International Centre for Trade Union Rights

Nike code of conductAuthor(s): PETER BOOTHSource: International Union Rights, Vol. 4, No. 4, Tackling the transnationals (1997), pp. 8-9Published by: International Centre for Trade Union RightsStable URL: http://www.jstor.org/stable/41937086 .

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OPINION □ TRANSNATIONALS

Nike code of conduct

Workers found

doing 11 hour

days for $30 to

$42 per month. Nike's president's

basic salary in 1994 was

$929,113

PETER BOOTH is national textiles officer of the British

union, the Transport & General Workers Union

FOLLOWING movement expressed by

and the many

a number international

years

of NGOs

of trade

concern

over union

its FOLLOWING expressed by the international trade union movement and a number of NGOs over its

manufacturing operations, Nike has finally responded by producing a Code of Conduct and various other measures which are clearly designed to counter damaging criticism which now appears to be affecting sales of this world leader in sporting footwear.

With reports of workers' abuse in many of its supplying factories in Asia along with poverty wage levels, Nike, as one of the most profitable businesses within the industry, has clearly been stung into re-action, in an attempt to restore its name with consumers and shareholders alike.

Nike's policy of sourcing and manufacturing high priced sports shoes from low cost suppliers has formed the basis of its phenomenal growth over the last 25 years. In earlier years its shoes were made in Taiwan and South Korea but once wages began to rise in those economies Nike de- camped and transferred most of its production to cheaper labour in Indonesia followed by China and now Vietnam. This short but important insight into Nike and its use of the lowest possi- ble cost of labour is necessary in giving consider- ation to its Code of Conduct and other related activities which the company has embarked upon over the last year or so.

Whilst not wishing to seem over critical of any move which helps the workers, which is always welcome for whatever reason, it has taken many years of workers' hardship before any real recog- nition has been given to a problem even existing.

When the first cases of human rights abuse were raised with the company many years ago, the response was often to deny that a problem existed and in any case Nike did not operate as a manufacturer itself, but sourced its goods from other manufacturers, but as more and more cases were brought to the attention of consumers in the US and Europe this Pontius Pilate distancing act became to look more like mea culpa.

Reports from the trade union movement through the International, Textile, Garment and Leather Workers Association and its US affiliate UNITE and bodies such as Global Exchange put Nike under a spotlight from which it just could not escape. They showed that in spite of the company's denials, wages paid in Nike factories in Indonesia were below subsistence levels, that workers were forced to work overtime, often without pay, workers were not allowed to form independent unions and managers were abusive to workers pushing them to speed up production and threatening them with punishment and dis- missal if they fell behind.

More recent reports tell of further abuse in Dong Nai, Vietnam where 56 women workers were forced to run around the factory compound in the heat of the sun until some fainted resulting in 12 being hospitalised.

So what of the Code of Conduct? Well! on paper it would appear to cover many of the points raised by the international trade union movement and NGOs providing for such things as health and safety, no forced labour, no child labour, minimum remuneration, maximum over- time, freedom of association and the right to bar- gain collectively. It also provided for "indepen- dent" monitoring and a Memorandum of Under- standing with its suppliers and sub-contractors.

However, looking a little closer all is not as it may appear. On the issue of pay the Code says that contractors should pay at least the minimum total compensation required by local law.

The problem here is that many countries mini- mum pay law is well below subsistence levels. Even the Indonesian government acknowledges that the minimum wage has been deliberately set to attract foreign investment so Nike can pay the minimum wage of £1.40 a day - but this does not go near the £2.50 required just to meet basic needs.

Even with the Code of Conduct and its mini- mum wage provision, a strike of 1,800 workers employed by Nike contractor, Sam Yang, Viet- nam, of this year showed that workers were paid US$38 per month, well below the minimum wage of US$45. The same workers were forced to work as many as 100 hours overtime a month and were given no contracts, also in breach of the Code's terms. For Nike's Code to have any mean- ing in terms of pay, it should at the very least commit its suppliers to pay a living wage and not just the legal minimum of the country con- cerned.

What of the right to freedom of association and to bargain collectively? In Indonesia 6,000 work- ers at a factory in Jakarta put down their Nikes and walked out over poverty pay. At first manage- ment gave in but later sacked 22 of the union's members and representatives.

In Vietnam a Nike contractor signed a collec- tive agreement following a strike of 1,800 work- ers, just over one week later, the company sacked 700 workers. These methods of intimidation and fear tactics are recognised by trade unionists throughout the world as the most desperate form of union busting methods.

It would appear that in spite of the fine words in the Nike Code of Conduct and the barrage of publicity that the company has used in promot- ing the Code, that very little of real value to the workers has been achieved. Nike is also a partici- pating company in the US 'Clinton Code' devel- oped by a coalition of apparel and footwear man- ufacturers under the direction of the US Pres- ident. The standards of that Code, as well as their own company Code, will need to be addressed and lived up to if Nike is to regain any credibility from these core labour standards.

If the company is serious about its human rights image as opposed to its corporate image, it

INTERNATIONAL union rights Page 8 Volume 4 Issue 4 1997

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could do far worse than improve upon its method of monitoring the detailed requirements of its own Code of Conduct and Memorandum of Understanding.

Its use of Ernst and Young as independent monitors seems misplaced in terms of their inde- pendence and their expertise and ability to moni- tor working conditions and human rights. Ernst and Young's audits are said to be inadequate and primarily concerned with product rather than the quality of employment of workers. Workers' groups complain that monitoring teams "never ask questions about conditions in factories".

The company's more recent decision to use Andrew Young, former US ambassador to the United Nations, has fared little better. An article by Stephen Glass shows that Young's business 'Goodworks', had a mission statement which "includes helping companies deal with public relations messes that can come with overseas endeavours". Nike was Goodworks first big client and when its report was produced only four months later it said "that Nike had good reason to feel it had got its money's worth". As part of a well co-ordinated expensive public relations cam-

paign, Nike released Young's report which con- cluded "no evidence or pattern of widespread or systematic abuse or mistreatment of workers".

Young's report met with derision as a "classic sham" marred not just by poor methodology but also by listing consultants who were never con- sulted. Neil Kearney, General Secretary of the ITGLWF recalls contacting Goodworks to discuss independent monitoring but they did not even have the courtesy to reply.

Going back to Nike's original basis of success by selling expensive but producing cheap, it would appear that little has changed. There are, however, important lessons to be learned in plac- ing too much faith in Codes of Conduct and a great deal more work needs to be done in the area of credible independent monitoring. Nike clearly has much to learn in the area of ethical trading but we should not lose sight of the fact that whilst so much attention has been centred on Nike, other sporting goods manufacturers, such as Adidas, Reebok and Fila are also produc- ing goods in the same areas, some times in the same factories without attracting quite so much attention.

Workers at one Reebok factory were doing 12 hour days and

earning $1.20 to

$1.40 a day

Nike in Indonesia I

THE ries area

streets

and outside

large

of Jakarta crowds

Tangerang - choke stream

- a with homewards

vast ageing industrial

lor- on

area outside Jakarta - choke with ageing lor- ries and large crowds stream homewards on

a humid May evening. Many women wear blue overalls bearing the emblem 'Hasi'. Some head for 'Banana Garden', a dusty collection of quasi bar- racks, where they are crammed, often with their families, into single rooms without running water. They seem happy to smile for my camera but are too fearful to talk. In April, perhaps as many as 300 workmates were sacked after taking part in a 10,000 strong march in protest against a cut in their monthly attendance allowance, imposed after the minimum wage was increased to 5,600 rupiahs a month (about £44). Their employers - the Hardeya Aneka Shoes Factory - are just one of many sub contractors producing Nike training shoes for export.

Nike chief executive Phil Knight was recently cited in Forbes magazine as the USA's sixth rich- est man. In the mid sixties he sold Japanese run- ning shoes from the back of his car. Sharp mar- keting and a shameless exploitation of cheap labour in Asia has enabled him to amass a 5.7 bil- lion dollar fortune.

Nike began operations in Japan and then shift- ed to Taiwan and South Korea, where Knight placed production in the hands of local com- panies. In the late eighties wages rose sharply, especially in Korea, where an independent trade union movement was gaining strength. So Nike moved on, taking many of its sub contractors with it to China, Thailand, Vietnam and Indonesia.

President Sukharto's autocratic government was intent on expanding non oil exports and happy to repress labour with an iron fist. Between 1988 and 1995, exports of Nike foot- wear from Indonesia grew more than thirtyfold to around a third of its global production. Initially, Nike denied that it was responsible for

more than 100,000, mainly female Indonesian H workers, arguing that its job was merely to H design and market products. But the corporation H was forced by waves of unfavourable publicity to H sharpen its PR and make concessions. H

Page 9 Volume 4 Issue 4 1997 INTERNATIONAL union rights

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