Patagonia supplier compensates workers following intervention by Finnwatch

Workers making wetsuits for Patagonia – the company named most sustainable in the world – contacted Finnwatch’s local partner in Thailand in May 2019. According to the workers they had had to pay their employer, a Taiwanese company Sheico, high recruitment fees which amounted to more than two months’ wages.

– The fees that the migrant workers had paid to Sheico were in breach of the international human rights standards and Thai laws. Fees that workers pay in order to obtain a job can even lead to situations of debt bondage, says Finnwatch researcher Anu Kultalahti.

Dialogue between Finnwatch and Patagonia leading to corrective action lasted several months. To date Sheico has reimbursed 171 migrant workers. With Patagonia’s support, Sheico is revising its migrant worker recruitment practices. The company is also committed to covering the full costs of migrant workers’ recruitment going forward.

– Patagonia took the reported misconduct seriously, hired help to further investigate the allegations and engaged in dialogue with Sheico, including the suppliers’ top management, Kultalahti says.

Patagonia forbade charging of recruitment fees to migrant workers in its supply chains already in 2014. Despite regular audits, and certification by the US scheme Fair Trade Certified, misconduct related to recruitment fees was not known to Patagonia before Finnwatch got in touch with the company.

– This case points out once again how important it is to hear from the workers directly about the problems they face. Thai laws that prohibit migrant workers from collectively organising should be revised, Kultalahti says.

The European Union is starting negotiations on a free trade agreement with Thailand. Finnwatch is calling on the EU to set the ratification of the International Labour Organization (ILO) conventions on freedom of association and collective bargaining as a condition for the negotiations.

Finnwatch also stresses the necessity of enacting mandatory human rights due diligence legislation. According to the organisation, Patagonia’s exemplary conduct of addressing its human rights impacts is not the norm. 

– Many companies have not given any thought to human rights risks in their global value chains, and competition for a cheap price does not encourage companies to do so either. Recruitment fees and cutting corners when it comes to labour rights protections lower companies ’production costs. Mandatory human rights due diligence would level the playing field for the responsible and the less responsible companies.