INDONESIA: Nike forced into self-criticism

BY PIP HINMAN

The recent well-publicised report by Global Alliance for Workers
and Communities on sexual harassment of women workers in Nike factories
in Indonesia is hardly earth-shattering news. By now, Nike's legendary
exploitation of its global 550,000-strong workforce is well known. It's
one of the big corporate tyrants. But there is more to the story than meets
the eye.

Throughout the initial Global Alliance (GA) report — the full report
is due out in April — the authors heap praise on Nike for its cooperation
with the researchers and the compliance steps it has begun to take. This
all seems a little strange until it's revealed (in the last chapter in
one of the final appendices) that Nike, together with Gap, another footwear
multinational, and the World Bank actually set up Global Alliance in 1999.

The report,
which surveyed work practices in nine factories across Indonesia, revealed
a number of workplace “problems” ranging from unpaid overtime to the death
of a couple of workers.

So how come Nike is prepared to wear such criticism by its own front
organisation which it funds to the tune of some US$7.8 million over five
years?

Under pressure

The answer is simple. Nike, like the World Bank and the International Monetary
Fund (IMF), is feeling the pressure of the growing strength of the anti-globalisation
movement and believes it's time for an image change.

Nike is increasingly concerned about its ugly corporate image. So what
better than to commission a report — even critical in parts — but which
stresses Nike's responsiveness and concern for its Third World workers
throughout.

Nike says GA is all about “improving workers' lives in the global supply
chain ... in the partnership of foundations, global brands, supply chain
manufacturers, trade unions and educational/research institutions”.

We're told that additional goals of Global Alliance include “strengthening
[the] factory management-worker relationship ... and helping ... build
sustainable national partnerships aimed at improving workers' lives”.

Nike believes that by combining the efforts of companies and non-profit
organisations it hopes to “effect positive impacts in the global economy”.
It's even encouraging other corporations to do likewise.

But recrafting Nike from ugly corporation to “responsible corporate
citizen” will require more than a few partisan reports. As the growing
global anti-corporate tyranny movement shows, people are not so easily
fooled.

Nike has been forced to take this step because of its devastating record
which can no be longer be covered up. Like the World Bank and IMF, which
are also in the business of “reinventing” themselves, Nike obviously believes
that the best way forward is to admit that, yes, obviously some things
are wrong, but that it is doing its best to remedy the situation.

“We know that our current compliance is not perfect. We are continuously
seeking to challenge ourselves and our partners to strengthen our compliance
system”, Nike states in the GA report.

Nike goes on to add that while the GA findings are sometimes “disturbing”,
it “welcome[s] the information because it enables us to deepen and strengthen
our existing compliance systems, and to take steps to improve working conditions
and opportunities for the workers”.

Improving conditions?

Nike's sudden concern about workers' conditions rings hollow. The US-owned
company first started operations in Indonesia in 1988. Nike's method of
operation is to place orders with sub-contractors which are mainly Korean-
or Taiwanese-owned garment or footwear manufacturers. In 1988, there was
one footwear factory with a few thousand workers producing Nike products.
Now Nike subcontracts 11 footwear factories and 22 apparel and equipment
factories which employ a combined workforce of more than 155,000 people
in Indonesia.

Nike is the biggest corporation making athletic shoes and apparel in
Indonesia. Its annual exports amount to more than US$1 billion. Yet the
workers receive on average between US$2.26 to US$2.94 a day or between
32-42 cents an hour.

A worker on US$2 a day can afford to rent half a two-by-three metre
room in a slum, eat two meals a day of rice and bean curd and purchase
some basic toiletries. This hardly makes Nike a generous employer when
the average mark-up on a pair of its sports shoes is somewhere in the realm
of US$75!

The GA survey was conducted between August and October last year. Some
4000 workers (some 83% of which were women) aged between 20-24 from nine
factories were interviewed by researchers from the Atma Jaya University
Social Research Institute around such issues as education, family life
and health, education and life skills, needs and aspirations, the workplace
and their communities.

The findings provide an insight into the desperate plight of Indonesian
workers. Since the country's economic collapse in 1997, Indonesian workers
have been forced to bear the brunt of the neoliberal austerity measures
proscribed in the IMF's structural adjustment programs. The IMF's current
US$5 billion bail-out is designed to assist multinational corporations
such as Nike to weather Indonesia's unstable economic conditions.

According to the GA report, since the 1997 economic crisis, the number
of people living in poverty increased dramatically from 22.5 million in
1996 to 49.5 million in 1998. About half of Indonesia's 210 million people
live on less than US$2 a day, with the paid labour force between 1986-1999
remaining around 66% of the total overall working age (above 15 years of
age) population.

According to the International Labour Organisation (ILO), 63% of Indonesian
workers give as their reason for going on strike is low wages. Wages fell
starkly in 1997 and haven't increased much since then, while government
subsidies on basic goods such as fuel, electricity and fertiliser have
been partially removed.

If Nike was the good corporate citizen it purports to be, it would immediately
move to implement the demands of its own work force. They are: wage rises
to cover cost-of-living rises, adequate weekly rest and annual leave, the
fair granting of sick leave and menstrual leave, reduce excessive overtime,
increase overtime compensation for night shift and Sundays, child care,
improve factory clinic services, provide workers with better protective
equipment and eliminate abusive treatment.

[Pip Hinman is the national coordinator of Action in Solidarity with
Indonesia and East Timor (ASIET). The full text of the Global Alliance
for Workers and Communities report can be found at http://www.theglobalalliance.org.
Visit the ASIET web site at http://www.asiet.org.au.]