Does the pronoun they fit the following sentence? I want to refer those 20 students by using they. There's an intervening text between the first and third sentence so does using they sound right and natural? Should I use the workers instead of they?
There are 20 workers in my factory. This is a 20% increase from last year. They are very creative and honest.
You can always use a pronoun, so long as it is clear who it refers to. It doesn't matter how much you've said since you named them. For example, if you were talking about your male friend, you only need to name them once, and then you can refer to him by pronouns from that point on. However, if you're talking about two males, your listener won't know which you were referring to if you used pronouns.
Your sentence has a problem in that regard. By mentioning the increase, you are tacitly referring to two groups: The original 17 workers and the 3 who joined last year. Who are the honest ones?
Make it clear by saying:
There are 20 workers in my factory. This is a 20% increase from last year. They are all very creative and honest.