LABOUR: Nike’s Initiative to Improve Factory Conditions

By IPS Correspondents Reprint | | Print |

Danielle Knight

WASHINGTON, May 12 1998 (IPS) - The Nike sports-shoe and clothing manufacturer, stung by charges of human rights and labour abuses, announced Tuesday plans to further improve conditions of factory workers abroad.

Nike’s Chief Executive Officer, Philip H. Knight, said in a speech at the National Press Club that he would expand its current independent monitoring programs of its factories in China, Indonesia, and Vietnam to include non-governmental organisations (NGOs).

While denying charges of human rights abuses, he increased to 18 years, the minimum age for half a million Nike workers -mostly young women – in factories overseas. Knight said Nike also would adopt U.S. Occupational Safety and Health Administration (OSHA) indoor air quality standards for all footwear factories.

“We are committed to improving workplace conditions for the 500,000 people who make our products,” he said. “We are a company of people rooted in our responsibility to be good corporate citizens.”

Rights groups, who have waged a campaign to raise the company’s human rights and labour standards, were not completely satisfied. While praising plans for independent monitoring and implementing OSHA standards, Medea Benjamin, director of Global Exchange, said Nike continued to ignore the issue of low wages.

“We’re excited about some of the new initiative, but nothing was said about ensuring a livable wage,” Benjamin said.

Global Exchange along with the Campaign for Labour Rights, Vietnam Labour Watch and National Organisation for Women have called on Nike to raise wages, currently averaging about 1.60 dollars a day to 3 dollars per day – a wage that, even if it meets the minimum wage requirement, still is “a poverty wage.”

Thuyen Nguyen, of the New York-based Vietnam Labour Watch added, “Nike has been refusing to sign a living wage provision as proposed by U.S. President Bill Clinton’s Apparel Industry Partnership,”

Nike’s new initiatives also included expanding education programs, including middle and high school equivalency courses, for workers in all Nike footwear factories. The shoe giant said it planned to fund University research and open forums to explore issues related to global manufacturing and responsible business practices such as independent monitoring.

Knight told reporters that the new proposals would cost “several million dollars” – a small fraction of Nike’s billion dollar advertising budget – known for aggressively recruiting star athletes and teams to promote its products. Recently, for example, it paid the Brazilian National Soccer Team more than 100 million dollars to become a “Nike Team,” by wearing Nike gear on the field.

Last month, a lawsuit was filed against the corporation in San Francisco superior court for allegedly misrepresenting conditions in its overseas factories. Attorneys said that Nike violated California’s Business and Professions Code that prohibited “unfair, deceptive, untrue or misleading advertising.”

The lawsuit was the latest in a series of developments that have tarnished Nike’s image and its global symbol, the “swoosh.” Plagued by an oversupply of shoes and the Asian financial crisis, Nike’s stock has fallen almost 50 percent of the past year. In recent months, it has laid off workers and cut production in Asia.

The lawsuit focused on Nike’s own “Code of Conduct,” or its own requirements for subcontractors to do business with it. The 1992 code required manufacturers to comply with local wage regulations, including overtime pay; and with applicable health, safety and environmental regulations. It also requires that no worker be put “at risk of physical harm.”

The code, however, did not match the reality of Nike’s practices, according to activists. A number of reports on labour conditions in the company’s factories run by subcontractors in Vietnam, Indonesia and China found that workers in some plants were subject to corporal punishment and overexposure to various hazardous chemicals and denied adequate pay and the protection of local laws and regulations governing wages and hours.

Fearing a public relations nightmare, Nike hired former civil rights leader and Atlanta Mayor Andrew Young to conduct an independent assessment of conditions in the company’s 350 plants around the world early last year. Much to the disagreement of human rights workers, Young found that the corporation was “doing a good job” – a finding which Nike featured in full-page ads in newspapers across the United States.

Controversy swirled around Nike again in November when an internal audit completed in January 1997 by the accounting firm Ernst and Young, was leaked to human rights groups and the press. The confidential report found that plants were not complying with Nike’s own corporate code of conduct.

The inspection reports said that workers at the factory near Ho Chi Minh city were exposed to carcinogens that exceeded local legal standards by 177 times in parts of the plant. The report also said that employees at the site, owned by a Korean subcontractor, were working 65 hours a week, far more than Vietnamese law allows, for ten dollars a week.

Rights groups also criticize the corporation for setting up factories in countries where independent unions are illegal and where labour laws are lax or unenforced. Nike’s code of conduct allowed workers to form unions, buy activists say in practice the company operates in countries that jailed or oppressed labour leaders.