Many international retail companies on the main high-street and online outsource the production process of their products to other countries for various reasons, one of which is to save on manufacturing costs. These companies generally subcontract factories and workers in "developing nations" primarily due to the legally mandated minimum wage, which is drastically lower than in "developed nations", such as Western Europe and the USA.
Along with this income difference between nations, there is also variance in the standard of labour conditions required (Arnold & Bowie, 2007). In the context of apparel production, this leads to so-called 'sweatshop' factories, where employees are generally immorally exploited in unethical conditions while being underpaid in a large majority of cases (Snyder, 2010). Thus, because of outsourcing production, many companies implicitly allow for the exploitation of workers and violations of their human rights.
Nike, inc., one of the biggest competitors in the market of athletic products, is notorious for regular criticism regarding its labour practices within its supply chain. The remainder of this article will explain the allegations against the market giant: more specifically, the underpayment of wages, the employment of child labour, various health and safety complaints within the production factories and links to forced labour factories.
Concerns regarding the underpayment of employees working in factories subcontracted by Nike, especially those located in Indonesia and India, have been around since the 1980s and 90s (Locke, 2002). In his research, Ballinger found that the legal minimum wage does not cover the amount considered the average living wage in many of these developing nations. This means that even where the legal minimum salary is provided, this does not suffice to support a single individual, never mind an entire family if this is the primary source of income (Martinez, 2008). In this study, he also discovered that a large portion of these suppliers did not even pay the minimum legally required, with many applying for exemptions directly from local governments (Locke, 2002; Ballinger, 2009).
In response to these criticisms, Nike published a report including workers' salaries in many subcontracted factories to prove the fulfilment of paying above the minimum required.
However, Nike guaranteed a living wage for all its workers in its advertisement yet failed to fulfil this in practice, despite paying employees a degree above the legally mandated minimum amount (Martinez, 2008). This contradiction of information constitutes an example of corporate bluewashing.
Another problem connected to Nike and its supply chain concerns the involvement of child labour in production factories, especially in Cambodia and Pakistan. The main incident relating to this issue dates back to 1996 and an article in Life Magazine, which included photographs of young children stitching footballs (Locke, 2002). In turn, the company took steps to regain confidence from its customers, such as publishing yearly reports to increase transparency and changing certain suppliers connected to the claims.
Despite this, the same issue occurred a decade later in the run-up to the 2006 World Cup: supplier Saga Sports forced workers to make footballs at home due to the high demand at the time, which, in turn, led to another period of criticism and company uncertainty. As a result, Nike ended all business with this supplier, aiming to send a message to other suppliers and potential future customers (Mallen Baker, 2016).
Since then, Nike has created and published a strict Code of Conduct for its suppliers, which prohibits child labour in the manufacturing process (Nike, 2022). One of the alleged policies enforced by Nike entails that, where a minor is found to be employed by a supplier or contractor, the child must be removed from employment but will continue to receive payment as if they were working until they reach the legal working age (Locke, 2002). However, there are still issues regarding the enforcement of the Code of Conduct in practice.
Since 2002, Nike has included the factories in the internal auditing annual reports concerning occupational health and safety (Nike, 2022). During the assessments of the individual factories subcontracted by Nike, each is given a grade (A, B, C…) corresponding to different degrees of adequacy. The average grade given to factories was B, which indicates the existence of problems to be addressed.
More recently, Nike has been accused of having significant corporate ties to the forced labour factories in Xinjiang, China, in 2021. In retaliation to these allegations, Nike published an official statement condemning the forced labour factories of Uyghurs and other ethnic minorities, referring to the prohibitions contained in the Code of Conduct for Suppliers and Contractors. The statement also included information concerning the ongoing investigations and assessment of suppliers in China to ensure no connection between the company and the factories involved in the scandal (Nike, 2021).
Also, in this statement, the high street company admitted that its Chinese supplier no longer employs workers residing in the Xinjiang Uyghur Autonomous Region (XUAR).
Despite the various allegations against them concerning the factories in which the products are made, it can be seen that Nike is enforcing internal auditing and control mechanisms as well as policies to ensure better the protection of the fundamental rights of its employees throughout the supply chain.
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