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Cruel Treatment Working for Nike in Indonesia

Urban Community Mission Survey Report, December 1999

Press For Change

Cruel Treatment
Working for Nike in Indonesia

Contents:

• Executive Summary
  
• Introduction
  
• About the Urban Community Mission
  
• The Survey
  
• Commentary on Survey Results
  
• Conclusion
  
• Contact Details

Executive Summary

Over the course of 1999 Nike has put considerable resources into promoting the idea that it has reformed its labour practices in response to the global campaign against the company. A number of major newspapers have carried stories heralding this change.

What has been missing has been thorough independent research testing Nike¹s claims against the experiences of workers.

To address this, in September Press for Change commissioned the Urban Community Mission (Jakarta) ­ an organisation with 16 years experience working on issues facing Indonesian factory workers - to conduct this survey.

In all 4,000 workers from 13 factories were interviewed - 2,300 from 5 sportshoe factories producing for Nike; 1,200 from 6 clothing factories producing for Nike and 500 from 2 sportshoe factories producing for BATA. The workers from the BATA factories were surveyed for the purpose of comparison.

The survey results indicate that factories producing for Nike in Indonesia are still characterised by excessive and compulsory overtime, abusive management practices and inadequate wages.

Abusive Management Practices

In most of the Nike contract factories surveyed workers are still subject to senseless punishments and extreme verbal abuse if they work too slowly or break other factory rules - 57% of Nike sportshoe workers and 59% of Nike clothing workers reported that they had seen workers being shouted at or subject to cruel treatment by their supervisors. The punishments include wage deductions, having their ears pulled, being pinched or slapped on the buttock, being forced to run around the factory or having to stand for hours in factory yards (being ³dried in the sun²). The verbal abuse includes the Indonesian equivalent of phrases like ³Fuck You!² ³You Whore!², and ³You Dog!².

Management practices appear to be less cruel in the BATA factories. Only 25% of workers reported that they had seen workers shouted at or mistreated and they only cited examples of verbal abuse rather than other forms of cruel treatment. When verbal abuse does occur the language is limited to relatively milder insults, along the lines of ³You Fool!², ³You Idiot!², ³You¹re Lazy!² or ³You¹re Stupid!².

Excessive and Compulsory Overtime

In the Nike contract factories (both sportshoe and apparel) the high pressure work environment was the most significant concern. For 1,555 workers the major complaint was being forced to work excessive overtime without breaks and for a further 344 it was the difficulties associated with getting permission for annual leave or menstrual leave. Another 136 focused on the pressures associated with the target system, under which workers have to get through a certain number of shoes or clothes each day.

Specific questions regarding the number of working hours were not included in the survey, but the Urban Community Mission knows from other contact with these workers that in a number of Nike contract factories workers are still being required to work more than 72 hours per week during peak periods.

The response of the BATA workers to this question suggests that they work under considerably less pressure than workers in the Nike contract factories. Only 15 of the 500 workers surveyed identified compulsory overtime as their major complaint and only 13 prioritised the target system.

Inadequate Wages

Nike has made much of its decision to raise wages for sportshoe workers in Indonesia in response to the economic crisis. This survey shows that these workers¹ wages have been raised above the legal minimum. The vast majority (84%) of Nike sportshoe workers interviewed indicated that they were earning a basic wage of between Rp. 251,000 ($US34) and Rp. 300,000 ($US41) per month for a standard 40 hour week. The legal minimum for the area is Rp. 230,000 ($US32) per month.

While positive, several things need to be kept in mind with regard to these wage increases:

• Since the Asian economic crisis hit, prices of many basic foodstuffs in Indonesia have more than doubled. This substantial inflation means that, despite these increases, real wages for Nike sportshoe workers are still below what they were in July 1997 and these workers are still struggling to meet their basic needs.

• The crash in the value of the Indonesian rupiah over the last two years has meant that this wage increase has not cost Nike very much. In US dollar terms it has only brought these wages up to a par with the lowest (legal minimum) wages being paid to Nike workers in other parts of the world

• This extreme concentration of wages suggests an almost complete lack of seniority pay - the wages of workers with as much as 14 years experience differ very little from those paid to workers who started work a month ago.

• Nike apparel workers are being paid significantly less than sportshoe workers - 31% of the 1,200 Nike apparel workers surveyed are receiving a basic wage of less than Rp250,000 ($US34) a month for a standard week. Workers struggling to survive on wages this low are in a desperate position.

In the BATA factories most workers are being paid wages equal to or better than those being paid to Nike sportshoe workers - 42% of the workers surveyed were earning a basic monthly wage of more than Rp. 300,000 ($US41) per month, compared with only 16% of Nike sportshoe workers.

However, 44% of the BATA workers surveyed are on very low pay, earning less than Rp. 250,000 ($US34) per month. Historically the BATA factory has produced relatively cheap sneakers for the local Indonesian market, but several years ago BATA started to produce expensive sportshoes for export on a contract basis. In order to compete for these orders, BATA employed temporary contract workers for this work and paid them at a lower rate. It may be that the workers surveyed who indicated that they are on this very low rate of pay are casual or temporary workers producing other brands, but more research is needed to ascertain this. In any case, these wages are appallingly low, and BATA should increase them.

Other Issues

Potential Benefits

According to UNICEF, 2 million young Indonesians had to leave school in 1998 because of the economic crisis. In 1999 it is predicted that 10 million children will be unable to continue school, because of school fees (in the order of $US3.50 per month) and because they must work in the informal sector to help their families get by.

Survey responses indicated that the 3,500 Nike workers had 6,572 younger siblings back in their home villages. This suggests that if all sportshoe workers in Indonesia were paid enough to enable them to make a decent contribution to their families¹ budgets it would dramatically increase the chances of several hundred thousand young Indonesians staying in school.

Worker Representation

Since independent unions became legal in 1998 a number of new unions have attempted to begin operation in Nike factories but there has been strong resistance from factory management and a number of workers have been fired for getting involved.

The Urban Community Mission (Jakarta) and Press for Change believe that allowing workers to form their own organisations and to bargain collectively is by far the most effective way of ensuring that this abuse and exploitation is finally brought to an end.

Introduction

Over the course of 1999, Nike has put considerable resources into promoting the idea that it has reformed and become a corporate leader in the area of monitoring factory conditions. Stories have begun to appear in the press supporting this view.

On April 12 the Financial Times (London) reported that the US Ambassador to Vietnam, Pete Peterson, had joined the debate over Nike¹s labour practices by praising the role which Nike was playing in Vietnam.

A headline in the October 4 edition of USA Today announced ³After global outcry, company makes some strides to improve² and the article quoted a Vietnamese Nike worker as saying "We used to be scared. We are not now."

On December 1 the Copley News Service reported that anti-sweatshop campaigns have ³already been effective in compelling companies such as Nike to improve their factory conditions.²

What has been missing has been thorough research testing Nike¹s claims against the experiences of workers.

To address this, in September the US group Press for Change commissioned the Urban Community Mission in Jakarta to conduct this extensive survey of factory workers producing for Nike. The research was funded by a generous grant from Joshua Mailman and the Joshua Mailman Charitable Trust.

About the Urban Community Mission

At the moment, UCM Jakarta has two major projects:

Jakarta Workers' Service - Pelayanan Buruh Jakarta (PBJ) - activities include training programs regarding union rights; campaigns for workers' rights; and assisting women workers and child workers to develop their own organisations.

Centre for Indonesian Migrant Workers (CIMW) - campaigns for the rights of migrant women workers and assists migrant workers with education and reintegration programs.

UCM Jakarta also supports campaigns for better working conditions for workers in export shoe factories.

The Survey

In this survey this issue was addressed by involving workers themselves in the survey process. Twenty five workers were trained in interview techniques and they carried out the interviews either in the factories during breaks or else after work. It was felt that workers would feel more comfortable talking to another worker, and more likely to trust that their comments would remain confidential. It is difficult to measure the extent to which this was achieved, however, and some workers may have understated problems in their factory for fear that their comments might be reported to their employer.

In all 4,000 workers were surveyed from 13 factories:

• 2,300 from 5 sportshoe factories producing for Nike (Pt. Nikomas Gemilang, Pt. Nasa, Pt. Starwin, Pt. Adis and Pt. Doson)
• 1,200 from 6 clothing factories producing for Nike (Pt Citra Abadi Sejati I & II, Pt Dayup Indo, Pt Tuntex Cikupa, Pt Tuntex Cakung, Pt Konaan, Pt Bintang Adi Busana).
• 500 from 2 sportshoe factories producing for BATA (Pt Bata Jakarta & Purwakarta)

Please see the ³Survey results² section below for the break down of how many workers were surveyed from each factory.

The workers from the BATA factories were surveyed for the purpose of making some comparison with conditions in Nike factories.

The survey was conducted over a five week period between September 10 and October 18, 1999. The survey questions were jointly designed by Press For Change and UCM Jakarta.

Commentary on Survey Results

Question 1. What village do you come from?

Responses to this question confirms that the considerable majority of workers in these factories are not from Jakarta - they are rural urban migrants, having presumably moved to Jakarta in an attempt to escape the extreme poverty in rural Indonesia. While most of the workers come from villages in Central, West or East Java, some have traveled from as far away as Aceh, North Sumatra, Borneo, Bali and Irian Jaya.

Another reason for asking this question was to get a basis for finding out more about the use of "labour suppliers" by Nike contract factories. In the past there have been allegations that these labour suppliers have misled people in rural areas by promising wages and conditions which are better than those which really exist in the factories. When these workers arrive at the factory in Jakarta and find out the truth they usually cannot afford to travel back to the village and so must work at the factory until they can save up enough to return.

Question 2. What is your monthly basic pay?

Nike has made much of its decision to raise wages for sportshoe workers in Indonesia in response to the economic crisis. This survey indicates that these workers are indeed earning more than the legal minimum. The vast majority (84%) of Nike sportshoe workers interviewed indicated that they were earning a basic wage of between Rp. 251,000 ($US34) and Rp. 300,000 ($US41) per month for a standard 40 hour week. The legal minimum for the area is Rp. 230,000 ($US32) per month. Workers were only asked about their basic wage ­ it may be that this amount is supplemented by attendance and productivity bonuses.

While positive, this increase needs to be kept in perspective. In order to discourage foreign investors like Nike from deserting Indonesia in the wake of the economic crisis the Indonesian government has kept the legal minimum wage at below subsistence levels and substantial inflation means that despite these increases Nike sportshoe workers are still struggling to meet their basic needs. Between August 1997 and Ausgust 1998 overall inflation in Indonesia was 80% and the removal of food subsidies meant that the prices of many basic foodstuffs rose by much more than this. This means that, even with this increase, real wages for Nike sportshoe workers are 30% below what they were in July 1997.

Nor has this wage increase cost Nike very much. The crash in the value of the Indonesian rupiah over the last two years has been so drastic that this increase has, in US dollar terms, only brought these wages up to a par with the lowest (legal minimum) wages being paid to Nike workers in other parts of the world.

The survey also demonstrates that some of Nike¹s statements regarding wages in Indonesia have been misleading. In March 1999 (ref. http://nikebiz.com/media/n_wage.shtml ), Nike vice-president Maria Eitel told the Portland City Club that a majority of Nike workers average approximately Rp 400,000 ($US55) a month. Only 29 of the workers surveyed by UCM (less than 1%) were earning that amount as a basic wage for a standard week. To be accurate Ms. Eitel¹s figures would have to include other payments, including payments for overtime. UCM Jakarta knows from other contact with workers in these factories that in peak periods they are still being required to work more than 72 hours a week. Being compelled to work excessive overtime was by far the biggest complaint amongst Nike workers surveyed (raised by 818 sportshoe workers and 737 apparel workers).

The extreme concentration of these wages also suggests an almost complete lack of seniority pay for more experienced workers, an issue which a number of workers identified as a key problem in their answer to question 7. Workers who have been working at their factory for as many as 14 years indicated that they are still only being paid at the same low rate as workers who recently arrived at the factory.

The survey indicates that wages for Nike apparel workers are significantly lower than those for sportshoe workers - 31% of the 1,200 Nike apparel workers surveyed are receiving a basic wage of less than Rp250,000 ($US34) a month for a standard week. In a recent letter to groups concerned about Nike¹s labour practices (refer www.nikeBiz.com/labor/cleancl_let.shtml ) Nike¹s director of labour practices, Dusty Kidd claimed that ³all but one of our apparel suppliers (in Indonesia) has increased its minimum wage base, with the lowest in that group providing at least Rp276,000/month to workers at the lowest skill levels working a regular 40-hour week.² Again this survey contradicts Nike¹s claims. Workers struggling to survive on wages this low are in a desperate position and Nike should see that they are increased as soon as possible.

Comparing the wages in Bata¹s sportshoe factories to those in Nike¹s sportshoe factories reveals a complex picture. As we have seen, 84% of workers in Nike¹s sportshoe factories earn a basic wage of between 251,000 ($US34) and Rp. 300,000 ($US41) per month. A large proportion (42%) of BATA workers earn more than this and the majority of BATA workers (55%) earn wages greater than or equal to this range. In this sense BATA could be said to pay better wages than Nike, even following Nike¹s wage increases.

However, 44% of the BATA workers surveyed earn basic wages below the Rp. 250,000 ($US34) per month level. The survey doesn¹t tell us this, but it may be that these workers are casual or temporary workers on short term contracts. Historically the BATA factory has produced relatively cheap sneakers for the local Indonesian market, but several years ago BATA started to produce expensive sportshoes for export on a contract basis. In order to compete for these orders, BATA employed temporary contract workers for this work and paid them at a lower rate. In answer to question 7 a number of BATA workers indicated that the contract system of employment was their biggest complaint regarding working in their factory. Further research is needed to ascertain why this group of workers are being paid at such a low rate and which shoes they are producing. In any case, these wages are appallingly low, and BATA should increase them.

Question 3. How many years have you worked at this factory?

Answers to this question highlight the short term nature of the employment being provided by these factories ­ 80% of the Nike apparel workers, 66% of the Nike sportshoe workers and 53% of the BATA sportshoe workers interviewed had been working in the factory for less than three years.

Question 4. Have you seen workers being shouted at or mistreated in this factory?

Responses to this question were the most disturbing aspect of the survey results.

The question was included because over the years a number of reports have found verbal abuse and excessive and cruel punishment to be common in Nike contract factories. In 1996, Australian academic Peter Hancock found that supervisors at PT Feng Tay in Banjaran in Indonesia were being trained to punish women who were working too slowly by systematically insulting them using the Indonesian equivalent of phrases like ³Fuck you!² and ³Hurry up and move you stupid bitch!² (ref. www.caa.org.au/pr/1997/ghosts.html). In 1997 Vietnam Labor Watch reported that in one factory in Vietnam workers were punished by being forced to run around the factory compound in the tropical heat until a number collapsed from heat exhaustion (ref. www.saigon.com/~nike/report.html ). In April 1998 ESPN film crews doing a story on conditions in Nike factories in Vietnam twice observed managers physically abusing workers (ref. www.caa.org.au/campaigns/nike/news.html#april98 ).

Nike claims to have addressed these abusive management practices by putting in place an extensive program to train factory supervisors in appropriate behaviour. In June 1999, however, staff of the independent auditor Verite visited the Formosa Textile factory in El Salvador and observed workers who worked too slowly being taken into the middle of the factory floor and shouted and sworn at by supervisors. Subsequent interviews with workers revealed that this is standard practice in the factory (ref. www.web.net/~msn/3nike16.htm ).

This survey confirms that abusive management practices also continue in Indonesian factories producing for Nike ­ 57% of Nike sportshoe workers and 59% of Nike clothing workers reported that they had seen workers being shouted at or mistreated in their factory.

Workers gave examples of extremely cruel treatment. As well as relatively minor (but nonetheless humiliating) punishments like being forced to clean the factory toilets, workers indicated that they are sometimes pulled by the ears, pinched or slapped on the buttock while being verbally insulted.

Punishments which make use of the tropical heat are evidently also used in Indonesia­ workers indicated that they are sometimes forced to run around the factory yards or are subject to being ³dried in the sun² (made to stand in the factory yards) for several hours.

Other punishments take advantage of workers¹ poverty and their fear of unemployment. They are sometimes sent home without pay for that day or are threatened with dismissal for small misdemeanours. Despite Nike having a policy against this, workers also report that deductions are still being made from their wages as a form of punishment.

The predominantly female workforce also indicated that they are sometimes required to prove that they are menstruating in order to obtain the menstrual leave provided for under Indonesian law.

The verbal abuse used against workers is also highly offensive ­ workers indicated that the Indonesian equivalent of phrases like ³Fuck you!², ³You Whore!², ³You Pig!², ³You Monkey!², and ³You Dog!² are used.

Examples of times when these types of punishment are used include when workers ask for annual leave; when they fail to reach the work target; when they refuse to work overtime; when they are late; when they lose their identity cards; or when they are absent for a day without permission.

Management practices appear to be more benign in the BATA factories. Only 25% of workers reported that they had seen workers shouted at or mistreated in their factory and they only cited examples of verbal abuse rather than other forms of cruel treatment. When verbal abuse does occur the language is generally milder, along the lines of ³You Fool!², ³You Idiot!², ³You¹re Lazy!² or ³You¹re Stupid!².

Question 5. Any younger brothers and sisters at home in village?

This question highlights the potential benefits which companies like Nike could bring to the Indonesian economy if they paid decent wages.

According to UNICEF, 2 million young Indonesians had to leave school in 1998 because of the economic crisis. This year it is predicted that 10 million children will be unable to continue school, because of school fees (in the order of $US3.50 per month) and because they must work in the informal sector to help their families get by.

This survey indicates that Nike and BATA workers have a large number of younger siblings at home in the village. The 2,300 Nike sportshoe workers surveyed had 4,242 younger siblings, the 1,200 Nike clothing workers had 2,330 and the 500 BATA workers had 1,025.

Before the economic crisis sportshoe workers often tried to send money home to their family in the village, when there was "extra" money from overtime earnings, for example. If earnings had kept pace with inflation over the past two years, many would be sending anything over subsistence earnings to help keep younger brothers and sisters in school, among other things.

If the 150,000 shoe workers in Indonesia (producing for Nike and other companies) were paid $10 more a month it could help increase the chances of several hundred thousand young Indonesians staying in school without raising the labour cost of the shoes more than 30 cents per pair.

Question 6. Has the trade union or government ever helped to solve any worker problem?

The overwhelming majority of workers surveyed (93% of Nike sportshoe workers, 99% of Nike apparel workers and 94% of BATA sportshoe workers) indicated that neither the Indonesian government nor the official government union SPSI had ever helped to solve any of the problems facing workers.

Since independent unions became legal in 1998 a number of new unions have attempted to begin operation in Nike factories but there has been strong resistance from factory management and a number of workers have been fired for getting involved.

7)

What is your major complaint or negative experience regarding your factory?

In the Nike contract factories (both sportshoe and apparel) the high pressure work environment was the most significant concern. For 1555 workers the major complaint was being forced to work excessive overtime without breaks and for a further 344 it was the difficulties associated with getting permission for annual leave or menstrual leave. Another 136 focused on the pressures associated with the target system, under which workers have to get through a certain number of shoes or clothes each day.

The next biggest issue was low wages ­ named by 607 workers. For another 62 it was the overall wages/overtime work system and a further 51 had concerns with the inadequacy of seniority pay.

The cruel and abusive management practices identified in question 4 were the highest priority concern of 104 workers.

Issues prioritised by other workers included excessive heat in the work rooms, lack of drinking water, lack of medical and other facilities, non-nutritious food in factory canteens, lack of a social security system and lack of transport from the factory when workers are forced to work late.

The response of the BATA workers to this question suggests that they work under considerably less pressure than workers in the Nike contract factories. Only 15 of the 500 workers surveyed identified compulsory overtime as their major complaint and only 13 prioritised the target system.

Low wages were overwhelmingly the most significant issue in the BATA factories ­ identified by 171 workers. Another 64 workers highlighted the use of wage deductions as punishment.

Conclusion

The Urban Community Mission (Jakarta) and Press for Change call on Nike to ensure that workers are allowed to form their own organisations and to bargain collectively. We believe that is by far the most effective way of ensuring that this abuse and exploitation is finally brought to an end.

Contact Details