WASHINGTON — German retailer Kik has agreed to pay an additional $5.15 million into a compensation fund helping survivors and families of workers killed in the Ali Enterprises garment factory fire in Pakistan four years ago.
The compensation fund was established by labor rights groups and unions in the wake of a fire that swept through Ali Enterprises in on Sept. 11, 2012.
The fire ripped through Ali Enterprises Inc., a jeans manufacturer based in Karachi, Pakistan, leaving 289 garment workers dead and many others injured. The incident sent shock waves through the entire global apparel industry and raised questions about the safety of garment workers stitching clothing for European and U.S. brands in Pakistan and around the world. It also led to the resignation of the Sindh Minister for Industry, the arrest of the factory owners for attempted murder and brought more attention to the monitoring and certification companies used by hundreds of U.S. and European retailers and brands.
Kik, which was Ali Enterprises’ main customer according to the labor rights groups, had already paid about $1 million into the emergency compensation in December 2012.
Per the new agreement, the new funds will be provided for loss of income, medical and allied care and rehabilitation. The arrangement does not cover damages for pain and suffering.
“We welcome that all the parties involved on an international level have now finally come to an agreement that will benefit those affected by the Ali Enterprises factory fire,” said Patrick Zahn, chief executive officer of Kik Textiles and Nonfood GmbH. “With our financial contribution, we have taken over responsibility for the victims on a voluntary basis going beyond national requirements. This was truly important to us”
“We are grateful for the support of many parties in the past months and years, among them the Ministry for Economic Cooperation and Development, which has enabled constructive talks within our Partnership for Sustainable Textiles,” Zahn said, also commending the International Labor Rights Organization for “for its thorough fact-finding and its recommendations aligning the manifold expectations.”
The German Federal Ministry of Economic Cooperation and Development and the Pakistani Ministry of Overseas Pakistanis and Human Resource Development helped facilitate the talks between the ILO, Kik, IndustriALL Global Union and the Clean Clothes Campaign to provide additional compensation to the victims and families.
The victims of the Ali Enterprises fire have been receiving some payments from public social security schemes in Pakistan to cover the loss of earnings and medical care, required under statute.
The parties intend to work together to establish a tripartite process to distribute the payments to victims, beginning next year.
The total estimated amount for payments for loss of income and medical costs under an ILO convention was $6.6 million, according to labor groups. In addition to Kik’s funding, the Sindh Employee’s Social Security Institution in Pakistan has provided $700,000, according to labor groups.
The stakeholders said they will continue to push for more robust social insurance schemes in Pakistan and the need for improvements in garment factory safety and inspection procedures, in addition to more compliance with social security laws to prevent another tragedy.
Ineke Zeldenrust, international coordinator of the Clean Clothes Campaign, said: “We welcome this agreement, which will now ensure direct payments are made to those who suffered such huge losses as a result of this disaster.”
“Our Textiles Partnership is making a difference and it is doing so in a totally new way,” said Gerd Müller, German Federal Minister for Economic Cooperation and Development. “What had not been possible in four years of controversy between the parties has now been achieved through our mediation work and will provide tangible assistance to the victims and bereaved family members of the terrible fire at the Ali Enterprises textile factory in Pakistan.”
Müller said the new joint environmental and social standards “are not just a piece of paper but are leading to concrete improvements in the living and working conditions of garment workers in factories on the ground.”
Gilbert Houngbo, deputy director general of the ILO, while commending the agreement on compensation, said, “The ILO believes that significant further investment is needed to improve the situation of workers in Pakistan in the garment and other sectors, including the effective access to employment injury benefits. We reiterate that good practices in the world of work can only continue to benefit both employers and workers.”