Nike sweatshops
Encyclopedia
Nike, Inc has been accused of having a history of using sweatshops, a working environment considered by many people to be dangerous and difficult. Workers can be exposed to hazardous materials, harmful situations, extreme temperatures, and abuse from employers. Sweatshop
workers often work long days, sometimes exceeding 14 hours, and earn pay far below a "living wage
". Many people in developed countries compare the wages and the amount of labor of the workers in Nike
factories to developed world standards. They claim that Nike unethically takes advantage of these labor markets. Nike has denied this claim many times, and expressed that they do not have any control over the factories. However, Nike has begun to pressure its manufacturers to improve working conditions.
and Taiwan
. As their economies developed, workers became more productive, wages rose, and many workers moved on to higher paying jobs. Labor unions also gained more influence. Nike found cheaper labor offered in Indonesia
, China
, and Vietnam
, which prohibited labor unions.
Throughout the 1990s, Nike was heavily criticized for selling goods produced in sweatshops. They originally denied claims against them. However in 2001, Nike director Todd McKean stated in an interview that the "initial attitude was, 'Hey, we don't own the factories. We don't control what goes on there.' Quite frankly, that was a sort of irresponsible way to approach this. We had people there every day looking at quality. Clearly, we had leverage and responsibility with certain parts of the business, so why not others?"
In 2005, protestors at over 40 universities demanded that their institutions endorse companies who use "sweat-free" labor, unlike Nike. Many of anti-sweatshop groups are student-led, such as the United Students Against Sweatshops
. Team Sweat is one of the largest groups that specifically tracks and protests against Nike. Team Sweat is “an international coalition of consumers, investors, and workers committed to ending the injustices in Nike’s sweatshops around the world.”, founded in 2000 by Jim Keady. Keady researched Nike’s labor practices while attending graduate school at St. John’s University in New York. Keady doubled as the soccer coach at St. John’s University, and while conducting his research about Nike; the school signed a $3.5 million deal with Nike, forcing all athletes and coaches to endorse Nike. Keady publicly refused to support Nike and was forced to resign in 1998. Since resigning, Keady has done original research into the effects of Nike’s Sweatshops. He travelled to Indonesia, worked in a Nike factory, and lived on the $1.25 wages.
William Stepp, of the Mises Institute, argued that minimum wage
is arbitrary and causes unemployment. Stepp continues further, stating that the workers were not exploited and clearly received benefits from working at the factories "by showing up for work every day, and by accepting a paycheck based on mutually-agreed-upon terms." In addition to pay, these benefits include free annual physicals, uniforms and clothing, a clinic and health service, a canteen stocked with food, recreation and entertainment, and transportation. However, Stepp did criticize Nike for its association with the World Bank
, which he says is the real exploiter of third world countries.
A study by the Global Alliance for Workers and Communities found that 70% of Nike factory workers in Thailand rated their supervisors as good and 72% thought their income was fair. In Vietnam, most workers "thought the factory was a 'good place to work' and planned to continue at least three years" and 85 percent felt safe there. Further, they felt that the factory offered a more stable career and higher income than farmwork.
for their factories. They spend about 10 million dollars a year to follow the code, adhering to regulations for fire safety, air quality, minimum wage, and overtime limits. In 1998, Nike introduced a program to replace its petroleum-based solvents with less dangerous water-based solvents. A year later, an independent expert stated that Nike had, "substituted less harmful chemicals in its production, installed local exhaust ventilation systems, and trained key personnel on occupational health and safety issues." The study was conducted in a factory in Vietnam.
Recently, Nike has developed a program to deal with claims of unfair practices. Nike claims to have hired a staff of 97 people to randomly inspect several hundred of their factories each year. Nike also gave the Fair Labor Association
, a working conditions watchdog
, the privilege to randomly inspect any factory that produces Nike products.
Nike has audited roughly 600 factories since 2002, giving each a score on a scale of 1 to 100, which is then associated with a letter grade, A through D. Some factories received an A and most received a B. When a factory receives a grade of D or lower, Nike threatens to stop producing in that factory unless the conditions are rapidly improved. In 2004, Nike expanded their monitoring process to include environmental and health issues.
planned to donate $30 million to his alma mater
, the University of Oregon
. When the University of Oregon joined the Worker Rights Consortium
(WRC), Knight revoked his donation because the WRC has a history of being unfriendly towards shoe companies. The Fair Labor Association is supported by Nike and the United States government, while the Workers Rights Consortium is not. There has been debate between the university and Knight about the legitimacy of the FLA and which labor monitoring organization is more effective.
Another dispute arose from Nike’s personalization system, NIKEiD
. MIT graduate Jonah Peretti
attempted to order a pair of shoes from Nike. He chose to have the word “sweatshop” embroidered on them. Nike sent Peretti an email explaining that his personalization request could not be granted for one of four things: it contained another party's trademark
or other intellectual property
, the name of an athlete or team Nike does not have legal right to use, profanity or inappropriate slang, or was left blank. Peretti replied, expressing to Nike that his personalization did not contain content violating the aforementioned criteria. Nike responded by allowing Peretti to alter his personalization and Peretti chose not to change it and cancelled the order. Ironically, the publicity led to Nike selling more of the personalized shoes.
Sweatshop
Sweatshop is a negatively connoted term for any working environment considered to be unacceptably difficult or dangerous. Sweatshop workers often work long hours for very low pay, regardless of laws mandating overtime pay or a minimum wage. Child labour laws may be violated. Sweatshops may have...
workers often work long days, sometimes exceeding 14 hours, and earn pay far below a "living wage
Living wage
In public policy, a living wage is the minimum hourly income necessary for a worker to meet basic needs . These needs include shelter and other incidentals such as clothing and nutrition...
". Many people in developed countries compare the wages and the amount of labor of the workers in Nike
Nike, Inc.
Nike, Inc. is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon, which is part of the Portland metropolitan area...
factories to developed world standards. They claim that Nike unethically takes advantage of these labor markets. Nike has denied this claim many times, and expressed that they do not have any control over the factories. However, Nike has begun to pressure its manufacturers to improve working conditions.
Allegations
Nike has been accused of using "sweatshops" since the early 1970s, when it produced goods in South KoreaSouth Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
and Taiwan
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
. As their economies developed, workers became more productive, wages rose, and many workers moved on to higher paying jobs. Labor unions also gained more influence. Nike found cheaper labor offered in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
, and Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
, which prohibited labor unions.
Throughout the 1990s, Nike was heavily criticized for selling goods produced in sweatshops. They originally denied claims against them. However in 2001, Nike director Todd McKean stated in an interview that the "initial attitude was, 'Hey, we don't own the factories. We don't control what goes on there.' Quite frankly, that was a sort of irresponsible way to approach this. We had people there every day looking at quality. Clearly, we had leverage and responsibility with certain parts of the business, so why not others?"
In 2005, protestors at over 40 universities demanded that their institutions endorse companies who use "sweat-free" labor, unlike Nike. Many of anti-sweatshop groups are student-led, such as the United Students Against Sweatshops
United Students Against Sweatshops
United Students Against Sweatshops is a student organization with chapters at over 250 colleges and universities in the United States and Canada. In April 2000, USAS founded the Worker Rights Consortium , an independent monitoring organization that investigates labor conditions in factories that...
. Team Sweat is one of the largest groups that specifically tracks and protests against Nike. Team Sweat is “an international coalition of consumers, investors, and workers committed to ending the injustices in Nike’s sweatshops around the world.”, founded in 2000 by Jim Keady. Keady researched Nike’s labor practices while attending graduate school at St. John’s University in New York. Keady doubled as the soccer coach at St. John’s University, and while conducting his research about Nike; the school signed a $3.5 million deal with Nike, forcing all athletes and coaches to endorse Nike. Keady publicly refused to support Nike and was forced to resign in 1998. Since resigning, Keady has done original research into the effects of Nike’s Sweatshops. He travelled to Indonesia, worked in a Nike factory, and lived on the $1.25 wages.
Counter-criticism
Despite claims of exploitation for profit, in the past decade, Nike profits as a percentage of total revenue have ranged from only 1.94% to 10.11%. The median was 8.3% and the average was 7.77%.Nike (NKE) annual SEC income statement filing via WikinvestWilliam Stepp, of the Mises Institute, argued that minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
is arbitrary and causes unemployment. Stepp continues further, stating that the workers were not exploited and clearly received benefits from working at the factories "by showing up for work every day, and by accepting a paycheck based on mutually-agreed-upon terms." In addition to pay, these benefits include free annual physicals, uniforms and clothing, a clinic and health service, a canteen stocked with food, recreation and entertainment, and transportation. However, Stepp did criticize Nike for its association with the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, which he says is the real exploiter of third world countries.
A study by the Global Alliance for Workers and Communities found that 70% of Nike factory workers in Thailand rated their supervisors as good and 72% thought their income was fair. In Vietnam, most workers "thought the factory was a 'good place to work' and planned to continue at least three years" and 85 percent felt safe there. Further, they felt that the factory offered a more stable career and higher income than farmwork.
Nike response
Nike began to monitor working conditions in factories that produce their products. During the 1990s, Nike installed a code of conductCode of Conduct
A code of conduct is a set of rules outlining the responsibilities of or proper practices for an individual, party or organization. Related concepts include ethical codes and honor codes....
for their factories. They spend about 10 million dollars a year to follow the code, adhering to regulations for fire safety, air quality, minimum wage, and overtime limits. In 1998, Nike introduced a program to replace its petroleum-based solvents with less dangerous water-based solvents. A year later, an independent expert stated that Nike had, "substituted less harmful chemicals in its production, installed local exhaust ventilation systems, and trained key personnel on occupational health and safety issues." The study was conducted in a factory in Vietnam.
Recently, Nike has developed a program to deal with claims of unfair practices. Nike claims to have hired a staff of 97 people to randomly inspect several hundred of their factories each year. Nike also gave the Fair Labor Association
Fair Labor Association
The Fair Labor Association , a non-profit labor rights organization, is a multi-stakeholder initiative bringing together companies, colleges and universities, and civil society organizations to improve working conditions worldwide by promoting adherence to international and national labor laws...
, a working conditions watchdog
Watchdog
Watchdog may refer to:Dog*Guard dog, a dog that barks to alert its owners of an intruder's presenceIn computing* Watchdog timer, a device in computer softwareConsumer protection...
, the privilege to randomly inspect any factory that produces Nike products.
Nike has audited roughly 600 factories since 2002, giving each a score on a scale of 1 to 100, which is then associated with a letter grade, A through D. Some factories received an A and most received a B. When a factory receives a grade of D or lower, Nike threatens to stop producing in that factory unless the conditions are rapidly improved. In 2004, Nike expanded their monitoring process to include environmental and health issues.
Other controversies
In 2000, Nike chairman Phil KnightPhil Knight
Philip Hampson "Phil" Knight is an American business magnate. He is the co-founder and Chairman of Nike, Inc. He resigned as the company's chief executive officer in 2004, while retaining the position of chairman of the board...
planned to donate $30 million to his alma mater
Alma mater
Alma mater , pronounced ), was used in ancient Rome as a title for various mother goddesses, especially Ceres or Cybele, and in Christianity for the Virgin Mary.-General term:...
, the University of Oregon
University of Oregon
-Colleges and schools:The University of Oregon is organized into eight schools and colleges—six professional schools and colleges, an Arts and Sciences College and an Honors College.- School of Architecture and Allied Arts :...
. When the University of Oregon joined the Worker Rights Consortium
Worker Rights Consortium
The Worker Rights Consortium is an independent labor rights monitoring organization focused on protecting the rights of workers who sew apparel and make other products sold in the United States, particularly those bearing college or university logos...
(WRC), Knight revoked his donation because the WRC has a history of being unfriendly towards shoe companies. The Fair Labor Association is supported by Nike and the United States government, while the Workers Rights Consortium is not. There has been debate between the university and Knight about the legitimacy of the FLA and which labor monitoring organization is more effective.
Another dispute arose from Nike’s personalization system, NIKEiD
NIKEiD
NIKEiD is a service provided by Nike allowing customers to personalize and design their own Nike merchandise. They offer online services as well as physical NIKEiD studios in different countries around the world, including: United Kingdom, France, Spain, Germany, China and the USA.- Description...
. MIT graduate Jonah Peretti
Jonah Peretti
Jonah Peretti is an Internet entrepreneur and a founder of BuzzFeed and Huffington Post. The New York Times called him a "viral marketing hot dog."...
attempted to order a pair of shoes from Nike. He chose to have the word “sweatshop” embroidered on them. Nike sent Peretti an email explaining that his personalization request could not be granted for one of four things: it contained another party's trademark
Trademark
A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...
or other intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
, the name of an athlete or team Nike does not have legal right to use, profanity or inappropriate slang, or was left blank. Peretti replied, expressing to Nike that his personalization did not contain content violating the aforementioned criteria. Nike responded by allowing Peretti to alter his personalization and Peretti chose not to change it and cancelled the order. Ironically, the publicity led to Nike selling more of the personalized shoes.