Nike is a household name when it comes to sports apparel and equipment. It has worked hard to burnish its image, especially by garnering endorsements from big names in the sports world, such as Michael Jordan. But in 1996 its silver image began to tarnish. It knew it was in trouble when an article on child labor in Pakistan appeared in Life magazine with a picture of a 12-year-old boy sewing a Nike soccer ball in a factory, and activists started showing up in front of Nike outlets holding posters with the boy’s picture on it. Although child labor is illegal in Pakistan, the law is not enforced and child labor is widespread. The factory in ques-tion was not run by Nike, but by a subcontractor or supplier. Nonetheless, Nike was held responsible by many, especially in the United States and Canada. One immediate result was a “Boycott Nike” movement, which continued to monitor and report on Nike’s actions.1 Nor was the report from Pakistan an isolated incident for Nike. Also in 1996, CBS’s 48 Hours reported on working conditions in Vietnam, featuring Nike and the abuses of workers who made some of Nike’s products. Since 1996 Nike has been charged by critics with engaging in a variety of unethical employment practices in countries that exercise little or no control over the conditions of labor or whose governments are corrupt and can be bought off. For Nike had and continues to have a reputation for producing its products in less developed countries with the cheapest labor and the laxest law enforcement, including China, Vietnam, Bangladesh, and Indonesia. At Nike’s invitation, the Vietnam Labor Watch conducted a six-month investigation, and its report details discrepancies between what Nike told American consumers and what the group itself uncovered.2 One significant item in the report is the state-ment that non-Nike shoe factories the group visited in Vietnam had better working conditions and paid higher wages. In 1998, Nike pledged to make sure its factories adhered to acceptable labor practices and agreed to let labor and human rights groups inspect its facilities.3 But its critics continued to track the company. In 2000, the Victoria International Development Education Association (VIDEA) in Canada published a book of facts about Nike, which noted among other things that Nike, which paid its 80,000 Indonesian factory workers 10 cents an hour, could double their wages at a cost of less than $20,000,000—the amount that Nike paid Michael Jordan for promoting its products. It paid $200,000,000 to sponsor the Brazilian soccer team. VIDEA also claimed that the cost of making one pair of Nike running shoes was approximately $5.00, although they retail for more than $100 and for as much as $189.4 The figures by themselves, of course, do not present the whole picture. But at least on the surface they suggest exploitation of labor and a terrible disparity between manufacturing and advertising expenditures. In 2001 Nike’s CEO, Philip Knight, claimed that the company’s policy with respect to the employment of child labor was “the highest in the world: 18 for footwear manufacturing, 16 for apparel and equipment.”5 But he acknowledged that there were instances in which the company used contract factories abroad where the policies had been violated. With respect to the company’s violations in Cambodia that had been reported by the BBC, Mr. Knight cited the fact that evidence of age could be bought there for as little as $5, and that following the charge the company reexamined all employee records there. The reply did not satisfy critics. A CNBC hour-long program on Nike in 2008 showed that Nike still has problems and raised the question, “What are workers owed and how to make sure they get it?”6 However one answers that question, the issues are broader than the one involving Nike and its critics, and Nike’s experiences highlight the ethical difficulties of multinational corporations operating in what can be called “corrupt environments” in which laws are not enforced, unethical practices are rampant, and/or governments are corrupt or ineffective. More broadly, the Nike case highlights the general issue of child labor. This in turn is related to sweatshops, and to a variety of other issues concerning labor and rights on an international scale. The rights of workers in most of the developed countries are recognized even if not always respected. But the question of workers’ rights in developing and/or poor countries is more complicated than often appreciated, since some economic (and so workers’) rights are tied to what is economically possible. Moreover, the standards to which one can hold local firms are arguably different from the standards to which one can hold multinational corporations Question: Does the fact that Nike paid its workers in Indonesia 10 cents an hour prove that it exploited them? Explain.
Nike: A Case Study
Nike is a household name when it comes to sports apparel and equipment. It has worked hard to burnish its image, especially by garnering endorsements from big names in the sports world, such as Michael Jordan. But in 1996 its silver image began to tarnish. It knew it was in trouble when an article on child labor in Pakistan appeared in Life magazine with a picture of a 12-year-old boy sewing a Nike soccer ball in a factory, and activists started showing up in front of Nike outlets holding posters with the boy’s picture on it. Although child labor is illegal in Pakistan, the law is not enforced and child labor is widespread. The factory in ques-tion was not run by Nike, but by a subcontractor or supplier. Nonetheless, Nike was held responsible by many, especially in the United States and Canada. One immediate result was a “Boycott Nike” movement, which continued to monitor and report on Nike’s actions.1 Nor was the report from Pakistan an isolated incident for Nike. Also in 1996, CBS’s 48 Hours reported on working conditions in Vietnam, featuring Nike and the abuses of workers who made some of Nike’s products. Since 1996 Nike has been charged by critics with engaging in a variety of unethical employment practices in countries that exercise little or no control over the conditions of labor or whose governments are corrupt and can be bought off. For Nike had and continues to have a reputation for producing its products in less developed countries with the cheapest labor and the laxest law enforcement, including China, Vietnam, Bangladesh, and Indonesia. At Nike’s invitation, the Vietnam Labor Watch conducted a six-month investigation, and its report details discrepancies between what Nike told American consumers and what the group itself uncovered.2 One significant item in the report is the state-ment that non-Nike shoe factories the group visited in Vietnam had better working conditions and paid higher wages.
In 1998, Nike pledged to make sure its factories adhered to acceptable labor practices and agreed to let labor and human rights groups inspect its facilities.3 But its critics continued to track the company. In 2000, the Victoria International Development Education Association (VIDEA) in Canada published a book of facts about Nike, which noted among other things that Nike, which paid its 80,000 Indonesian factory workers 10 cents an hour, could double their wages at a cost of less than $20,000,000—the amount that Nike paid Michael Jordan for promoting its products. It paid $200,000,000 to sponsor the Brazilian soccer team. VIDEA also claimed that the cost of making one pair of Nike running shoes was approximately $5.00, although they retail for more than $100 and for as much as $189.4 The figures by themselves, of course, do not present the whole picture. But at least on the surface they suggest exploitation of labor and a terrible disparity between manufacturing and advertising expenditures. In 2001 Nike’s CEO, Philip Knight, claimed that the company’s policy with respect to the employment of child labor was “the highest in the world: 18 for footwear manufacturing, 16 for apparel and equipment.”5 But he acknowledged that there were instances in which the company used contract factories abroad where the policies had been violated. With respect to the company’s violations in Cambodia that had been reported by the BBC, Mr. Knight cited the fact that evidence of age could be bought there for as little as $5, and that following the charge the company reexamined all employee records there. The reply did not satisfy critics.
A CNBC hour-long program on Nike in 2008 showed that Nike still has problems and raised the question, “What are workers owed and how to make sure they get it?”6 However one answers that question, the issues are broader than the one involving Nike and its critics, and Nike’s experiences highlight the ethical difficulties of multinational corporations operating in what can be called “corrupt environments” in which laws are not enforced, unethical practices are rampant, and/or governments are corrupt or ineffective. More broadly, the Nike case highlights the general issue of child labor. This in turn is related to sweatshops, and to a variety of other issues concerning labor and rights on an international scale. The rights of workers in most of the developed countries are recognized even if not always respected. But the question of workers’ rights in developing and/or poor countries is more complicated than often appreciated, since some economic (and so workers’) rights are tied to what is economically possible. Moreover, the standards to which one can hold local firms are arguably different from the standards to which one can hold multinational corporations
Question: Does the fact that Nike paid its workers in Indonesia 10 cents an hour prove that it exploited them? Explain.
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