C. Penney and Macy's "Style & Co." label.  There were 1,884 workers at the factory, at least 70 percent of them women.

Lido's owner, Mr. Hak Lae Kim, flees El Salvador:

The week of August 27, Mr. Hak Lae Kim and is entire family left El Salvador, saying that he was sick and travelling temporarily to the U.S. for medical treatment.  In fact, he fled to South Korea.

The 1,884 Lido workers were sent out for their annual vacation near the end of September and told to return to work on Wednesday, September 26.  When the workers arrived, the factory was locked and armed security guards told them the factory was closed.

According to the workers, there are still 80,000 yards of fabric left in the plant in addition to already-cut fabric and completed garments.  About 50 percent of the fabric and garments belong to Sears' "Sag Harbor".  Russel Athletics and Alfred Dunner make up most of the remainder.


Company labels that have been smuggled from the Lido Factory

Even the Ministry of Labor says the workers are owed at least $1,132,332 in back wages and benefits:

All 1,884 locked-out workers staged a protest in front of the shuttered Lido factory.  The following day, Ministry of Labor inspectors arrived.

The Salvadoran Ministry of Labor is now calculating that each worker is owed at least $601 in back wages, benefits, and severance pay for a total of $1,132,332.  The fired workers dispute this figure, saying they are owed an average of $796 each and $1.5 million in total for all 1,884 workers.



We've been cheated by the Koreans  

A month later—why haven't the workers been paid?

No one, including the Salvadoran Ministry of Labor, is disputing the fact that Mr. Hak Lae Kim fled El Salvador, illegally leaving the workers owed somewhere between $1.13 and $1.5 million in back wages and benefits.

Moreover, there is an enormous amount of fabric and garments left in the factory, which the workers are blockading so that it too does not disappear in the middle of the night.  In fact, representatives of three factories—Only Fashions, Cenco and Intradesa—have approached the workers saying they will pay $1 million to the workers for the fabric and garments if they lift their blockade of the factory.

So why have the workers not been paid?  The Ministry of Labor knows the Lido workers have been cheated.   And some of the largest apparel companies in the United States—including Sears, Russell Athletics, Wal-Mart, J.C. Penney and Cintas—have sourced production of their clothing to the Lido factory.

One would imagine that the large U.S. companies working together with the Salvadoran Ministry of Labor and the Lido workers could solve this easily and quickly.


Fired Workers Blacklisted?

The Ministry of Labor officials also promised the locked-out Lido workers that they would organize a "work fair" and could just about guarantee them that they would quickly find work in either of the two giant nearby Free Trade Zones, American Park and Exporsalva.  But when the workers showed up at the zones to apply for jobs, they were turned away and told they did not want "troublemakers" in their industrial parks.



Will the banks walk off with the money?

Apparently the Lido Company also has outstanding debts with several local banks.  If the system operates like it usually does in El Salvador—see attached case on Hermosa Manufacturing, where more than two years after the abrupt closing of the plant, the fired workers have yet to receive a single cent of the back wages and benefits due them—the banks will get paid while the workers suffer.  Even though the Salvadoran Constitution guarantees that workers have the right to be the first to recover their back wages and benefits, this rarely happens.

Conditions are so bad in El Salvador that the Adidas Company recently sent an open letter to the Government of El Salvador titled, "Is there effective enforcement of national labor law?  The case of Hermosa Manufacturing"

Adidas writes:  "With respect to the regulatory framework and the workers of Hermosa Manufacturing, the government of El Salvador has not lived up to its commitments to protect, enhance and enforce basic workers' rights." The Adidas Company continues with a threat to pull its remaining work from El Salvador as "the Hermosa case has caused serious concern about regulatory safeguards for workers which we consider as the elementary foundation to continue operations in this country."

What are things coming to under CAFTA?  Where are the labor rights enforcement mechanisms and guarantees in the U.S. Free Trade Agreement—if the companies now must challenge the Government of El Salvador for its miserable ongoing record of failure to enforce its own labor laws?



We Ask the Ministry of Labor to Resolve Our Problems with Severance Pay and Back Wages   

Lido was also a sweatshop—for at least 10 years:

The factory first opened under the name Doall in the mid-1990s.  In 1999 the factory was re-named Lido.

  • Workers were at the factory 65 hours a week, forced to work a routine 12-hour shift, from 7:00 a.m. to 7:00 p.m. Monday through Friday with a five-hour shift on Saturdays.
  • All overtime was mandatory and if a worker missed even a single overtime shift due to family emergency, they next day they would be cursed at and threatened. On the third "offense" the worker would be suspended and docked two days' wages.
  • Workers arriving five to ten minutes late in the morning would be suspended and docked two days' wages.
  • Workers were told they could drink water and go to the bathroom just once during working hours.  The only other time they were permitted to use the toilet was during lunch break.
  • Workers attending appointments at the Social Security healthcare clinic—for which the workers pay each month with deductions from their wages—were docked for time away from the factory.
  • Supervisors routinely screamed and cursed at the workers, constantly driving them to work faster to meet the excessive mandatory production goals.
    The workers of the Lido factory are being supported by IDHUCA, the Jesuit UCA University's Human Rights Institute and by the National Labor Committee.


* Open Letter from Adidas to the Government of El Salvador
* NLC report on Hermosa, 2001
* NLC report on Doall, "Fired for Crying to the Gringoes" 1999

Other Recent CAFTA Disasters:
* Fribo case in Guatemala
* Sam Bridge factory in Guatemala:

Update on Sam Bridge:  In retaliation for the report on sweatshop conditions at Sam Bridge, the chief of personnel, Fredy Solorzano, is threatening an investigation—not to clean up the factory, but rather to find out who spoke truthfully about factory conditions so they can be fired.  Dozens have been fired to date.

The workers of Fribo and Sam Bridge are being supported by CEADEL, the Center for Studies and Support for Local Development, Festras Union and by the National Labor Committee.

Center for Studies and Support for Local Development (CEADEL)
1ra. Av. 4-76 Zona 4
Chimaltenango, Guatemala.
Tel. (502) 7839-3349 
      (502) 2424-6122