Indonesian workers at Adidas contractor complain over employment conditions

Workers at a local supplier for global brand sportswear brand Adidas say their employment rights are routinely breached, raising concerns about an industry long accused of poor labour conditions.

Yohana Belinda

Yohana Belinda

The Jakarta Post


Shoemaking workers demand higher wages in a protest staged on June 19, 2023, the day of a friendly soccer match between Indonesia and World Cup winner Argentina. PHOTO: THE JAKARTA POST

August 21, 2023

JAKARTA – Workers at a local supplier for global brand sportswear brand Adidas say their employment rights are routinely breached, raising concerns about an industry long accused of poor labor conditions.

The Jakarta Post looks behind the scenes to shed light on the less glamorous end of a supply chain for shoes marketed around the world by a marque embellished with Blackpink and Lionel Messi.

Employees of PT Panarub Industry seized the publicity of a soccer match between Indonesia and Argentina at Jakarta’s Gelora Bung Karno Stadium on June 19 to stage a protest over work conditions at their factory.

Panarub Industry has been crafting Adidas sneakers in Indonesia since 1988. The company was established in 1968 and has also reportedly produced footwear for many other brands, including Lily, LA Gear and Mizuno.

Holding posters addressing Adidas, they demanded to be paid the income lost as their wages took a large cut during the COVID-19 pandemic. Panarub Industry slashed employee remuneration and conducted layoffs in response to the global economic downturn.

Ismet Inoni, who heads legal advocacy and mass campaigns at the Gabungan Serikat Buruh (GSBI) labor union, expressed little confidence when speaking to the Post on Aug. 10, saying the plight of shoemaking workers appeared unresolvable because the factory seemed “unconcerned”.

“We see that there’s currently no inclination on the part of Adidas to address the issue of workers’ welfare. They can’t run away from problems that occur within their supplier, because Adidas gets a lot of profit from their supplier,” Ismet said.

He said the cuts suffered due to the pandemic had caused hardship at a time when the prices of basic needs had risen. The GSBI claims that, according to its estimates, Panarub Industry workers were owed at least Rp 17 billion (US$1.11 million) in total.

Tense industrial relations with contractors for global sportswear brands are not limited to Indonesia.

Business Insider reported on campaigners disrupting an Adidas breakfast event in Portland, Oregon, the United States, in March, with Billy Yates, US head of the Pay Your Workers campaign, claiming that 30,000 workers in Cambodia alone were owed $11.7 million. After Yates spoke up and banners were unfurled in front of the audience, the organizers decided to call off the event.

“I lack specific data on other companies, but I do have information on [Panarub Industry] because of its labor union. I don’t have any records on similar issues at businesses that have no labor union,” Ismet explained, adding that he had heard of other companies failing to remunerate employees in accordance with Manpower Ministerial Regulation No. 5 of 2023.

Issues ranging from unpaid overtime to months-long salary delays have been reported in various labor-intensive industries. In April, CNN Indonesia reported on a viral video posted by a textile worker in Central Java alleging her employer had failed to compensate workers for extra work.

Keep up with the flow

Several Panarub Industry employees, including Dwi Martini, are GSBI union members. For almost 20 years, she has been producing Adidas sneakers sold at premium prices across the globe. She has long complained about the one-pair-flow arrangement, saying it tormented her colleagues.

“If you can’t finish a pair of shoes or have work piling up, your senior scolds you,” Dwi said on July 26.

Dwi, who has been a labor union member for some time, said she had far more “freedom” than her ununionized coworkers at the manufacturer and had learned more about workers’ rights.

“Previously, I was only working at the production house, and I would be scolded if there was a backlog with the production, but now that I’m also a union member, things have improved, but my colleagues are still facing the same issue,” she said.

The one-pair-flow arrangement, which has been praised as an innovative method of boosting productivity, has left many workers unable to take breaks for prayer, refreshments or even trips to the lavatory during working hours, according to Dwi.

She noted that many employees were unaware of even the most basic workplace protections.

The strenuous workflow makes employees prone to fatigue and illness, Dwi said, adding that she was one of several workers whose health had suffered as a result of the rigid schedule.

The mother of two experienced kidney problems in 2012 as a result of fear of being disciplined by her supervisor and her worry about the growing backlog of shoes if she took a break.

“If you force your body not to drink or even go to the toilet, you can get sick, but we have no choice,” she said, adding that she had learned more about her rights as a worker after joining the union.

“I was unaware of my rights before becoming involved with the group. However, since I became involved in the organization, I take drinks and toilet breaks. If my employer yells at me because the items are stacking up, I tell him: Why don’t you do it yourself?”

Performance pressure

Fellow union member Dewi Wulandari claims that, in addition to the stress caused by the one-pair-flow arrangement, employees also wind up having several duties, making it difficult for them to focus on just one. Dewi herself also works in quality control (QC) and needs to have other abilities, like knowledge of shoe repair.

“QC [workers] conduct inspections and […] are required to be accurate. What particular aspect, for instance, do you think doesn’t quite fit? They also assist with repairs, whether these are minor issues, such as badly placed adhesive or […] more serious issues,” she said.

She went on to describe how she had also been transferred to various departments that were outside of her knowledge, which increased her stress levels and prevented her from performing at her best, though she added that there were also benefits to performing a variety of tasks.

“If it’s simply to verify that the shoes are ok, [that’s fine], but I have been transferred to areas that truly weren’t within my scope [and didn’t match] my training,” Dewi remarked, “and [instead of being instructed] how to do tasks step-by-step, sometimes [the superior] just tells you to keep going and then lets you go.”

“Consequently, workers are punished when the results are unsatisfactory,” she added.

She bemoaned that no discernible compensation increases had occurred despite the one-pair-flow system, in which targets were raised yearly. According to Dewi, the biggest wage increase was back in 2012.

“The wage increases haven’t kept up with our needs. Wage cuts instead of hikes during the COVID-19 pandemic compounded the situation. This year, there was a modest increase, [but it] doesn’t match the rising [costs] of essential necessities,” Dewi said to the Post on July 30.

However, Dewi, who has been active with the labor union for two years, said the government abolishing the sectoral minimum wage (UMSK) through Government Regulation No. 36 of 2021 has made matters worse for employees.

“Regardless of employment status, we are all well aware that permanent staff roles are becoming increasingly difficult to find. In larger businesses, permanent staff may be an option. Contracts, internships or outsourcing continue to be utilized by the company, she continued, adding that many were financially vulnerable because of their contract status.

The Post reached out to Panarub Indonesia director Budiarto Tjandra, who declined to comment, citing “protocols from our buyers.”

Adidas has not responded to a request for comment.

Labor economics expert Payaman Simanjuntak told the Post on Aug. 7 that companies needed to learn to empathize with their workers if the problems were to be solved.

Entrepreneurs and employees should both be aware of the regulations and understand what they are entitled to, Payaman said, noting that in line with Government Regulation No. 35 of 2021 on working hours and overtime, the standard workday was seven hours for a six-day week and eight hours for a five-day week.

Meanwhile, Government Regulation No. 36 of 2021 regulates pay based on the provincial minimum wage or district minimum wage.

Workers were only permitted to work an additional four hours per day and 18 hours per week when overtime was necessary, he explained, stressing that overtime pay was significantly more than the normal hourly rate.

He continued by saying that break times were also regulated, with employees entitled to a 30-minute break following four hours of labor, one day off after working six days in a row and a minimum 12 working days of annual leave.

“I also want to emphasize that every employee has the freedom to worship in accordance with their personal belief and faith. The duration of this worship may be adjusted in accordance with the conditions at work,” he stated.

scroll to top