Labor Sweatshops: Can Nike be Trusted?
July 1st, 2008Fair labor practices, Uncategorized 15 Comments“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 - poor wages, excessive overtime, unsafe work practices, physical and verbal abuse and denial of rights to form unions – at Nike contract factories in emerging economies.
Now, in 2008, an important question remains: given its poor history, can Nike be trusted nowadays to ensure fair and reasonable conditions for workers in factories which manufacture its products?
I don’t think so. As shown below, the company has taken some positive steps to clean up its act. But with results of audits into its supplier contract factories suggesting that conditions on the factory floor are still pretty darn awful (see below), Nike has a long way to go before it can be trusted to deliver decent outcomes for those who make its products.
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 constructive. 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
But the results are not satisfactory.
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 these outcomes.
Size is no excuse. Global corporations are expected to manage their supply chains effectively, even if this may be a complex task when we are talking about almost 700 factories in 52 countries.
Nor is the fact that Nike contracts out its manufacturing to external suppliers rather than owning the factories themselves, especially given that the company has publicly accepted responsibility for conditions at these factories.
Conclusion
Nike’s efforts have fallen well short of what was required in this area. Greater transparency and accountability is encouraging, but until results of audits start improving, the general public is well justified in linking the company to poor labor practices and labor rights abuses.
Olivia Says:
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