“We blew it”
Back in the year 2000, a BBC report documented the story of twelve year old girls working sixteen hour days, seven days per week at a Nike factory in Cambodia.
This prompted an admission that the company “blew it” by employing child labor, despite earlier assurances to the contrary. It also critically dented public confidence, and added credibility to other allegations about poor labor practices at Nike contract factories in emerging economies.
These allegations included poor wages, excessive overtime, unsafe work environments, child labor, physical and verbal abuse and denial of rights to form unions.
The objective of this article is to discuss whether or not Nike can be trusted in 2008 to ensure fair and reasonable working conditions for workers at its factories. Given its poor history, has Nike made sufficient improvements to earn confidence of the general public?
I will conclude that Nike has not demonstrated sufficient improvement to earn the confidence of the general public in relation to its labor practices.
Your thoughts, comments and opinions are most welcome.
Some positive moves
Over the years, Nike has taken some positive action steps to address the problems. These include:
• being an instrumental member of the Fair Labor Association (FLA), a global coalition between large companies, unions and NGOs, dedicated to promoting fair labor practices in third world countries;
• revising and strengthening its Code of Conduct in (1998), which stipulates minimum labor conditions with which the company’s supplier are required to comply;
• being the first in its industry to fully disclose the location of all supplier contract factories (2004); and
• making public disclosure of the aggregate results of audits into supplier contract factories. (2004/05 and 2005/06)
The last two steps were particularly helpful and constructive, especially in terms of transparency and public accountability. Full disclosure of the location of supplier contract factories has enhanced the ability of NGOs, labor rights organizations and the media to conduct independent investigations into labor conditions. Moreover, the publication of aggregate audit results allows the general public to make more informed assessments of overall performance in relation to workplace standards.
Performance still lacking
Whilst the company has become more transparent, the results are still unsatisfactory in relation to outcomes.
According to the company’s 2005/06 Corporate Social Responsibility (CSR) report:
• Approximately 90% of contract factories were non compliant with Nike’s code of conduct on work hours. Of these, more than half required overtime which exceeded legal limits;
• More than 80% were non-compliant in relation to at least eleven categories of occupational health and safety issues, including protective equipment, hazardous materials, injury management, ergonomics, and electrical and fire safety;
• Almost 30% were non-compliant with legal requirements relating to wages and approximately 32% were non-compliant with legal requirements relating to non-wage benefits.
These figures are appalling. Worse still, reports from independent sources paint a more dire picture still. In one Indonesian factory in 2005, workers were paid just fifteen per cent of the legal minimum wage over a three month period!
No excuses
Nike has no excuse for poor labor practices at its contract supplier factories.
Size is no excuse. Yes, the company operates almost 700 factories in 52 countries, but global corporations are expected to manage their supply chains effectively - even though this may be a complex task.
In addition, the fact that Nike contracts out its manufacturing to external suppliers, rather than owning the factories themselves, is also no excuse. This is particularly the case because the company has publicly accepted responsibility for labor conditions at contract factories.
Conclusion
Nike has fallen well short of acceptable labor practices.
Greater transparency and accountability is encouraging, but the results of contract factory audits indicate that labor practices are far short of acceptable standards.
Until the company demonstrates considerable improvement, the general public is well justified in linking the company to poor labor practices and labor rights abuses.
Over to you
Your comments, thoughts and opinions in relation to Nike’s labor practices are most welcome.
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