IKEA will pay $6.5 million to a German government fund to compensate victims of forced labor in East Germany during the Cold War.
Political and criminal prisoners were forced to produce IKEA furniture in the 1970s and 1980s under the German Democratic Republic's (GDR) communist regime.
The industry practice was confirmed by an independent investigation by IKEA, a Swedish furniture maker, which revealed that IKEA employees likely knew about the labor conditions, CNN reported.
An investigation by accountants at Ernst & Young revealed that IKEA used prisoners from East German labor camps. The company initially denied a television report that said it knowingly used prisoners as forced labor.
The GDR, controlled by the Soviet Union from 1949 to 1990, imprisoned tens of thousands of residents for opposing the state, and many companies benefited from their forced labor.
IKEA's payment follows years of advocacy from victim groups and conversations with the Union of Victims' Associations of Communist Dictatorship (UOGK).
"We deeply regret that products for IKEA were also produced by political prisoners in the GDR," Walter Kadner, CEO and Chief Sustainability Officer at IKEA Germany said in a statement to CNN.
"Since it became known, IKEA has consistently worked to clarify the situation. We have given our word to those affected that we will participate in providing support. We therefore welcome the implementation of the hardship fund and are pleased to be able to keep our promise," the statement added.
IKEA Germany expressed deep regret and welcomed the hardship fund to support affected individuals.
The move was praised as "groundbreaking" by UOGK and others.
The hardship fund was set up in 2021 after decades of campaigning by victim groups.
"IKEA's pledge to support the hardship fund is an expression of a responsible approach to dealing with dark chapters in the company's own history," said Evelyn Zupke, special representative for GDR victims in the German parliament. "We can't undo what prisoners had to suffer in the GDR's prisons, but we can treat them with respect today and support them."
In 2013, Germany paid $1 billion in reparations for the care of aging Holocaust survivors.
