Nike and Adidas workers in Indonesia live in extreme poverty.
Even when significant amounts of overtime work are available,
wages are so low that they break up families, forcing many workers
to live separately from their children. At times like this, when
the combination of an economic downturn in the US and rising inflation
in Indonesia have pushed down orders and overtime levels, workers'
economic situation becomes perilous and many have been forced
into debt just to survive. Mass dismissals associated with this
drop in orders have forced many hundreds to join the 40 million
Indonesians already unemployed.
Fear also dominates the lives of these workers. With good reason
they are afraid that speaking openly about factory conditions
or getting involved in active unions will put their livelihoods
in danger[8]. The arrest, imprisonment
and extended trial of Ngadinah Binti Abu Mawardi from the PT Panarub
factory, which supplies Adidas, has raised concern that active
union involvement could endanger their liberty. Attacks on outspoken
workers at the PT Nikomas Gemilang factory, which supplies both
Nike and Adidas, have made the 23,000 workers at that factory
afraid that involvement in union activities could endanger their
lives.
This poverty and fear result directly from the way in which
Nike and Adidas have chosen to do business. Both operate global
contracting systems that push the costs of unstable consumer markets
onto those least able to afford them - young workers from poverty
stricken rural areas in industrialising countries. In order to
be able to provide the flexibility and low costs which companies
like Nike and Adidas demand, factory owners keep full time wages
below what is needed to meet the basic needs of a single worker.
This makes most workers desperate to work as much overtime as
they can, and hence the factory owner is able to fill new orders
quickly, whenever they come in. The pressure for maximum flexibility
and minimum cost also makes it necessary for factory owners to
prevent the growth of active unions, which might stop production
or seek to increase wage costs. If contractors are unable to control
their workers and keep their costs down then Nike and Adidas can
easily move their orders to other companies who are willing to
do so.
Nike and Adidas are not alone in this, but they have more capacity
than most companies to do something about it. Contracting and
sub-contracting of production has become endemic in the global
clothing and footwear industry, and as a result extremely exploitative
working conditions have become the norm. Human rights groups have
targeted giant companies like Nike and Adidas because their profit
levels mean they can more easily afford to ensure that workers
producing their goods are able to live with dignity. Nike's net
income for the 2001 financial year to May 31 was $US589.7 million.
Adidas' net income for the year 2000 was $US160 million [9].
Both can be extremely generous when it comes to athlete endorsements.
Nike has a five year endorsement contract with Tiger Woods which
involves paying him $US100 million (Los Angeles Times 2001), and
another with Lleyton Hewitt worth $US15 million for the same period
(Business Review Weekly 2001).
Despite this wealth, both companies have refused to put in place
structural reforms which would ensure decent wages and conditions.
Both refuse to commit to a wage standard that would meet the basic
needs of a small family. Neither is willing to put in place the
kind of independent systems for monitoring and verifying factory
conditions which campaigners have demanded. Additionally in the
last twelve months Nike in particular has refused a number of
practical proposals put forward by Oxfam Community Aid Abroad,
the Clean Clothes Campaign and Global Exchange which would have
increased workers' freedom to engage in union activity and speak
openly about factory conditions in particular factories.
That is not to say that there have been no improvements in these
factories. Workers interviewed for this report indicated that
they are shouted at and humiliated by their supervisors less often
than they were eighteen months ago, and that instances of sexual
harassment are occurring less often. In some factories there has
also been a reduction in some types of discrimination against
members of independent unions, although the critical issue of
discrimination against union members when dismissing workers has
not been addressed.
There have been some improvements in the area of health and
safety, although these have to be set against ongoing dangers
to workers' health. A particularly positive development is the
greater accessibility of sick leave for workers who are genuinely
ill. Against this, respiratory illnesses associated with inhaling
vapours from toxic chemicals are still occurring, albeit less
often. Workers are still losing fingers in accidents involving
cutting machines at the PT Nikomas Gemilang factory, and in the
same factory they are still being denied safe footwear that would
protect their feet from possible amputation in the case of accidents
involving heavy metal moulds. Although there have been improvements
in some factories in the procedures for applying for legally mandated
menstrual leave, in practice at the Nikomas Gemilang factory workers
are still required to prove they are menstruating by pulling down
their pants in front of factory doctors.
In short, Nike and Adidas have not done enough to address the
concerns of human rights groups, consumers and workers themselves.
Those improvements which have occurred are commendable, and these
companies deserve some recognition for them. They demonstrate
that positive change in response to international pressure is
possible. Unfortunately they fall well short of ensuring that
Nike and Adidas workers are able to live with dignity. What is
needed is structural reform that is sustainable, transparent and
independently verified. In order to address this Nike and Adidas
should:
1. Signal to factory owners and governments in supplier countries
that enforcement of labour standards, including increased wages,
will not lead to automatic relocation in search of cheaper labour.
2. Press for the enforcement of workers' rights to organise
and bargain collectively.
3. Ensure that their suppliers minimise the use of contract
labour and other hiring and dismissal practices which increase
workers' fear that participating in unions could put their jobs
in danger.
4. Ensure that armed soldiers are not employed by factory owners
and stationed at factories, particularly in countries with a history
of the military being used to suppress unions.
5. Commit to ensuring workers are paid full time wages which
are at least adequate to meet the basic needs of a family and
allow a small amount of discretionary income. In order to do this
they should:
- Carry out research on the value of workers' current wages.
- Consult with local trade unions, human rights and other relevant
organisations and academics to determine appropriate living
wages in each area.
- Negotiate the level of a living wage with genuine representatives
of workers.
- Establish prices to suppliers that reflect the cost of paying
living wages.
6. Undertake serious research into their own ordering practices
to see where they need to be adapted to enable suppliers to follow
the standards outlined in their codes.
7. Work with international unions and human rights organisations
to establish a monitoring and verification program that includes
verification of factory monitoring by credible organisations which
are independent of (i.e. not selected by) the company. Such a
program should:
- Include worker education to ensure that workers are aware
of their rights.
- Establish a confidential, accessible complaint mechanism for
workers whose rights are not being respected.
- Ensure that regular, professional and transparent auditing
of occupational health and safety takes place in supplier factories.
- Make all monitoring and verification reports public so that
the international community can know the extent to which improvements
have occurred.
- Include the regular release the addresses of all suppliers
and the levels of orders from each supplier to the international
unions and human rights organisations involved in the monitoring
and verification program. This would give some insight into
whether workers who try to organise unions are being punished
by having production shifted to non-union factories.
By taking these steps they would genuinely become leaders in
the field of corporate social responsibility and set a standard
which other companies could be encouraged to follow. Until they
do so it is likely that Nike and Adidas workers will continue
to suffer extreme and unnecessary hardship; until they do so -
whatever they may hear from Nike, Adidas or organisations sponsored
by them - consumers cannot and should not have any confidence
that their sportswear is made in decent conditions.
Next: Notes and References
