Nike Case Study

Nike is one of the largest, most popular, and most profitable shoe and clothing companies in the world. But the reality for many workers overseas making Nike shoes and clothing is far less rosy. Workers are paid wages insufficient to meet their basic needs, are not allowed to organize independent unions, and often face health and safety hazards.

During the 1970's, most Nike shoes were made in South Korea and Taiwan. When workers there gained new freedom to organize and wages began to rise, Nike looked at other countries with cheaper wages. It found them in Indonesia, China, and most recently Vietnam. In these countries protective labor laws are poorly enforced and cheap labor is abundant. Also in China and Vietnam, the law prohibits workers from forming independent trade unions. This was also true in Indonesia until 1998, when Dictator General Suharto was overthrown. These three countries continue to be the major places where Nike shoes are made.

Nike does not own any of the factories where its shoes are produced; it contracts the work to various factory owners. Nike says it is in the business of marketing shoes, not making them. However, Nike dictates the terms to the contractor: the design, the materials, the price it will pay. While companies like Nike used to try to avoid responsibility for factory conditions by saying they were just the buyer. Anti-sweatshop movements have made this excuse unacceptable and forced the retailers to take responsibility for the workers who make their products.

There have been many complaints from Nike workers and local labor groups. The AFL-CIO office in Indonesia, for example, said that Nike factory workers filed more complaints about wage violations than any other shoe company. In the first two years Nike was in Vietnam, one factory official was convicted of physically abusing workers, another fled the country during a police investigation of sexual abuse charges and a third was under indictment for abusing workers.

When the Nike campaign began in 1996, Nike was not even paying their Indonesian workers the minimum wage. In fact, all the shoe companies doing business in Indonesia would petition the government year after year for an exception from paying the minimum wage on the grounds that it would be a hardship for the factories to pay it. And this was a wage that, according to the Indonesian government itself, covered only 70% of the basic needs of one person.

Another problem is that several factories in Indonesia and Vietnam were paying new workers an apprentice wage that was below minimum wage. They would justify this on the grounds that the women needed several months to learn the job. But most of the time, the women would get a few hours training and be put right on the assembly line. The apprentice wage was merely a pretext for cheating workers.

In April 1999 when the Indonesian government announced that it was increasing the minimum wage to 231,000 rupiah/month ($26US), Nike for the first time announced that it would raise wages for its Indonesian factory workers higher than the legally