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Wages and Working Conditions

Addressing compensation issues was outside of Nike's concern and beyond the scope of Young's investigation. But, Young notes, regardless of GoodWorks' capacity he had no "desire or intention" of addressing wages and working conditions in the Nike factories. He states: "Are workers in developing countries paid far less than U.S. workers? Of course they are. Are their standards of living painfully low by U.S. standards? Of course they are. This is a blanket criticism that can be leveled at almost every U.S. company that manufactures abroad." He concludes that enforcing wages and standards in foreign factories is not practical, that requiring an American company to pay U.S. wages abroad is not reasonable, and that reform is not possible at the factory or industry level. With these preconceived notions, the final results of the investigation are hardly surprising.

Young's framing of the issue was, as one critic noted, "disingenuous in the extreme." Activists suggest not that Nike pay U.S. wages overseas, but that the corporation pay at least a living wage. Nike pays its Asian workers -- mostly women -- on average from about $1.50 per day in Vietnam to about $2.50 per day in China and Indonesia to make footwear, which accounts for about 69 percent of its revenue -- $8.7 billion last year.

The 35 workers interviewed for the VLW report said it was not possible to live on Nike's wage, which is the equivalent of 47 U.S. dollars per month: The cost of three simple meals per day is $2.10, but employees interviewed earned only about $1.60 a day. All 35 said that rather than being able to earn enough to send money back home to their families in rural areas, they were dependent upon financial support from parents or other relatives to help make ends meet.

The VLW report included copies of worker pay stubs indicating that several had been paid below the minimum wage ($35 per month; $45 since July 1996) in 1996 and 1997. All 35 of the workers interviewed reported receiving sub-minimum wage for their first 90 days at the factories, which is a violation of Vietnamese labor law: The Labor Code stipulates that workers can be paid a training or probationary wage for 30 days if the job requires a high school education, and six days if less education is required.

The Labor Code also mandates that while overtime is permissible, workers cannot be required to work more than four hours of overtime per day or 200 hours total per year. VLW confirmed earlier media reports that workers were forced to work mandatory overtime hours to meet high quotas, and found that on average Nike workers are forced to work 500+ hours of overtime per year. During their factory visits VLW collected pay stubs from workers in two different plants indicating that they had worked more than the 200-hour yearly maximum in five or six month periods in 1996. Workers told investigators that they were required to work the overtime, being excused only in the case of a major family emergency. Over 60 percent of the interviewees reported that they were not properly compensated for their overtime and Sunday hours, and VLW's analysis of pay stub records turned up several irregularities in wage reporting.

Anita Chan reports similar findings in the Chinese plants she visited, where workers were required to work 12-hour shifts every day. Chan further notes that in Nike and other shoe factories in China, workers are required to pay an illegal "deposit" equivalent to one month's wages. Those who quit prior to one year of employment forfeit their deposit, essentially creating an illegal system of bonded labor.

To the extent that the GoodWorks report addressed working conditions, the group gave Nike a clean bill of health. Young writes that he found the Nike factories to be clean and modern facilities which "certainly did not appear to be what most Americans would call 'sweatshops.'"

That depends, one assumes, on what you consider to be a sweatshop.

Vietnamese workers interviewed by VLW say they are not allowed to use the bathroom more than once in an 8-hour shift and are allowed to drink water only twice per shift. Both the water and the bathrooms are controlled by card or hat systems -- workers must request the card or hat from their supervisor before they are allowed to use the facilities. The VLW report notes that the number of cards or hats are limited to 3 cards for 78-person assembly line and 4 cards for a 300-person line. Violating this rule three times can result in dismissal.

According to Chan, in many Chinese factories workers are exposed to toxic glue solvents such as benzene, xylene or toluene without protective gear or proper ventilation. These fumes can lead to fatal illnesses over time, although many employers replace the glue-shop workers in these plants before the onset of symptoms. In her letter to the Post Chan noted that she had discovered "collusion between local governments and foreign investors" that often kept labor law infractions from being reported to Beijing. "Thus, in many footwear factories enforced overtime that exceeds the legal maximum, wages that are below the legal minimum, no days off for weeks on end, substantial fines for trivial offenses, corporal punishment and physical abuse are common occurrences."

Abuse of Workers

Young says he found "no evidence or pattern of widespread or systematic abuse or mistreatment of workers in these twelve factories." This is a fairly slippery statement: Young acknowledges that abuse reports have been included in Nike audits, documented by NGOs and confirmed through his own worker interviews (a reality he says is "not surprising" considering that there are more than 350,000 workers on Nike contracts in Asia), but he essentially lets Nike and the factories off the hook since there is no evident "pattern" of these factories violating national laws, local laws or the Code Of Conduct.

As Thuyen Nguyen asked in response to this statement, "How many more incidents of abuse need to occur before Mr. Young can take these charges seriously?"

Nguyen's Vietnam Labor Watch has described a "boot camp assembly line" system where workers are subjected to corporal punishment and humiliation at Nike plants in Vietnam, southern China and Indonesia. Examples of corporal punishment include workers being hit over the head by their supervisors, having their mouths taped for talking, being forced to stand in the sun or kneel with hands in the air for extended periods, and having to clean the toilet or sweep the factory floor as punishment. The VLW report notes that the corporal punishment persisted even while activists were observing the factories. During a March 18, 1997 visit to a Nike facility in Dong Nai, 56 women workers were forced to run around the factory in the heat as punishment for not wearing regulation shoes, causing one woman to faint and eleven others to develop shock symptoms. The incident took place, ironically enough, on International Womens Day, when most companies send women workers flowers and gifts instead of sending them to the emergency room.

VLW notes that verbal abuse also is widespread. Less commonly noted, however, are examples of sexual abuse in Nike's overseas factories. According to the worker's newspaper, Nguoi Lao Dong, a Nike supervisor sexually molested two workers during a night shift in 1996, an incident that Nike CEO Phil Knight reported (albeit in an altered form) at a September 1996 shareholder's meeting. The female workers involved said they were offered bribes to keep quiet about the incident. Employees also complain that sexual harassment -- usually in the form of supervisors grabbing female employees' buttocks or breasts -- is an ongoing problem.

In the GoodWorks report, Young placed most of the blame for these "non-systematic" abuses on the culture of the factories' host countries where "the concept of 'workers' rights' is not a well-developed or well-understood principle." Young concludes only that Nike and other firms should "pro-actively take steps that contribute to the creation of systems and processes that protect its workers."

So why did Young ignore these issues? Certainly not because he was not aware that problems existed: The Ernst & Young audit reports Young examined showed (among other things) reports of forced overtime, reduced training and probationary wages being paid beyond the actual training period, certain employees receiving less than the minimum wage, and holidays and days off being denied to workers. Young claims that Nike is "well aware" of the problem and is "insisting that the factory management address these problems on a systematic basis," although he listed no specific indications as to how Nike was addressing the situation.