Nike’s Contractor Factories in Developing Countries. Opportunity or Exploitation?

“Nike has raised the exploitation of poverty stricken foreign workers to a fine and spectacularly remunerative art.” (New York Times, March 31, 1997)

Human rights organizations, labor unions, and other civic societies around the world criticize Nike and its contractors in developing countries for worker exploitation, abuses, excessive overtime, inadequate wages, lack of medical facilities in its factories and bad working conditions. Nike, Inc. reported a 30 percent jump in its third quarter profit for 2008. The company revenue was $4.54 billion for that quarter alone, with total revenue of $18.6 billion for 2008. Despite the huge profit every year, the company pays little to the workers who make these products.

The abuse of workers is a serious issue in most of Nike’s contractor factories in developing countries since the mid 1990s, especially in Asia. These abuses are both physical and verbal and still continue to this day. According to a survey conducted by the Urban Community Mission Jakarta, in 1999, 57 percent of Nike’s sport shoe workers and about 59 percent of Nike’s clothing workers reported abuses. The same survey reported that workers have been punished for raising their voices or refusing excessive and compulsory overtime. Punishment includes physical abuses such as workers’ ears being pulled, being pinched or slapped on the buttock, and being forced to run around the factory^[1].

Workers at Nike factories complain that they were not allowed to use the toilet or drink water during the work day^[2]. Nike’s violation reports of local and international labor laws are the subject of many respected media outlets such as BBC, CNN, New York Times, NBC, and others around the world. For example, the Indonesian government gives special protection rights for women workers. Indonesian laws mandates that women to work only 40 hours a week, and require they be paid at least minimum wage, given pregnancy and lactation leave, and receive promotions and equal pay as well as others benefits. However International Labor Organization (ILO) reported that Nike’s factories violate these rules and even further discriminate against women^[3].

Even a report published by Nike (2003 and 2004) admitted worker abuses in more than half of its production sites. The report says most factories force workers to work more than 60 hours a week. The report also admitted that more than a quarter of workers who refused overtime were punished. These workers have to work long shifts to keep their jobs and families alive. The villagers in a rural area of West Java known as Banjaran called workers who work at Nike’s Satan factory “walking ghosts” because they are rarely seen in the village^[4].

In 2008, more than 20,000 Vietnamese workers protested at a Taiwanese-owned plant that makes shoes for Nike. Workers demanded a 20 percent increase to their salaries, of only $59 per month.^[5] Nike and its contractors closed down dozens of production sites as wages have risen in South Korea and Taiwan and opened new factories in cheaper labor countries such as China, Indonesia, Thailand, Vietnam and Bangladesh.

Nike claims (2003-2004) that it pays these workers 14 percent more than minimum wage and that since the 1990s, on average, their workers are making 50 percent more compared to what they were making in the1990s. However, if adjusted for inflation and devaluation of local currencies since the 1990s, Nike’s workers are making slightly less than what they were making two decades ago. In 1997, a year before the Asian economic crisis, one US dollar exchanged for 4650.00 Indonesian rupees, while in 2006 one US dollars exchanged for 9020.00 Indonesian rupees^[6]. On the other hand Nike is spending millions of dollars on advertisements and endorsements. Nike paid the world’s number one golfer, Tiger Woods, $100 million between 2000 and 2005^[7]. Basketball star, Michael Jordon has earned $18 million to $20 million every year for decades^[8]. His one year income exceeds the total annual payroll of thousands of Indonesian factory workers that make these shoes. In November of 2000, Tiger Woods had to be escorted by authorities in the lobby of his Bangkok hotel to avoid a group of protestors. They said “they were part of a group of 1,016 who were still waiting to receive compensation totaling $ 932,000 after being laid off by Nike in September.^[9] ”

[...]

^[1] Urban Community Mission Jakarta, “Working for Nike in Indonesia”, 1999

^[2] David, Teather, “Nike Lists Abuses at Asian Factories”.

^[3] Peter, Hancock, “The waking ghosts of West Java”.

^[4] Ibid.

^[5] Workers Strike at Nike

^[6] UN, Department of Economic and Social affairs.

^[7] BBC, “Woods meets Nike protesters”.

^[8] Margaret, Hebblethwaite, “Sneaker makers exploit workers”.

^[9] BBC, “Woods meets Nike protesters”.