From Child Labor to human rights Abuse, a story of Nike.inc in Indonesia

Posted: January 20th, 2012 | Author: Till | Filed under: Human Rights, Indonesia, International Business

“I truly believe that the American consumer does not want to buy products made in abusive conditions.”, Phillip H. Knight co-founder and former director of Nike.inc once said to defend and partly acknowledge past abuses of its profit driven company. This statement was forced by growing demands from non-governmental organizations and outcries from helpless workers. That gave  Mr. Knight no choice but to react before the company’s reputation took any more damage, promising to pay minimum wages, improve working conditions, abolish slave-like child labor, and many more issues (back in 1998).

This January, after 11 months of negotiations between Nike and Indonesian Serikat Pekerja National trade union (SPN), Nike agreed on repayments of one million USD to employees, which had not been paid overtime hours for the last two years. Actually employees of Nike Partner Pt.Nikomas in Indonesia had not been paid the overtime hours they had delivered for a longer period, but according to Indonesian law Nike only had to repay claims made on the past two years. Nevertheless that one million might sound generous, but as BBC indicated the amount is rather small in relation to the 593,468 free hours contributed by around 4,000 workers that went into improving Nike‘s profit margin statistics.

On another earlier occasion in mid July last year, Indonesian Nike producers were accused of abusing workers rights. Among the specific examples of the abuses, employees indicated to have been kicked, beaten, forced to work under unduly conditions, and punished with standing in the sun for hours, if production quotas were not reached. Workers that dare/d to take sick leave or to protest were/are generally disposed off rather quickly. Punishment does not stop with the worker, since such problems have to be battled at its root, therefore responsible supervisors may have to tolerate retaliatory measures taken by higher management, to un-mistakenly clarify that divergence from company’s policies is not desired.
Official response from the textile retailer was that those practices are known, but since Nike has outsourced great part of its production to partners (which tend to have a more simplistic approach on human rights) quality of working conditions could not be assured. Nike officials further indicated that rigorous steps had already been taken to assure workers rights among the production lines of its goods. Nevertheless a general reality Nike’s quality inspectors face, is that not all partners are willing to let processing facilities to be inspected, not to mention engaging in conversations with employees.
A justified question would be how that Partner even could get hold of a producer license for Nike products, which in this case would be of the Nike.inc owned show brand Converse.

According to unconfirmed sources that prefer to remain anonymous, the “sweatshops” which are hired by Nike have generally close ties to the Indonesian military. The economic ingenuity of those military entrepreneurs, which are responsible to meet quotas and production targets, is then somehow “overseen” by Nike supervisors.

Jim Keady, graduate from St. John’s University NY, in his recently released documentary provided further insight on his perspective on Nike.inc operations in Indonesia.

According to the ITGLWF* Report 2011 around 50%, in some cases even up to 80%, of the workers in the Indonesian Leather processing industry are working on short-term contracts. These contracts provide the job holder with considerably fewer rights. Many cases have been reported where long-term employees were forced into signing short-term contracts, thus resigning on most of their rights.

In addition to that, it is normal for short-term workers assigned through local job agencies are not to be entitled, to receive sick-leave pay, written contracts, pay for annual leave, or guaranteed payments at the end of the working period. Another common practice among employers in that industry is that workers are hired with the promise of a permanent job, and then consequently fired after a 3 month probationary period. Through those practices employers try to get around paying minimum wages or social security for the employees.

Furthermore most workers are intimidated into not joining labor unions, and most permanent workers are afraid of even talking to outside researchers, because then the likeliness of losing their job increases.

Although standard working hours in Indonesia are 40 hours per week with a maximum of 3 daily overtime hours, research indicated that before deadlines, 35 to 40 hours overtime were the standard. In case workers do not reach the realistic production targets set by higher management, the latter will come up with creative ways of punishing such fraudulent behavior by for example locking the overworked employees in an unventilated room with no sanitary facilities, water or food for hours. Sometimes even the whole production line would be subdued to such productivity enhancing treatments.

Not only Nike.inc, the ITGLWF report 2011 discovered other re-known brands, that tend to misbehave in developing countries, in its research.

Sportswear articles produce profits ranging in the billions. (to stay with the specific example) Nike indicated profits of over 1,1 billion USD last November. It is understandable that the tough competitive environment of the industry pushes those companies to take full advantage of globalization, riding the profitable wave of modern slavery.

Nevertheless the Indonesian Serikat Pekerja National trade union (SPN) called its success a great victory. The union indicated that this case will present a precedent to future actions against employee rights infringements at manufacturers from Puma or ADIDAS.

*International Textile Garment & Leather Workers’ Federation.

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