Tough Week for Nike; Tougher Week for Workers
Thousands Strike in Nike Factories in Indonesia and Vietnam

The past week has dealt a heavy blow to Nike's already tarnished image due to labor unrest in its Asian factories. It has been an even harder week, however, for Nike factory workers. In Indonesia, 10,000 workers went out on strike, fighting the Nike contractor over 20 cents a day. In Vietnam, 3,000 workers were fighting over what amounts to a penny an hour.

"It's really shameful that Nike is so fantastically wealthy and its CEO Philip Knight is the sixth richest man in the United States, and the company is nickel-and-diming the poor factory women who make their products," said Medea Benjamin, director of the human rights group Global Exchange. "It is shameful that Nike spokesman Jim Small has said that the Indonesian workers who are fighting for an extra 20 cents a day--a wage that is still below subsistence--may be pricing themselves out of the market. To threaten people with losing their jobs because they're asking for pennies more a day is disgraceful."

The strikes at Nike factories come on the heels of Nike signing on to a Presidential agreement to eliminate sweatshops. The Nike case, however, points out the major flaw in that agreement: companies can pay workers only a minimum wage and are not obligated to pay a livable wage. In Vietnam, the minimum wage of $1.60 a day is not enough for three decent meals a day, let alone housing, transportation, clothing or health care. In Indonesia, the government itself admits that the minimum wage covers just 90 percent of the basic subsistence needs of one person.

"Nike factories will continuously be rocked by crises, and Nike's reputation will continue to erode, until Nike does two things: pay its workers a living wage and use independent monitors that have the trust and respect of the workers," said Ms. Benjamin. Nike's critics are calling on the company to pay a minimum of $3 a day in Vietnam and $4 a day in Indonesia. They are also calling on Nike to stop using the accounting firm Ernst and Young as its monitors, claiming they have failed miserably. Instead, they want Nike to contract the Indonesian Sports Shoe Monitoring Group and the Vietnam Labor Watch.

In a letter to CEO Philip Knight, Nike critics in the human rights, labor and religious communities call on Nike to take these actions quickly to avoid further trauma to the workers who make Nike products and further erosion of Nike's good name. "If you pay your workers a living wage, and use these respected groups as monitors," says the letter, "we are certain that the company and the workers will all benefit, and that consumers will start feeling better again about buying your products."

Urgent Update on the Strike of 10,000 Nike Workers Making Nike Shoes

Tentative Agreement Reached; Workers Remain Distrustful

On April 22, 1997, 10,000 workers in the PT Hasi factory that make Nike shoes went on strike protesting inadequate wages, forced overtime and poor working conditions, including seven toilets for all 10,000 workers.

The wildcat strike was set off when workers received their April paychecks and felt they were being cheated by the factory. On April 1 the nation's new minimum wage had gone into effect, raising wages by 20 cents a day. The Hasi factory owners had asked the government for permission not to pay the new wages, saying that the extra 20 cents would be a financial hardship. However, after protests from the workers and a directive from Nike headquarters in the U.S. calling on the contractor to pay the new wages, Hasi agreed. But at the same time, they took away the $6.50 monthly premium that workers had earned for steady attendance, a premium stipulated in the workers' contract. In effect, what they were giving with one hand they were taking away with the other.

"When the workers received their April pay, there was great confusion," said Sylvia Tiwon, a professor at U.C. Berkeley and expert on women workers in Indonesia. "They said that either Hasi is paying them the new minimum wage but violating the labor contract by not paying the attendance bonus, or Hasi is paying them the bonus and honoring the labor contract but not paying the new minimum wage. Either way, they were furious and despite possible military action against them, they staged a wildcat strike."

By April 23, a tentative agreement had been reached, with the factory owners agreeing to pay both the minimum wage and the bonus. However, the workers remain distrustful and skeptical that the factory will honor the agreement.

"The level of distrust in the factory is dangerous. Until Nike agrees to pay its workers a living wage, there will always be crises. And until Nike agrees to the kind of independent monitoring by local human rights groups that we have been calling for, they will not have a handle on what is going on inside the factories" said Medea Benjamin, director of the human rights group Global Exchange. There is a coalition of Indonesian labor, human rights and religious groups called the Sports Shoe Manufacturing Monitoring Group that is ready and eager to monitor Nike factories, but Nike has refused the let them. Instead it uses monitors from its accounting firm Ernst and Young, a company that does not have the trust and respect of the workers.

"We hope the present crisis will convince Nike of the need to pay its workers a living wage and to adopt truly independent monitoring of its factories," said Benjamin.

Workers win pay rise at Nike plant in Indonesia

JAKARTA, April 23 (Reuter) - Indonesian workers under contract to Nike, Inc. have won a pay rise after staging a mass strike and protest, the official Antara news agency reported on Wednesday.

It said 10,000 of the 13,000 workers at a factory owned by the local firm PT Hardaya Aneka Shoes Industri, which is under contract to Nike, marched on Tuesday from the plant in Tangerang on Jakarta's outskirts to the district parliament to demand the wage increase.

The early morning march, which snarled traffic in the industrial area in West Java province, was watched closely by security forces but there was no violence.

Antara said the workers demanded they be paid the new basic minimum monthly wage of 172,500 rupiah ($71.37), excluding allowances, that went into effect on April 1.

The report quoted a representative of the workers as saying the company had included their 16,000 rupiah per month "attendance allowance" in the 172,500 rupiah minimum wage, meaning their minimum wage had actually stayed at last year's level.

After a two-hour meeting at the parliament between workers, legislators, company executives, union leaders and manpower department officials, the firm agreed to pay the minimum wage without including allowances for attendance, overtime, transport, holiday pay and meals.

The company's personel manager Alfonso was quoted as saying after the meeting that the workers would now receive a minimum of 200,000 rupiah monthly.

The Jakarta Post newspaper on Wednesday quoted Alfonso as saying the company had been given permission by the manpower ministry to delay paying the 1997 minimum wage because of its financial situation.

The government allows garment and shoe manufacturers with large work forces to ask for permission to delay paying the new minimum wage if a public audit proved they were incapable of doing so.

Last January, the government raised the minimum wage in all 27 provinces by an average of 10.07 percent effective from April 1. The minimum wage varies across the country, with workers in Jakarta being guaranteed 172,500 rupiah.

The Indonesian Times newspaper reported on Wednesday that another 10,000 workers from nearby garment, shoe and bag manufacturers also went on strike on Tuesday.

The workers were demanding an increase in the minimum wage, every Sunday off with pay, and sick leave as well as increases in transport and overtime allowances.

Indonesia, with a population exceeding 200 million people, has long sold itself to foreign investors as a good place for labour intensive industries because of its low labour costs.

Indonesian Nike plant shut after protests

JAKARTA, April 26 (Reuter) - An Indonesian plant producing shoes for U.S. athletic-wear maker Nike Inc shut down for the weekend following protests over wages by thousands of workers, a plant official said on Saturday.

Local newspapers said workers on Friday had ransacked an office and damaged cars in a two-hour protest following the failure of PT Hardaya Aneka Shoes Industri to immediately implement a pay rise.

The company is under contract to Nike.

"Things have returned to normal here, but the plant is closed for today and Sunday. The workers will return to work on Monday because the problems have been settled," the plant official told Reuters.

The official, who declined to give his name, refused to give further details, but said Saturday was normally a working day at the plant at Tangerang on Jakarta's outskirts.

There were no reports of arrests and police declined to comment.

Media Indonesia newspaper said the two-hour protest on Friday was sparked by PT Hardaya Aneka Shoes' failure to implement a pay agreement reached after 10,000 workers staged a walk-out on Tuesday.

Newspapers had said the dispute began when the company, faced with a minimum wage increase, included an attendance allowance of 16,000 rupiah ($6.60) in the monthly minimum wage of 172,500 rupiah ($70.80), meaning the workers saw no actual wage increase.

The move prompted angry workers to march from the plant to the local district parliament in protest.

In January, the government raised the minimum wage in all 27 provinces by an average of 10.07 percent effective from April 1. The minimum wage varies across the country, with workers in Jakarta guaranteed a minimum of 172,500 rupiah ($70.80).

After meetings with union representatives and manpower department officials, the company said it had agreed it would pay the basic minimum monthly wage, excluding allowances for attendance, overtime, transport, holiday pay and meals.

Indonesia, with a population of 200 million, has long sold itself to foreign investors as a good place for labour-intensive industries because of its low wage costs. ($1 =2,435 rupiah)

Trampled Dreams
by Bob Herbert
New York Times -- 7/12/96

Ask Cicih Sukaesih about her dreams and you will hear a long, long silence. She has none. In Indonesia, a woman who is 32 years old, unmarried, broke and unemployed keeps her thoughts focused on the short term. Each day is an emergency.

Ms. Sukaesih used to earn about a dollar a day working in a factory that made athletic shoes for one of the world's premier marketers of dreams, Nike Inc. It wasn't much of a living. A study of women in similar circumstances in 1989 had shown that 88 percent were malnourished.

In 1991 the legally required minimum wage was raised to a dazzling $1.25 a day. But the operators of the Sung Hwa Dunia factory in Serang, West Java, where Ms. Sukaesih worked, refused to pay it. The staggering wealth of the big shots at the top of Nike's pyramid depends on the laborers at the bottom being paid next to nothing. This time the laborers balked. Six hundred workers who were barely earning enough to feed themselves walked out of the Sung Hwa Dunia plant. The police and the military, trained to suppress labor unrest, were quickly alerted. Investigations were begun. The 600 workers walked back in.

Sill, an example had to be made. In January 1992, Ms. Sukaesih and 23 others who had dared to demand that their employers pay the minimum wage were dismissed.

I taked with Ms. Sukaesih by phone Wednesday night. Speaking through an interpreter, she described working conditions in the factory. "We were not treated with respect," she said. "Many of the supervisors were from Korea. They yelled at us. There were some that liked to hit people, slap people. There were some who would kick the Muslim workers when they were praying during their lunch break."

The factory has since been taken over by different operators (also under contract to Nike) and the name has been changed to Eltri Indo Footwear. The abusive practices reportedly have ceased and the minimum wage, now a little over $2 a day, is being paid. But Ms. Sukaesih and her co-workers have not been rehired. They have sued and their case is now languishing before the Indonesian Supreme Court.

Ms. Sukaesih will be in the United States next week to tell her story. Her trip is being paid for by labor and human rights activists who want Nike to settle the claims of workers who have been unfairly dismissed, and agree to independent monitoring as a safeguard against the abuses in the factories.

Ms. Sukaesih has no money of her own and her prospects are dim. She is already considered old for factory work. "They want young girls," she said. "At my age you have to pay a bribe to a security guard just to apply for a job." Meanwhile, the women who are working are only marginally better off than Ms. Sukaesih. There is a widely held notion- and Philip Knight, Nike's chief executive officer, does nothing to discourage it- that minimum wage workers in Indonesia are paid enough to live reasonably comfortable lives. That is not so.

Many of the working women live in bamboo or tin dwellings with no running water and nothing in the way of appliances. Apong Herlina, a lawyer with the Legal Aid Institute, tells the heartbreaking story of women from the countryside who have come to the cities for work but do not earn enough to have their children with them. The children remain in the country, being cared for by relatives.

"These women work a tremendous amount," Ms. Herlina said, "but there is not enough money for transportation or the time to travel the long distances to visit their children. They see them once a year, during the holiday. The rest of the year they grieve."

Dreams fade into nothingness in the long, grim hours in the factories. The workers who live with their children face a struggle each day just to feed them. And then it's back to work in the shadow of the Nike "Swoosh."

The system works fabulously for Mr. Knight and his team of celebrity hucksters, led by the inimitable Michael Jordan. Mr. Knight's holdings were recently estimated at more than $5 billion. I spoke with Mr. Knight on Wednesday, too. He noted that Indonesians were lining up for jobs in factories that make Nikes. And he said that it would wreck the country's economy if wages were allowed to get too high.

"How much would you pay them?" he asked.