Nike And Asian Labour
There has been much debate and controversy
recently concerning Nike's Asian
labour practices. This is a very complex
issue and one that is a long way from
being solved. It is very difficult to
determine which side of this argument to
defend, as both sides acknowledge
the facts, yet put a completely different spin
on them. Do you believe Nike's
critics who say they're exploiting workers? Or,
do you believe Nike when they
say that they are giving workers in these
countries wonderful opportunities
to raise their standard of living? The
consensus answer to this question by
all sides seems to be that Nike is
improving but still has a ways to go.
Nike's Asian ties can be traced back to
the birth of the company. The CEO,
chairman of the board of directors, and
co-founder, Phil Knight, wrote his
masters thesis at Stanford University in the
1960's on the prospects for
using Asian labor to produce goods cheaper and more
effectively. In order to
incorporate this plan in to Nike's business structure,
a partnership was set
up with a Japan based company called Tiger Sports. Tiger
Sports would
manufacture shoes for Nike in Asia then shipped them to the United
States
to sell. In the 1980's however, this aspect of Nike's partnership
with
Tiger Sports was dissolved, and Nike was forced to expand production
from the
United States to countries such as Taiwan and Korea where their
products could
be manufactured at the same relatively low cost that Nike
enjoyed through the
Tiger Sports partnership. Over the last five of
years, however, the production
numbers for these countries have been
decreasing at an alarming rate due to the
fact that their economies expanded
at a very rapid pace. This, in turn, caused
the cost of labour to increase
dramatically, and therefore Nike could no longer
produce their product as
efficiently as before. In lieu of the rapid economic
growth in the pacific
rim, and the increased production cost, Nike has moved
more into countries
such as Vietnam and China where the labour is cheaper and
labour laws less
stringent. (VLF, VN Fact Sheet) Nike does not own any of the
factories that
produces its products in Asia, and subsequently they do not
directly employ
the workers or management. They contract out work to factories
that make all
of the products and run all of the factories. They do, however,
have a
massive amount of leverage when dealing with these factories because of
the
huge contracts they supply. To ensure good labour practices, Nike has a
Code
of Conduct that every contractor must agree to abide by in order to get
a
contract. The Conduct Code in theory condemns and prohibits child
labour,
requires that workers be paid fair wage, imposes caps on the days and
hours a
worker can be forced to work, prohibits mistreatment or
discrimination of
workers in any form, obligates factories to implement
programs that benefit
worker's health and safety, and recognizes and respects
the workers right to
freedom of association. There are 1000 Nike employees
worldwide monitoring
operations at the subcontractors and specifically the
Code of Conduct adherent.
The most consistent criticism of Nike is that
the workers in the factories
contracted by them are not aware of the Code of
Conduct that was agreed upon,
and/or it is not enforced (especially the wages
and overtime aspects) by the
factory officials. Critics contend that the
factories pay less than minimum wage
at times, force too many overtime hours,
and fail to make the workplace as clean
and as safe as standards dictate.
Many of the factories that are contracted have
workers and management from
different countries, causing some problems in
communication. Some factories
in China have Taiwanese Managers while factories
in Vietnam have Korean
managers. This is one reason offered by Nike in defense
of the factories
failure to comply with the Code of Conduct. To look into this
issue, earlier
this year Nike commissioned Andrew Young, a former civil rights
leader and
United Nations ambassador to do an analysis of how well the Code was
working.
Young and his staff visited four factories in Vietnam, Indonesia,
and
China for three to four hours each led by Nike's people. Young's
conclusion
proved not only to be uninformative, but somewhat aggravating to
the public due
to its elementary tone. "Nike is doing a good job, but could
do
better" was the statement released by Young at the end of the
report.
Another aspect of the inquiry that bothered the public was the
fact that Young
chose not to look into the issue of wages, a prime component
of the Code. The
reason for this being "such an exercise was well beyond the
technical
capacity of our small firm." (GoodWorks, Executive summary) Stephen
Glass
calls into question Young's work in his article. He criticizes Young
and
GoodWorks International LLC (Young's company) for not using their
own
interpreters, not spending enough time in the factories, not consulting
with
"experts" on the issue, and using this report as a public
relations
ploy for his new company. He states, "But if the Nike report was
'classic
Andy Young,' it was also a classic sham, marred not just by
shoddy methodology
but by frequent misrepresentations" (Glass). Young even
admits that he and
his company are not "labor practices experts" (GoodWorks,
disclaimer)
yet they were chosen to do this job. About a month ago a secret
internal audit
performed by Ernst and Young was leaked to press (Audit). In
it was information
about dangerous levels of carcinogens, as well as overtime
abuse suffered by
workers. This information directly contradicts Young's
statement of "clean,
well-lit, ventilated factories." This report makes it
appear that Young's
report was strictly for public relations and had no real
impact on rectifying
the situation, or bringing to light any of the issues
that surrounded the
situation. Recently, Nike commissioned a study by
graduate students from the
Amos Tuck School of Business at Dartmouth
College to determine if workers in
Indonesia and China were earning a
livable wage. The intent of this study was to
shed some light on the areas
that the Young report failed to cover. The students
spent three weeks
interviewing workers in each country, and at the end of the
study, three main
conclusions were found. The first conclusion, "Nike
contract workers
consistently earn wages at or above government mandated minimum
wage levels."
The second conclusion states, "workers living on their
own can generate
discretionary income in excess of basic expenditures such as
housing,
transportation, and food." The third conclusion, "for workers
living in
extended family households, Nike contract factory worker wages are
typically
used to increase or augment total household income to raise overall
household
living standards" (Nike, Press Conference). Although these
conclusions
support Nike's insistence that they do not sacrifice their workers
well being
for their own financial gain, critics bring to light a valid point
when they
argue that it is impossible to paint an accurate picture of the pay
scale in
three weeks time by interviewing approximately 1% of the workers,
sometimes
in front of management, which doesn't allow the worker total freedom
of
speech.