00-06-04, Nike has "disclosed" very short PWC reports on its homepage

Some initial thoughts on Nike's disclosure of PWC reports (see www.nikebiz.com) from Tim Conner on the Nike international list. (others thoughts on this are very welcome).

A key demand of some groups involved in the international campaign has beenfor greater transparency in Nike's monitoring programs, so that an accurateassessment can be made of their effectiveness in discovering and rectifyingproblems in Nike factories. Any step toward greater openness andaccountability, however small, is to be welcomed. Such steps also need tobe kept in perspective and balanced against the importance of full disclosure.

TRANSPARENCY OF PWC's MONITORING:

1. Full disclosure would involve disclosure of PWC's reports, includinginformation about the methodology used.

At this stage, Nike has only released "full reports" for three factoriesand there is no information on how many such reports will be released. Nikehas not said why they have only released such a small number of reports,nor the basis on which these reports were chosen - was it, for example, arandom selection, or one based on the content of the reports?

The "full reports" provide very limited information. They do not indicatewhat questions PWC asks workers, how workers are selected for interview,how workers' confidentiality is protected, nor how much time is spentinterviewing each worker and building a relationship of trust. The studentsNike sent to observe PWC's monitoring found significant problems in eachof these areas. This program of disclosure will not tell us whether theseproblems are rectified.

These "full reports" also fail to indicate how workers answered specificquestions, giving only very broad (and very brief) summaries of themonitors' impressions. Many of the sections of the Canadian report are leftblank. All three reports indicate that "at Nike's request" the monitordidn't conduct a full health and safety investigation nor an environmentalinvestigation at that time.

Nike has released a list of the number of "non-compliances" found byPriceWaterhouseCoopers and the resulting action plans for 53 factories inNorth America. Nike has not said on what basis these 53 factories wereselected for release of information from amongst the 167 factories whichsupply Nike in North America. Again it is not clear whether reports fromother factories in North America have been withheld at this stage becausetheir content may be damaging to Nike. Nike has made a commitment that overthe long term the list of non-compliances and action plans of more than 700Nike contract factories will be released, with this information released alittle at a time, quarter by quarter. Nike has not said why thisinformation can only be released on a quarterly basis rather than all at once.

While interesting, the list of non-compliances for these 53 factories tellsus what PWC's monitors found, not how effective their monitoring is indiscovering the extent of labour abuses in Nike's contract factories. Ofcourse, this summary list provides us even less information about PWC'smethodology than the "full reports". In the three full reports, forexample, the number of workers interviewed in each factory varies from 3 to25. We have no way of knowing which number is more indicative of the numberusually interviewed.

2. Full disclosure would involve release of factory addresses inassociation with these reports so that independent research could assessthe effectiveness of Nike's monitoring program. We have questioned whetheran accounting firm visiting factories one day each year will have themotivation or expertise to build a relationship of trust with workers sothat they know they can report problems in their factory with out fear ofretribution. Workers in a number of Nike factories have told us that theyare warned before Nike's monitors arrive that if they say anything negativeabout the factory it could result in losing orders from Nike and as aresult they or their fellow workmates might lose their jobs. While fullrelease of PWC's reports (including information about methodology) would bea useful step towards accountability we will not know how effective PWC'smonitoring is until Nike is willing to release the names and addresses ofthe factory to which each report relates, so that independent research canbe conducted and PWC's monitoring can be assessed against it.

EFFECTIVENESS OF PWC's MONITORING

Given that the purpose of calling for transparency is to assess theeffectiveness of Nike's monitoring programs, it is useful to consider whatthese reports tell us about the key concerns which have been raised bylabour rights groups.

1. Protection of Workers' Right to Organise

Nike's code claims to protect workers' right to freedom of association, ahuman right protected in the Universal Declaration of Human Rights and inILO conventions.

Nike has chosen to site much of its production in countries or industrialzones where it is illegal for workers to form their own unions and even incountries where it is legal to exercise this right independent research hasfound that in Nike contract factories workers are commonly harassed,discriminated against and dismissed for seeking to express it. If thisright was properly protected in Nike factories it would provide an "on theground" monitoring system far superior to annual one day visits by anaccounting firm.

This disclosure indicates that PWC's reporting on protection of this rightis extremely weak. The list of definitions tells us that this rights isgrouped under "Respect for Workers and Rights" in each report, but it isnot specifically mentioned in this section of any of the three "fullreports" which Nike has disclosed and in the Canadian report this sectionitself is entirely blank.

Many of the students who Nike sent to observe PWC's monitoring reportedthat workers are asked about this right using language which workers cannotunderstand. Since this disclosure does not reveal which questions are askedthere is no way of knowing whether this phrasing will be changed. It is notat all clear whether PWC asks workers whether anyone has tried to form aunion at the factory and what happened as a result, nor whether PWC seeksto interview any union organisers to ensure that they are not beingdiscriminated against.

In order for Nike's code to effectively protect workers' right to organiseit is also necessary that Nike workers understand that the code is supposedto protect it. Although Nike has told us that considerable steps are takento ensure that workers' know and understand the code, this new disclosureof PWC's monitoring suggests that workers are not even asked about theirknowledge of the code. One of the three full reports mentions that workershave a very limited knowledge of Nike's code but this is mentioned as acasual observation, there is no indication that workers were asked directlyabout it and no action plan is put in place to rectify it. Neither of theother full reports make any mention of the issue and (unlike "ManagementKnowledge of Code") it is not listed in the "compliance grid" for the other50 factories.

Finally, if there is dismissal, harassment or discrimination againstworkers who try to form unions in a factory then no worker will tell amonitor about this unless they have confidence that doing so will not leadto discrimination against them. There is no indication of whether PWCmonitors take any steps to establish a relationship of trust with workersthey interview nor if they behave in a manner which would warrant thattrust (by, for example, ensuring that all workers they speak to are notsubsequently discriminated against).

2. A wage that meets workers basic needs

In the letter on March 15 some of us called for Nike to ensure that workersare paid (at the very least) wages sufficient to meet their basic needs andthose of a small number of dependents with some discretionary income andsome money for saving. Nike has not agreed to this. The students didreport, however, that PWC asks workers if their wage meets their basicneeds but what workers say in response is not even reported to Nike. Thethree full reports do have sections about what percentage of a workersincome they are able to save or spend on a dependent. In the Mexican report76% of the 25 workers interviewed indicated that they were not able to saveor spend anything on dependents, but two workers indicated that they wereable to use more than 50% of their income in this way - a discrepancypossibly explainable if these two workers lived at home and were supportedby their parents. In the US and Canadian reports this section is blank.Tim Connor