Interfaith group recommends changes at Nike, Reebok factories
5/12/1998 News media contact: Tim Tanton · (615) 742-5470 · Nashville, Tenn. By Tim Tanton and Linda Bloom* NEW YORK (UMNS) - A delegation that recently visited Nike and Reebok plants in Southeast Asia is urging the companies to promote better wages and labor conditions for their workers in that part of the world.
The group, organized by the New York-based Interfaith Center on Corporate Responsibility (ICCR), released a report May 20 following a tour of seven factories in Indonesia, Vietnam and China. During the March 1-12 trip, the delegation also met with religious and human rights groups interested in monitoring the plants.
"I feel that it was a productive trip for shareholders from the United States to go over and offer our observations and suggestions," said Vidette Bullock Mixon, director of corporate relations and social concerns with the United Methodist Board of Pension and Health Benefits. "However, I feel even stronger that local non-governmental organizations will be in a much better position to assist Nike and (hold it ) more accountable and in compliance with its code of conduct."
Mixon was part of the five-member delegation of institutional shareholders that visited the factories. The Board of Pension invests more than $10 billion in retirement funds for United Methodist church clergy and some lay employees. It has been working with Nike on improving labor conditions in the factories operated by the shoe maker's suppliers in Southeast Asia.
The group found that Nike, Reebok and their suppliers are making progress in areas such as workplace safety and health and excessive overtime hours. However, it also found that wages are too low. In their responses, included in the delegation's report, Nike and Reebok noted that they are continuing to work on improving wages and addressing other concerns.
The group's key recommendations focused on three areas:
· Wages. "Nike and Reebok and other footwear companies should pay a sustainable living wage, which enables workers to meet their needs for nutritional food, shelter, potable water, clothing, medical care and transportation."
· Freedom of association. "Workers should not be penalized in any way for organizing or participating in independent unions."
· Independent monitoring. "Nike and Reebok should initiate a regular, ongoing independent monitoring process, utilizing respected local non-governmental organizations from the religious and human rights community as the monitors."
The tour grew out of talks with Nike after the Board of Pension and other groups filed shareholder resolutions on code of conduct compliance. The board owned 120,400 shares of Nike as of May 1.
The Rev. David Schilling, a United Methodist pastor and director of ICCR's global corporate accountability programs, said the resolutions were withdrawn in August after Nike agreed to an ongoing dialogue about working conditions, sustainable wages and independent monitoring of contracts. "A part of that conversation was (about making) a visit to the plants," he added.
Since ICCR and its members also have had a relationship with Reebok, that company was approached and included as part of the tour. Besides Schilling and Mixon, the delegation included Ruth Rosenbaum, The Center for Reflection, Education and Action; Steve Koenig, Informed Investors Group; and the Rev. Seamus Finn, Missionary Oblates of Mary Immaculate.
The trip was an important way to see how foreign contractors in the footwear industry operate, Schilling said. The group visited four plants that supply Nike and three that supply Reebok.
The delegation learned that the typical worker at the factories is a woman between the ages of 18 and 20. She has come from a rural area and will stay two to three years to earn enough money to start a small shop or business back home. Advancement at the factory itself is rare.
"The vast majority of the workers stay at the legal minimum wage," Schilling said.
The low wages were a major concern for the delegation. The Indonesian government has set a minimum wage of 65 cents per day. In Vietnam, the minimum wage was $45 per month in major cities and less in the rural areas.
While the worker may be earning more than she would in her own village, the wages still may be lower than what is needed for food, clothing, shelter and medical care, particularly in countries in economic crisis, such as Indonesia.
"The question for religious investors is: How does the system affect the human dignity of the person?" Schilling asked.
Companies like Nike and Reebok are responding to issues such as proper ventilation and the replacement of toxic chemicals with water-based glues. However, according to Schilling, "the harder issues of the workers' right to organize, the workers' right to a fair and decent wage have yet to be impacted by company codes of conduct."
The trip reinforced the Board of Pension's belief that independent monitoring of manufacturing operations by local nongovernmental organizations is important, Mixon said. "We saw our role as being a facilitator of dialogue between local nongovernmental organizations and corporations such as Nike and Reebok."
Since the delegation's visit, both Nike and Reebok have expressed willingness to work with nongovernmental organizations on human rights training and other areas.
The group made 19 recommendations about plant operations and labor conditions.
In Indonesia, for example, the group said workers should not be dismissed for participating in independent unions. "Company and factory management should express concern about the Indonesian government's new labor regulations, which become effective Oct. 1 … (and) will further erode the right to form a union and bargain collectively."
In Vietnam, the group called for periodic adjustments in wages based on changes in currency exchange rates. The delegation also urged the discontinuance of a "no talk policy" at one of the factories, and it said that "cultural understanding and training among Korean management and Vietnamese workers needs to be broadened."
Ten recommendations related to worker concerns in China. They included setting minimum wage standards and promoting safety education. The group suggested providing a primer for workers on Chinese labor law and improving long-range planning in managing layoffs.
In their responses, Nike and Reebok said they have acted upon several of the recommendations. For example, both said they respect workers' rights to union involvement. Nike also noted that the no-talk policy at the Vietnamese plant has been discontinued, and Reebok said its contingency plan for layoffs is to reduce the work force by attrition.
The factories seemed to be run efficiently and maintained fairly well, Mixon said.
Overall, Nike is working more closely than in the past with the subcontractors making its products, and it is holding them accountable for adhering to its codes of conduct, she said. "I think traditionally that close working relationship hasn't always existed."
# # #
*Bloom is news director of United Methodist News Service's New York office. Tanton is news editor for UMNS in Nashville, Tenn.
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