Alianza Fashion by Institute for Global Labour and Human Rights

A Test Case for the Guatemalan Government & the Office of the United States Trade Representative

Alianza Fashion

Death threats, fired for organizing, blacklisting, forced overtime, workers robbed of social security, health care and pension

Major labels complicit: Briggs New York, Sag Harbor, Fashion Bug, J.M. Collection, Alfani

Center for Studies and Support for Local Development CEADEL

Institute for Global Labour and Human Rights (Formerly National Labor Committee)

September 17, 2010

A Test Case for the Guatemalan Government & the Office of the United States Trade Representative

Alianza Fashion A Joint Report of Center for Studies and Support for Local Development, CEADEL Institute for Global Labour and Human Rights (formerly NLC)

September 2010

CEADEL Center for Studies and Support for Local Development Centro de Estudios y Apoyo al Desarrollo Local Colonia El Esfuerzo, Parcela 182, zona 1 Chimaltenango, Guatemala Tel: (502) 41476985 and (502) 55676439 ceadel@intelnet.net.gt

Author Charles Kernaghan Research Charles Kernaghan, Barbara Briggs, Sergio Chavez, Cassie Rusnak, Elana Szymkowiak, Ellen Weber, and Gwyneth Williams

Institute for Global Labour and Human Rights (Formerly National Labor Committee) 5 Gateway Center, 6th Floor 60 Boulevard of the Allies Pittsburgh, PA 15222 Tel: 412-562-2406 Fax: 412-562-2411 nlc@nlcnet.org www.nlcnet.org

Alianza Garment Factory CAFTA Guatemala

Contents Executive Summary About CEADEL Preface

Profile of Alianza Fashion and its U.S. Customers....................................................................................... 1 Factory Conditions at Alianza Fashion ........................................................................................................ 5 Long Hours and Forced Overtime ............................................................................................................ 5 Verbal Abuse and Pressure ....................................................................................................................... 5 Wages........................................................................................................................................................ 6 Illegal Firings, Denial of Right to Organize, Blacklisting ............................................................................ 7 Death threats against CEADEL’s leaders end, but Alianza management’s hatred of CEADEL persists ... 10 Illegal Firings at Alianza Fashion Expose Social Security Fraud ............................................................... 11 The Workers’ Demands .............................................................................................................................. 14

Addenda Three examples of workers letters of dismissal and IGSS records, translated into English Letters of dismissal and IGSS records of 20 fired workers, original documents Alianza’s U.S. Buyers

NLC, CEADEL—September 2010

Executive Summary 

On July 30, 2010, the United States Trade Representative filed a case against Guatemala for the systematic violation of workers’ legal rights—the first such case brought under a U.S. free trade agreement.

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Alianza Fashion in Guatemala, with 1,350 workers, sews garments for Briggs New York, Sag Harbor, Fashion Bug, Alfani and JM Collection.

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Forced overtime, 10 2/3 to 12 1/5 hour shifts—7:30 a.m. to 6:10 or 7:40 p.m., six days a week are the norm. Workers are at the factory up to 71 ½ hours a week. Workers who can’t stay for overtime are told they “have the opportunity to resign immediately.”

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Workers are allowed 20 minutes to sew each pair of pants. Supervisors yell and curse at the women, “Hurry up, you shit!”

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Workers are paid 95 cents an hour--$1.21 an hour counting bonuses—which does not come even close to meeting basic subsistence needs.

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Workers exercising their legal right to organize are immediately fired and blacklisted. The Guatemalan Government has done nothing to protect worker rights.

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Leaders of the Center for Studies and Support for Local Development, CEADEL—a local human rights NGO—have received death threats for assisting Alianza workers.

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Alianza Fashion management appears to be systematically robbing workers of their Social Security deductions, leaving them and their children without health care, or their pensions.

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The Alianza workers must be made whole again and an independent investigation of the Social Security Institute must be undertaken.

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The Alianza Fashion case provides one more example of the continued failure of corporate factory monitoring.

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The U.S. labels should not cut and run from the Alianza factory. That would only punish the workers further. The U.S. companies should work with management to finally bring the Alianza factory into compliance with Guatemalan labor law and U.S. CAFTA labor provisions.

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Despite the systematic and gross violation of worker rights at the Alianza Fashion and other factories across Guatemala, apparel makers were able to export--duty free--$10.5 billion worth of garments to the U.S. since January 2004. Under CAFTA, it is likely that Guatemala's 155 garment factories have saved nearly $3 billion in tariff breaks. In return, the workers in Guatemala and the American people received nothing. This is not the way free trade agreements are supposed to work.

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The USTR's case against Guatemala has the potential to guarantee that respect for worker rights will become reality under the US-CAFTA free trade agreement.

About CEADEL

Center of Studies and Support to Local Development CEADEL The Center for Studies and Support for Local Development, based in Chimaltenango, is a nonprofit organization dedicated to assisting and accompanying garment ¨maquila¨ and agro-export workers, eradicating child labor and supporting workers´ right to organize. CEADEL offers worker training in human and labor rights and labor law as well as courses to allow workers to complete their primary education and build vocational skills (including computers, baking, electrical work). CEADEL also offers legal assistance and support for worker efforts to organize. CEADEL and the National Labor Committee have collaborated in a number of successful joint campaigns to improve conditions and end violations in factories. These include campaigns on the Legumex frozen fruit and vegetable processing plant and Fribo apparel factory in 2007, and the Sam Bridge and Nicotex apparel maquila factories in 2008 and 2009, respectively.

CEADEL / Centro de Estudios y Apoyo al Desarrollo Local Colonia El Esfuerzo, Parcela 182, zona 1 Chimaltenango, Guatemala Phones: E-mails: Website:

(502) 41476985 and (502) 55676439 jgzo57@yahoo.com, coordinacionceadel@yahoo.es www.ceadel.org.gt

Gabriel Zelada : Director Gladis Marroquín: Project Coordinator

Preface What is at Stake? By Charles Kernaghan

It is almost impossible to overstate the potential impact that the United States Trade Representative’s case against Guatemala—for the systematic violation of legal workers’ rights standards—can have across Central America. What we know is that from January 1, 2004 through July 2010, Guatemala exported $10.5 billion worth of garments to the U.S., which entered duty free. If we take the general tariff on trousers, which is 28.2 percent, we can estimate that garment factories in Guatemala have been the beneficiaries of nearly $3 billion in tariff breaks. What have the American people or the workers in Guatemala gained? Absolutely nothing. For the last six and a half years, despite billions in tariff breaks, there have been zero improvements in respect for fundamental worker rights. We also know that “Sag Harbor Stretch Woman” pants with “The Slimming Solution” design made in Guatemala enter the U.S. with a landed Customs value of $10.54. This $10.54 accounts for the total cost of production of the pants including fabric, thread, assembly and shipping costs. Retailers sell the pants for $36.00, which represents a hefty mark-up of $25.46. Surely there is enough money here to make at least modest improvements in respect for worker rights. But nothing changes. There are also other players involved. Sag Harbor pants are sold at Kohl’s, Sears, Meijers, even U.S. military exchanges. One would think that such an impressive group could get it right and insist on worker rights improvements. No such thing is happening. We also know that Sag Harbor and Briggs New York have been monitoring the Alianza factory for years now. In fact, at the end of August auditors from Briggs New York paid another visit to Alianza. The monitors could speak with any worker they chose to. But it’s all a game and the workers know what they must do. Management advises the workers: “Remember, if things go well with the monitors we will have plenty of work until at least December.” Some supervisors are more direct, instructing the workers not to talk about what goes on in the factory… “You have to say everything is okay.” The same game is played over and over again, with no gain for the workers.

It is an open secret that corporate monitoring does not work. Mr. John Ruggie, the special representative to the United Nations Secretary General for human rights and transnational corporations told Women’s Wear Daily (June 4, 2009) that, “Just about everybody, at least off the record, will tell you that monitoring doesn’t work and auditing of supplier factories doesn’t work, because people cheat.” (http://www.wwd.com/business-news/un-expert-raises-doubts-onfactory-monitoring-2156916) These are the reasons the USTR’s case against Guatemala could represent such a major turning point, where—for the first time—government, local factories and global brands would be held legally accountable to respect labor laws and our free trade agreements. This is exactly what the workers have been hoping for. The joyride for sweatshop companies may be over.

Workers meeting at CEADEL

Alianza Garment Factory CAFTA Guatemala

Alianza Fashion, S.A Alianza Fashion, S.A

smaller number of women’s skirts and jackets. As of September, the Fashion Bug label appears to account for the majority of production.

Kilometer 52 ½ Carretera Interamericana Chimaltenango, Guatemala Owner/Legal Representative: General Manager: Ownership: Phone: Fax: Email:

Mr. Bong Choon Park Seo Mr. Rubén Enrique Rosales Ovalle South Korean

502-772-02100 502-772-02121 dongfredy@alianzafashion.com

Number of workers: Approximately 1,350, of whom 80 percent are women. Production/Labels: Briggs New York (Kellwood, sold at J.C. Penney and Sears), Sag Harbor (Kellwood, sold at Kohl’s, Sears, U.S. Military Exchanges, Meijer and others), Fashion Bug (Charming Shoppes), Alfani (sold at Macy’s and Bloomingdales) and JM Collection (a private label sold exclusively at Macy’s).

Alianza also regularly subcontracts to another Korean-owned factory, Avandia, which is located in El Zapote, Guatemala. It is possible that Alianza Fashion owns the Avandia plant, as their listed email address is dykim@alianzafashion.com. In the month of August 2010, Alianza Fashion shipped 665,992 garments to the United States, the overwhelming majority of which were ―ladies woven pants.‖ The Briggs New York and Sag Harbor labels accounted for over 40 percent of total imports. Along with the pants, Alianza shipped a much

NLC, CEADEL—September 2010

Label being produced at Alianza Fashion factory in September 2010

In the last year to date, September 1, 2009 to August 31, 2010, Alianza Fashions exported well over 6 million garments to the U.S. South Korean factories like Alianza Fashion and Avandia dominate Guatemalan garment exports to the U.S. Of a total of 155 garment export factories, 88—or 57 percent—are South Korean-owned. In 2009, Guatemala exported $1.1 billion worth of garments to the U.S. Since being awarded duty-free access under the Central American Free Trade Agreement (CAFTA) in 2004, Guatemala has shipped $10.53 billion worth of garments to the U.S. (January 1, 2004 through July 31, 2010). Guatemala is the 13th largest apparel exporter to the U.S. in the world. However, taken together, the CAFTA countries exported $6.14 billion of garments

Alianza Garment Factory CAFTA Guatemala to the U.S. in 2009, making them the world’s second largest supplier of apparel to the U.S. after China. On July 1, 2006, Guatemala ratified the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which allowed the region’s apparel exports to enter the U.S. duty free as long as the yarns and fabrics used in sewing the garments were made in the U.S. The United States then back-dated CAFTA to January 1, 2004, meaning that Guatemala and other beneficiary countries were granted tariff credits equal to the duties being paid from January 1, 2004 on. In the case of Guatemala, the garment factories received tariff credits from January 1, 2004 to June 30, 2006. Duty-free access to the U.S. market under the

CAFTA-DR Free Trade Agreement was supposed to be conditioned upon beneficiary countries guaranteeing respect for national and internationally recognized worker rights standards. “A party shall not fail to effectively enforce its labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the parties, after the date of entry into force of this agreement.” (CAFTA-DR Article 16.2 / Enforcement of Labor Laws) As the Alianza Fashion case will clearly demonstrate, the Guatemalan Government has failed miserably in its commitment to protect the legal rights of Guatemala’s workers. Over the past five years, the Guatemalan Government and garment factories have blatantly violated every labor law in Guatemala.

Label smuggled out of the Alianza Fashion factory in February 2010

NLC, CEADEL—September 2010

Alianza Garment Factory CAFTA Guatemala

Sag Harbor has been produced for years in Alianza. This “Sag Harbor Stretch Woman” label was smuggled from the factory in February 2010.

Briggs New York label smuggled from Alianza Fashion.

Workers recognized this style of “Sag Harbor Stretch Woman” pants, purchased in Kohl’s. Briggs New York women’s pants purchased at a Sears Store in Massachusetts, which the workers recognized in photos as one they had worked on.

NLC, CEADEL—September 2010

Alianza Garment Factory CAFTA Guatemala

This Alfani label, smuggled out of the Alianza factory in August 2010 was sewn into women’s black pants.

This Fashion Bug label (above) smuggled from the Alianza factory perfectly matches the label on pants purchased recently in a Fashion Bug store in Pittsburgh (below). “Alfani” “curvy fit” “ebony black” pants purchased in a Macy’s store in Massachusetts.

NLC, CEADEL—September 2010

Alianza Garment Factory CAFTA Guatemala

Factory Conditions at Alianza Fashion Long Hours and Forced Overtime The regular legal work week in Guatemala is 44 hours. At Alianza the official shift is from 7:30 a.m. to 4:10 p.m. –8 2/3rds hours—Monday through Friday, with a 40-minute break for lunch. On Saturday, the regular shift is four hours, from 7:30 a.m. to 11:30 a.m., bringing the work week to 44 hours. However, at Alianza, actual working hours Monday through Friday are from 7:30 a.m. to 6:10 or 7:40 p.m. –10 2/3rds to 12 1/5th hours a day—with a 10 ½ hour shift on Saturday from 7:30 a.m. to 6:10 p.m. All overtime is mandatory and the workers cannot leave the factory until their daily production goals are complete. One woman sewing operator recently explained: “Our working time is from 7:30 a.m. to 4:10 p.m., but that is a lie, because we get out at 6:10 p.m. or 7:40 p.m., as it’s impossible to reach the goal by 4:10 p.m. We can’t do it. So we have to stay working until we reach the target of 1,200 pants [per module or line]. At the low end, Alianza workers are at the factory 64 hours a week, putting in 10 2/3 hour shifts, six days a week. Not counting the 40 minute lunch break, the workers are actually working 60 hours a week including 16 hours of mandatory overtime. At the high end, workers are at the factory 71 ½ hours a week, putting in 12 hour and 10 minute shifts Monday through Friday, from 7:30 a.m. to 7:40 p.m., while working a 10 2/3rds hour shift on Saturday,

NLC, CEADEL—September 2010

from 7:30 a.m. to 6:10 p.m. Not counting their lunch breaks, the workers are actually toiling 67 ½ hours a week, including 23 ½ hours of overtime, all of it obligatory. There are also shifts from 7:30 a.m. to 9:10 p.m. –13 2/3rds hours—once or twice a month before shipments must leave. Workers report that the factory is ―full of work‖ and that ―workers in the cutting and packing departments are working to 11:00 p.m. almost every night,‖ putting in 15 ½ hour shifts. Even if the cutting and packing departments worked just three 15 ½ hour shifts each week, this would put the workers at the factory for a grueling 81 ½ hours a week. Without warning on July 12 and 13, almost half the workers—600 or so out of the 1,350 total—were forced to stay until 11:00 p.m., putting in back-toback 15 ½ hour shifts. The chief of personnel told the workers: ―Those of you who do not want to work overtime have the opportunity to resign immediately.” Such last minute overtime is a very serious problem for many workers, who either live far from the factory or live in neighborhoods too dangerous to be returning home at such a late hour.

“Hurry Up, You Shit!” Women in Guatemala abused sewing clothing for women in the United States There are 17 assembly lines (also called modules) at the Alianza factory, with 50 workers on each line. Women’s pants make up 88 percent of total production—15 out of 17 lines—with just two lines making jackets for Sag Harbor and Fashion Bug. Management arbitrarily sets the production goal at 1,200 pants per eight-hour shift, or 150 per hour. This means the sewing operators have just 20 minutes to complete each pair of pants. For pants

Alianza Garment Factory CAFTA Guatemala without pockets—which require less sewing—the goal is raised to 1,500 pants per shift.

which of course we can’t pay it, because we haven’t any money, so the factory deducts it from our wages.”

It is impossible for the workers to reach this goal. “They demand high quality and that we reach the target,” one sewer told us, “but the synthetic cloth is difficult to handle.” “It also takes more time,” another worker explained, “when the cloth has squares or stripes which have to be perfectly aligned at the waist and at the front and back.”

There are several very abusive supervisors, the workers tell us, especially one called Victor. He shouts, “You old whore, why don’t you work faster!” It is not uncommon for the women sewers to cry. “Supervisors shout at us and scold us…and we, as women, are humiliated.”

Ninety-five Cent-an-Hour Minimum Wage

Pin stripes on these Sag Harbor pants make sewing difficult

As we have seen, workers are routinely kept for two or more hours of mandatory overtime each day, unable to leave until they reach their goals. Supervisors and the Chief of Production are constantly walking the shop floor shouting “Hurry up. Hurry up or we are going to have to get rid of you!” and “Hurry up! Make those fucking 100 pieces you shit!”… “Go to hell. You’re good for nothing. Hurry up!” Moreover, the workers explain, “The supervisors and the inspection department are very strict. They want 100 percent quality. If we make a mistake in the sewing, they take us to the office. They started a new policy in August. If we get a written warning for poor quality, we have to pay 100 Quetzales [$2.40],

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The base wage for garment workers in Guatemala is 95 cents an hour and $7.60 for an eight-hour shift. However, in Central America, they pay what is called the ―Seventh Day’s Pay,‖ which acts as a sort of attendance bonus. If workers do not miss any days, they will be paid for all seven days, not just the six days they work. So garment workers can earn $1.21 an hour. (95¢ x 8 hours x 7 days = $53.20; $53.20 ÷ 44 hours work/week = $1.21 per hour.) Workers appear to be paid more or less correctly at the Alianza Fashion factory. Wage with 7th Day Attendance Bonus $1.21 per hour $9.67 a day (8 hours) $53.20 a week $230.53 a month $2,766.40 a year The $1.21 an hour wage does not come even close to providing basic subsistence level needs. Alianza workers live from hand to mouth, trapped in poverty.

Alianza Garment Factory CAFTA Guatemala does nothing to protect the workers’ legal right to organize. The Ministry of Labor is dysfunctional.

Illegal Firings, Denial of Right to Organize, Blacklisting There is not a single functioning union with a collective contract in any of the 155 garment export factories across Guatemala. The companies refuse to recognize unions and routinely resort to threats of reprisals and firings to block organizing drives. The Guatemalan Government is completely passive and

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On February 2, 2010, a group of 20 workers at Alianza Fashion with the help of CEADEL, organized an “Ad Hoc Committee,” which is the first step toward organizing a union. They were immediately fired. Under Guatemalan labor law, the founding members of an ad hoc committee/union are legally protected and cannot be demoted, transferred, fired or retaliated against in any way. As the country’s labor laws are not enforced by the Guatemalan Government, Alianza factory management did not hesitate, even for a second, before illegally firing the founding Ad Hoc Committee members.

List of Alianza Workers Illegally Fired on February 2, 2010 For Daring to Exercise Their Legal Right to Organize No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14

First Name Pedro Lucia Juan José Pedro Malaquias Norma Judith Maria Eufemia Diana Lily Rumualdo Ledy Marilú Roxana Elizabeth Aida María Carmen Angelica Isaias Ajquill

Last Name Buch Iboy Riquiac Mendez Marroquin Vasquez Sen Mejia Yol Cheroque Buch Thic Pichiya Cana Chacal Subuyuc Ambrocio Agustín Lémus Ris Gónzalez Salazar Gónzalez Salazar Salazar Velásquez

Note: Six of the 20 fired workers fled the factory in fear and have not maintained contact with CEADEL.

NLC, CEADEL—September 2010

Alianza Garment Factory CAFTA Guatemala 

In early March 2010, another group of 32 Alianza workers tried again to exercise their legal right to organize an ad hoc committee. All 32 workers were illegally fired by Alianza factory management on March 25 and 26, 2010.

Once again, the Ministry of Labor did not lift a finger to protect or enforce these workers’ legal right to organize. Some of the illegally fired workers are now blacklisted.

List of 32 Alianza Workers Fired on March 25 and 26, 2010 For Exercising their Legal Right to Organize

No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Name of the worker CESAR AUSTO REYES COTZAJAY MARVIN ADOLFO ZAMORA MORALES ERICK FERNANDO ACETÚN ESTRADA ERICK AMILCAR ACETÚN ESTRADA CARLOS ARTURO LOPEZ PABLO ANTONIO VELASQUEZ TZAMPOP MAYRA LORENA CALLEJAS SALAZAR EDGAR BENAJAMIN BORRAYO CAMEY JOSE MARVIN GOMEZ FARFAN VILMA MARINA SOCOP TOMA SELVIN AMILCAR SITÁN NIMAJUAN ELVA SUNUC RUIZ JOSE HAROLDO SOCOY CHUP JOAQUIN LASTOR VELASQUEZ ELMER RONALDO GALINDO ITZAY EDGAR ALVA ACUTA SARA ABIGAIL ATZ CALAN MANUEL DE JESUS RUMPICHI LARA HERMEJILDO CALAN CASTRO JOSE DOMINGO RAMOS FIGUEROA LUIS PATZAN LARIOS PEDRO ACEYTUNO LUX HECTOR OSWALDO SAQUIL CHOC ISABEL CHOPOX CURRUCHICHE CESAR OBDULIO MORALES TAGUAL MARTALIZOLIVIA AMBROSIO TZIRIN EDWIN BERNARDO CHIROY TATAGUIN PEDRO PICHOL AZURDIA VICTOR MACZUL XEP EDWIN GIOVANNI XOYON SUY JAIME OVIDIO XICON SIRIN JORGE MARIO MENDEZ VALLE

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Workers Seeking Reinstatement X X X X X X X X X X X X X X X X X X X X X X X

Years working at Alianza 9 years 6 ½ years 8 years 7 ½ year 1 ½ year 2 years 2 ½ years 2 years 6 ½ years 9 years 9 years 7 ½ years 7 years 4 ½ years 6 ½ years 2 years 3 years 4 ½ years 6 years 9 years 9 years 5 ½ years 4 years

Alianza Garment Factory CAFTA Guatemala

As can be seen from the list above, the majority of these illegally fired workers were senior employees, with six to nine years experience working at Alianza. It is obvious there was no problem with their work. Their ―crime‖ was to organize a union. Twenty-three of the fired workers have refused to accept severance pay—which would make their firing legal—and continue to struggle for reinstatement and their right to organize. With CEADEL’s assistance these 23 workers have also filed a legal suit against Alianza Fashion management demanding reinstatement, but this could take months, if not years, to resolve. Nine other founding members of the second ad hoc committee, feeling their legal rights would never be protected, have taken their severance and left.

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Illegally Fired Workers Are Targeted with Blacklisting The illegally fired union leaders—who have refused to take their severance pay and continue to struggle for reinstatement—still have to find work in order to feed and house themselves and their families. It is now feared that Alianza Fashion’s general manager, Mr. Ruben Enrique Rosales, is circulating a list of the fired union leaders among other South Korean-owned factories in the Chimaltenango area. Joaquin Lastón Vásquez, who was illegally fired in March for organizing a union at Alianza was able to

NLC, CEADEL—September 2010

find work at another South Korean-owned garment factory, Sewon, S.A., but was fired within a matter of days, on June 8, 2010. No explanation was given for his sudden firing. Erick Fernando Acetun Estrada was also illegally fired from Alianza in March for being a member of the ad hoc committee. He had worked for just a few days at the same factory as Joaquin Lastón Vásquez and was fired on the same day, June 8. Manuel de Jesus Rompich Lara—also illegally fired in March—worked for just two weeks at a South Korean garment factory called Sam Sol S.A., but was suddenly fired without any explanation. Maria Eufemia Pichiya Cana—who was illegally fired by Alianza management on February 2, 2010 for union organizing—found employment at another South Korean factory called Beltlan, S.A., but was fired without any reason given after just four days. After Maria Eufemia was fired, a supervisor at the Beltlan S.A. factory told the workers that she was let go because “she was a problem” and “was involved in organizing with CEADEL and these people are troublemakers.”

Twenty Alianza workers were fired on January 4, 2010 for having missed one day of work, on January 2, the day after New Year’s Day. All those fired worked in the ironing department. These firings were also illegal, as missing one day’s work is not just cause for termination. (It was only through CEADEL’s intervention that the fired workers received their severance pay.)

Alianza Garment Factory CAFTA Guatemala

Alianza Fashion—Run Like a Minimum Security Prison Death threats against CEADEL’s leaders end, but Alianza management’s hatred of CEADEL persists Serious death threats against CEADEL’s leaders began in February 2010 and lasted about three months. Early February

February 10:

March 30:

April:

CEADEL’s lawyer, Mr. Walter Felipe Pocop, received a phone call from a man who threatened him, “We’re going to kill you.” Alianza’s general manager, Mr. Enrique Rosales, enters CEADEL’s office at night, armed with a pistol, saying he is looking for Mr. Pocop. CEADEL director, Jose Gabriel Zelada, receives a call on his cell phone. The male caller tells him, “You are going to die, you son of a bitch.” Mr. Zelada receives a second death threat.

(See the National Labor Committee’s March 10, 2010 report, “Illegal Firings and Death Threats at Alianza Fashion Garment Factory in Guatemala” for more details.) Death Threats End, But Workers Are Told They Will Be Immediately Fired If They Have Any Connection to CEADEL

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Alianza’s general manager, Mr. Enrique Rosales, tells workers point blank: “If you go to CEADEL, you will be kicked out of Alianza.” “If you go to CEADEL, stay there and ask them to feed you. You better not have any contact with CEADEL, because we are the ones who feed you.” “If we find any more traitors among us, they will be immediately fired without any severance pay.” “You should think twice before going to CEADEL because after you’re fired you will come crying to me begging for your reinstatement.” “CEADEL and their friends only want to cheat you. They don’t do anything good for you. All they want to do is shut the factory down.” “If you try to organize, you will hurt the factory and you will be without work.” Alianza management also uses the factory’s loudspeaker system to threaten the workers not to cooperate or go to CEADEL’s office. A group of workers explains, “Supervisors and managers tell us that CEADEL is only out to help themselves. They warn us not to go to CEADEL because it could be very dangerous for us if we want to keep our jobs. Alianza workers are also threatened not to go to the Guatemalan Ministry of Labor: “If you go to the Ministry [of Labor], we will throw you out without a cent.”

Alianza Garment Factory CAFTA Guatemala

Illegal Firings at Alianza Fashion Expose Social Security Fraud Alianza management, in broad daylight and over the course of years, has systematically robbed the workers of their Social Security payments, leaving the workers, and their children, without health care, and the workers without their pensions—despite the fact they are paying for it. It is hard to imagine that Alianza Fashion is a unique case or that the Guatemalan Social Security Institute (IGSS) could be so lax that it would miss the fact that a large factory like Alianza, with 1,350 workers, may have been inscribing less than 100 workers into Social Security. A full and independent investigation is necessary. While criminally robbing its workers, Alianza management continues to be awarded duty free access to the U.S. market. The Guatemalan Social Security Institute (IGSS) was founded in 1946 to provide health care and pensions to all Guatemalan workers. IGSS is the only functioning pension plan in Guatemala, operating on deductions from workers pay and a portion paid by employers. Workers must pay 4.83 percent of their monthly wages into IGSS. The workers’ deduction is based on the minimum wage, the 7th Day attendance bonus, all overtime and production bonuses. For example, a worker earning the minimum wage of 1552.50 quetzales ($192.51) a month would pay $9.30 into Social Security. With overtime and other incentives, the workers’ mandatory deductions for Social Security would be higher.

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Companies must pay an additional 10.67 percent of the workers’ monthly wages. If a worker earns just the minimum wage of $192.51 per month, management must pay $20.54 into the Social Security Institute. The combined worker deduction and management portion would total $29.84 a month if the worker is earning just the minimum wage. In return for the worker and management payments to Social Security, the workers—and their young children up to five years old—receive free health care. Social Security health care covers occupational accidents, maternity care and maternity leave, general illnesses, disability, hospitalization, sick leave, widow support and more. The Social Security wage deduction also allows workers to retire, after they have reached 60 years of age and have worked a minimum of 15 years, with a pension equivalent to 60 percent of the worker’s average wage including overtime and production bonuses. It appears that Alianza factory management has systematically deducted workers Social Security payments each month and then pocketed the money rather than passing it to the Guatemalan Social Security Institute as required by law. Moreover, Alianza management has also failed to pay the company’s portion of mandatory Social Security fees—and in some cases, this has been going on nine years. (Alianza Fashion only began operations in 2000.) The Social Security scandal at Alianza’s only came to light after management illegally fired workers attempting to exercise their right to organize a union. It was CEADEL that advised the fired workers to ask for a certified copy of their personal files at the Guatemalan Social Security Institute. At first, IGSS staff flat-out refused to provide copies of the workers’ files. It took the fired workers seven weeks and four trips back and forth from Chimaltenango to Guatemala City, but in the end they won--at least partially. Of the 20 fired workers

Alianza Garment Factory CAFTA Guatemala who sought their Social Security files, just two workers received their records for the full period of their employment at Alianza. The other 18 received only partial records, from 2007 on. Still, the documents are incredibly disturbing. Alianza Fashion management made only partial Social Security payments on behalf of two workers, while management made no Social Security payments whatsoever for the other 18 workersâ&#x20AC;&#x201D; some of whom had been working with Alianza for the last nine years, since 2001!

NLC, CEADELâ&#x20AC;&#x201D;September 2010

In the best case scenario, Alianza management paid just 46 percent of the mandatory Social Security deductions, for Ms. Sara Abigail Atz Calan. In the second case, management paid just 24 percent of the Social Security deducations legally due for Ms. Vilma Marina Socop Toma. Vilma began working at Alianza on January 2, 2001 and was illegally fired on March 26, 2010 for attempting to organize a union.

Alianza Garment Factory CAFTA Guatemala

Alianza Workers Robbed of Social Security Health and Pension Benefits Name of Worker Period of employment at Alianza 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Carlos Arturo López Pablo August 18, 2008 - 26 March, 2010 Cesar Austo Reyes Cutzajay March 16, 2001 – March 25, 2010 Edy Amilcar Acetun Chonay July 22, 2002 - 26 Mar - 2010 Elva Sunuc Ruiz September 30, 2002 – March 26,2010 Edwin Giovany Xoyon Suy April 23, 2007 – March 26, 2010 Erik Fernando Acetun Estrada April 1, 2002 – March 25, 2010 Hector Oswaldo Saquil Choc March 13, 2006 – March 26, 2010 Hermenejildo Calan Castro May 7, 2004 – March 26, 2010 Jorge Mario Mendez Valle April 19, 2001 – March 26, 2010 José Domingo Ramos Figueroa June 16, 2003 – March 25, 2010 José Haroldo Socoy Crup May 13, 2002 – March 26, 2010 Joaquin Lastor Velazquez July 11, 2005 – March 26, 2010 Kelly Evelyn Alonzo Gonzalez September 6, 2005 – March 26, 2010 Luis Patan Larios May 28, 2001 – March 26, 2010 Marcos Pata Cipriano January 28, 2004 – March 26, 2010 Marvin Adolfo Zamora Morales July, 30, 2003 – March 25, 2010 Pedro Aceytuno Lux September 20, 2004 – March 26, 2010 Sara Abigail Atz Calan March 5, 2007 – March 26, 2010 Selvin Amilcar Sitan Nimajuan April 2, 2001 – March 26, 2010 Vilma Marina Socop Toma January 2, 2001 – March 26, 2010

NLC, CEADEL—September 2010

Months for which IGSS Provided requested records*

# Monthly Payments by Alianza to IGSS during the period

Alianza Garment Factory CAFTA Guatemala

The Workers’ Demands

 Alianza management must immediately reinstate the workers illegally fired in March for exercising their legal right to organize.  Alianza management must respect and guarantee the workers’ right to organize a union.  Every worker must be registered in Social Security and guaranteed the legal right to health care and a pension. Alianza must make the workers whole again by paying all outstanding Social Security deductions and payments owed.  All overtime at Alianza must be voluntary and in compliance with the law.  Good faith negotiations must take place between Alianza workers and CEADEL, Alianza factory management, the Ministry of Labor and the Guatemalan Social Security Institute. (One serious suggestion to stop factory management from robbing workers of their Social Security payments is to make this a crime punishable by imprisonment. In El Salvador, such a law has been very effective in ending Social Security violations.)  The labels must not pull their work from the Alianza factory, which is the worst thing they could do. The workers need these jobs. The companies must keep their production in the factory as they work together with management to finally bring Alianza into compliance with Guatemalan labor laws and U.S.-CAFTA labor rights provisions.

NLC, CEADEL—September 2010

Addenda



Letters of dismissal and IGSS records of 20 fired workers, original documents (The IGSS records of the 20 fired workers can be downloaded online.)



Three examples of workers letters of dismissal and IGSS records, translated into English



Alianza’s U.S. Buyers

Documentation of Alianza’s Underpayment or Non-Payment of IGSS Social Security Dues --3 Examples— Of 20 workers fired from the Alianza factory in March 2010 for forming an Ad Hoc worker committee, the records of 18 show no payments at all by the company into Guatemala’s pension and healthcare system on the workers behalf. The two remaining workers were ―lucky‖—the company made some of the legally required payments for the months they worked. Each fired worker received: 1.) a letter of dismissal from the company documenting their time of employment 2.) a Guatemalan Social Security Institute report of the payments received (or not received) from Alianza on their behalf. Below are translated examples of the records received by three workers—the two for whom some payments were made and a third more typical worker for whom no payments were made. Links to copies of the original documentation for all 20 workers can be found in Addenda.

Vilma Marina Socop Toma (Worked for Alianza for 9 years. IGSS records indicate that—during 95 months for which Social Security payment data was made available, only 23 monthly payments made by Alianza on Ms. Socop’s behalf.) [Letter of Dismissal from Alianza] Chimaltenango, March 26, 2010 Sirs Labor Inspectorate In the facilities of the Alianza Fashion SA Company, Km 52.5 InterAmerican Highway to Chimaltenango on the 26th day of March of this year, where the labor relationship is concluded, [with the] FIRING FOR JUST CAUSE of Mrs. VILMA MARINA SOCOP TOMA. Her [employment] relationship began on January 2, 2001 in the cutting area [and] ends on March 26, 2010. The employment relationship is concluded. Sincerely [Signed] Ruben E. Rosales Human Resources Manager

Employee agrees

Viviana Lara Secretary of Human Resources

[Translation: Vilma Marina Socop Toma’s IGSS Payment Record] IGSS

REPORT OF WAGES EARNED CA-29 CORRESPONDANCE & RECORDS DEPARTMENT 2/25/2010 TO DATE: 2/182010 PERIOD REQUESTED: JAN/2002 – DEC/2009 Affiliate #: 2-83-24138 Name: Socop Toma Vilma Marina Report 2934 Business #: 79147 Name: ALIANZA FASHION SOCIEDAD ANONIMA Relationship: The interested party [the worker herself] Input: 384 Date of Request: January 1, 2010 Date of Response: February 17, 2010 Year CMonth Month Wage Code Description of Code 2002 1 January 0.00 2 Not reported 2002 2 February 0.00 2 Not reported 2002 3 March 0.00 2 Not reported [Same through October 2004]….. 2004 11 November 0.00 5 Pay given but no Rolls [planillas] 2004 12 December 0.00 5 Pay given but no Rolls [planillas] 2005 1 January 0.00 2 Not reported [Same through June 2006] 2006 7 July 1,309.20 1 Reported [Same through September 2007 2007 10 October 0.00 5 Pay given but no Rolls 2007 11 November 1,374.66 1 Reported 2007 12 December 1,374.66 1 Reported 2008 1 January 1,432.50 1 Reported [Same – IGSS payments made through July 2008 2008 8 August 0.00 5 Pay given but no Rolls [Same—pay was given but no rolls—through December 2008] 2009 1 January 0.00 2 Not reported [Same through June 2009 – not reported] 2009 7 July 0.00 8 Social Security Rolls in Process [Same through December 2009—last monthly record detail made available.] Wages:

Q 31,571.46

Payments Made: 23

The herein signed Microfilm operator attests and lets it be known that s/he viewed the microfilm archives where s/he verified through the Social Security rolls that the information rendered in this report is true. [Signed] Rubi Mazin Operator Dignitizer: Maby [Signed & stamped] Signature of Immediate supervisor

[Signed] Reviewed [Signed & stamped] Marvin Gutierrez Supervisor

Sara Abigail Atz Calan Worked in Alianza for three years, from March 5, 2007 – March 26, 2010. IGSS records indicate that—during 35 months for which Social Security payment data was made available, only 16 monthly payments made on Ms. Atz Calan’s behalf.)

[Letter of Dismissal from Alianza] Chimaltenango, March 26, 2010 Sirs Labor Inspectorate In the facilities of the Alianza Fashion SA Company, Km 52.5 InterAmerican Highway to Chimaltenango on the 26th day of March of this year, where the labor relationship is concluded, [with the] FIRING FOR JUST CAUSE of Mrs. SARA ABIGAIL ATZ CALAN. Her [employment] relationship began on March 5, 2007 as a [sewing] operator in module 02-B [and] ends on March 26, 2010. The employment relationship is concluded. Sincerely [Signed] Ruben E. Rosales Human Resources Manager

Employee agrees

Viviana Lara Secretary of Human Resources

[Translation: Sara Abigail Atz Calan’s IGSS Payment Record] IGSS

REPORT OF WAGES EARNED CA-29 CORRESPONDANCE & RECORDS DEPARTMENT 7/12/2010 TO DATE: 7/92010 PERIOD REQUESTED: MY/2007 – JN/2010 Affiliate #: 2-80-23518 Name: ATZ CALAN SARA ABIGAIL Report 12920 Business #: 79147 Name: ALIANZA FASHION SOCIEDAD ANONIMA Relationship: The interested party [the worker herself] Input: 16680 Date of Request: July 9, 2010 Date of Response: July 9, 2010 Year CMonth 2008 1 2008 2 2008 3 2008 4 2008 5 2008 6 2008 7 2009 1 2009 2 2009 3 2009 4 2009 5 2009 6 2009 7 2009 8 2009 9 Wages:

Month January February March April May June July January February March April May June July August September

Wage Code Description of Code 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED 1,432.50 1 REPORTED

Q 22.920.00

Payments Made: 16

OBSERVATIONS: 1.-MAY TO SEPTEMBER, NOVEMBER, DECEMBER/07 IS NOT REPORTED. 2.-AUGUST TO DECEMBER/08, JANUARY TO JUNE/10 NO REGISTERED PAY 3.-OCTOBER/07, OCTOBER TO DECEMBER/09 PAYMENT WAS MADE, ROLLS HAVE NOT BEEN ENTERED TO THIS AGENCY The herein signed Microfilm operator attests and lets it be known that s/he viewed the microfilm archives where s/he verified through the Social Security rolls that the information rendered in this report is true. [Signed] Rubi Mazin Operator Dignitizer: Lucrecia [Signed & stamped] Signature of Immediate supervisor

[Signed] Reviewed [Signed & stamped] Marvin Gutierrez Supervisor

Luis Patan Larios Worked in Alianza for nearly nine years (105 months), from May 28, 2001 to March 26, 2010. For the 35 months for which Social Security payment data was made available to him, IGSS records indicate that 0 payments made by Alianza to IGSS on his behalf.)

[Letter of Dismissal from Alianza] Chimaltenango, March 26, 2010 Sirs Labor Inspectorate In the facilities of the Alianza Fashion SA Company, Km 52.5 InterAmerican Highway to Chimaltenango on the 26th day of March of this year, where the labor relationship is concluded, [with the] FIRING FOR JUST CAUSE of Mr. JORGE MARIO MENDEZ VALLE. His [employment] relationship began on April 19, 2001 as a [sewing] operator in module 01-B [and] ends on March 26, 2010. The employment relationship is concluded. Sincerely [Signed] Ruben E. Rosales Human Resources Manager

Viviana Lara Secretary of Human Resources

Employee agrees

LABOR MINISTRY STAMP & DATE

[Translation: Jorge Mario Mendez Valle’s IGSS Payment Record] IGSS

REPORT OF WAGES EARNED CA-29 CORRESPONDANCE & RECORDS DEPARTMENT 7/12/2010 TO DATE: 4/2010 PERIOD REQUESTED: SP/2001 – JN/2010 Affiliate #: 1-81-32194 Name: MENDEZ VALLE JORGE MARIO Report 12941 Business #: 79147 Name: ALIANZA FASHION SOCIEDAD ANONIMA Relationship: The interested party [the worker himself] Input: 16688 Date of Request: July 9, 2010 Date of Response: July 9, 2010 Year

CMonth

Month

Wages:

Wage Code Description of Code Payments Made: 0

OBSERVATIONS: 1.-SEPTEMBER/01 TO JULY, SEPTEMBER, OCTOBER/04, JANUARY/05 TO SEPTEMBER, NOVEMBER/06 TO SEPTEMBER, NOVEMBER/07 TO JULY/08, JANUARY TO SEPTEMBER/09 IS NOT REPORTED. 2.-AUGUST, NOVEMBER, DECEMBER/04, OCTOBER/06, OCTOBER/07, OCTOBER TO DECEMBER/09 PAY WAS GIVEN BUT NO [SS] ROLLS HAVE BEEN ENTERED WITH THIS AGENCY. 3.-AUGUST TO DECEMBER/08, JANUARY TO JUNE/09 THERE IS NO PAY REGISTERED. The herein signed Microfilm operator attests and lets it be known that s/he viewed the microfilm archives where s/he verified through the Social Security rolls that the information rendered in this report is true. [Signed] Angel Perez Operator Dignitizer: Lucrecia [Signed & stamped] Signature of Immediate supervisor

[Signed] Reviewed [Signed & stamped] Marvin Gutierrez Supervisor

Letters of dismissal and IGSS records of 20 fired workers, original documents

Name of Worker Period of employment at Alianza Carlos Arturo López Pablo August 18, 2008 – March 26, 2010

Cesar Austo Reyes Cutzajay March 16, 2001 – March 25, 2010

Edy Amilcar Acetun Chonay July 22, 2002 – March 26, 2010

Elva Sunuc Ruiz September 30, 2002 – March 26, 2010

Edwin Giovany Xoyon Suy April 23, 2007 – March 26, 2010

Erik Fernando Acetun Estrada April 1, 2002 – March 25, 2010

Hector Oswaldo Saquil Choc March 13, 2006 – March 26, 2010

Hermenejildo Calan Castro May 7, 2004 – March 26, 2010 Jorge Mario Mendez Valle April 19, 2001 – March 26, 2010 José Domingo Ramos Figueroa June 16, 2003 – March 25, 2010

José Haroldo Socoy Crup May 13, 2002 – March 26, 2010

Joaquin Lastor Velazquez July 11, 2005 – March 26, 2010

Kelly Evelyn Alonzo Gonzalez September 6, 2005 – March 26, 2010

8 9

Luis Patan Larios May 28, 2001 – March 26, 2010 Marcos Pata Cipriano January 28, 2004 – March 26, 2010 Marvin Adolfo Zamora Morales July, 30, 2003 – March 25, 2010

Pedro Aceytuno Lux September 20, 2004 – March 26, 2010

Sara Abigail Atz Calan March 5, 2007 – March 26, 2010

Selvin Amilcar Sitan Nimajuan April 2, 2001 – March 26, 2010

Vilma Marina Socop Toma January 2, 2001 – March 26, 2010

14 15

Link to Original Documents

http://www.globallabourrights.org/documents/Case1-Lopez-Pablo.pdf http://www.globallabourrights.org/documents/Case2-Reyes-Cutzajay.pdf http://www.globallabourrights.org/documents/Case3-Acetun-Chonay.pdf http://www.globallabourrights.org/documents/Case4-Sunuc-Ruiz.pdf http://www.globallabourrights.org/documents/Case5-Xoyon-Suy.pdf http://www.globallabourrights.org/documents/Case6-Acetun-Estrada.pdf http://www.globallabourrights.org/documents/Case7-Saquil-Choc.pdf http://www.globallabourrights.org/documents/Case8-Calan-Castro.pdf http://www.globallabourrights.org/documents/Case9-Mendez-Valle.pdf http://www.globallabourrights.org/documents/Case10-Ramos-Figueroa.pdf http://www.globallabourrights.org/documents/Case11-Socoy-Crup.pdf http://www.globallabourrights.org/documents/Case12-Lastor-Velazquez.pdf http://www.globallabourrights.org/documents/Case13-Alonzo-Gonzalez.pdf http://www.globallabourrights.org/documents/Case14-Patan-Larios.pdf http://www.globallabourrights.org/documents/Case15-Pata-Cipriano.pdf http://www.globallabourrights.org/documents/Case16-Zamora-Morales.pdf http://www.globallabourrights.org/documents/Case17-Aceytuno-Lux.pdf http://www.globallabourrights.org/documents/Case18-Atz-Calan.pdf http://www.globallabourrights.org/documents/Case19-Sitan-Nimajuan.pdf http://www.globallabourrights.org/documents/Case20-Socop-Toma.pdf

Alianza’s U.S. Buyers Macy's, Inc. 7 West Seventh Street, Cincinnati, OH 45202 Phone: 513-579-7000; Fax: 513-579-7555 Website: http://www.macysinc.com Stores: 810 Macy’s and 40 Bloomingdale’s in the U.S. Operating Income: $1.063 billion (2009) CEO: Terry J. Lundgren (Average Compensation: $7.29 million)

Sears Holdings Corporation 3333 Beverly Road , Hoffman Estates, IL 60179 Phone: 847-286-2500; Fax: 847-645-4003 Website: www.searsholdings.com Stores: 3900 in the U.S. and Canada Annual Revenue: $46.770 billion (2009) CEO: W. Bruce Johnson (Total Compensation: $1.49 million) Kohl’s Corporation Kohl's Department Stores, N56 W17000 Ridgewood Drive, Menomonee Falls, WI 53051 Phone: 262-703-7000; Fax: 262-703-6353 Website: www.kohlscorporation.com Stores: 1067 in the U.S. Annual Net Sales: $17.178 billion (2009) CEO: Kevin Mansell (Annual Compensation: $4.46 million)

Charming Shoppes, Inc. (Owner of Fashion Bug) 450 Winks Lane, Bensalem, PA 19020 Phone: 215-245-9100; Fax: 215-633-4640 Website: www.charmingshoppes.com Stores: 2100 stores in the U.S. Annual Revenue: $2.474 billion (2009) CEO: James P. Fogarty (Annual Compensation: $5.21 million)

Kellwood Company (Owner of Sag Harbor and Briggs New York) 600 Kellwood Pkwy., Chesterfield, MO 63017 Phone: 314-576-3100; Fax: 314-576-3460 Website: www.kellwood.com Where to buy: Dillard’s, Macy’s, Kohl’s, Sears, Boscov’s, Barneys, Bergdorf Goodman, Nordstrom, Neiman Marcus, Lord & Taylor, Bon-Ton, Saks Fifth Avenue, Bloomingdales Annual Revenue: Approximately $2 billion CEO: Michael W. Kramer

Belk Inc. (Owner of Kim Rogers) 2801 West Tyvola Road Charlotte, NC 28217-4500 Phone: 704-357-1000 Website: www.belk.com Store: 306 stores in 16 states in the U.S., primarily in the southern U.S. Revenues of FY2010 (ended Jan. 30 2010): $3.35 billion CEO: Thomas M. Belk, Jr.