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Vietnam Labor Watch
815 15th Street, NW Suite 921, Washington DC 20005
Tel: 202.518.8461, Fax: 202.518.8462
PRESS CONFERENCE -- Bringing Nike to Heel
National Press Club 529 14th Street, NW May 12, 11 am in front of 14th Street entrance
Mr. Phil Knight is going to speak at a National Press Club Luncheon, "Focus on Asian Manufacturing Issues" on May 12th 1998. We are glad that Mr. Knight is paying attention to this particular issue. Especially after the courageous activism by Asian workers making Nike shoes has stirred the conscience of consumers around the world. Nike is beginning to feel the impact, with sales slumping and college students calling upon administrators at universities around the U.S. to take another look at Nike endorsement and licensing deals. Will Nike CEO, Phil Knight, address the situation with meaningful reforms in his speech? There is little to make us optimistic.
May 7 - Nike representatives refuse to meet with officials of Indonesian trade unions while in Jakarta for a meeting of Business for Social Responsibility, called to address issues related to the economic crisis in Indonesia. The overture was unprecedented as it marked the first time that the "official" union in Indonesia teamed up with the banned "Indonesia Prosperity Workers Union" (FBSI). The workers' representatives had hoped to explain to U.S.-based corporations the desperate plight of workers in Indonesia - minimum wage 70 cents a day, facing inflation of 45% per annum. (att. #1).
April 27 - Indonesia's Administrative Court announced that 24 fired workers won their case against Nike contractor PT Eltri Indo Footwear, part of the Astra conglomerate run by Bob Hasan (friend of Suharto). The five year-old case was decided by the Supreme Court of Indonesia back in February, after a labor court ruling in the workers favor was overturned by millionaire Manpower Minister, Abdul Latief. (att. #2)
Despite public exposures of harsh labor conditions at Nike factories, Nike has made only a few cosmetic changes. Nike factories in Vietnam are still the lowest paid of all foreign enterprises in Vietnam and have the worst working conditions. For examples, Pepsi, CocaCola paid their bottle washers twice ($80/month) what sewers in Nike factories made ($40/month). Even at such low wages, Nike factories in Vietnam have been caught paying workers below the minimum wage and cheating workers out of overtime wages in 1996, 1997 and even in 1998 (VLW, Nike Labor Practices in Vietnam , Mar. 1997).
Last March, another Nike factory worker in Vietnam was physically abused by a supervisor. She was hit on the head and dragged by the collar for about one hundred feet because she accidentally bumped into the factory security manager. This same worker was hit on the head in a separate incident in March 1996. Nike responded by fining the factory security manager a meager $100 and send the woman a letter of apology. Two weeks ago, a Nike factory worker, Lap Nguyen, who cooperated with ESPN, was forced to resign. After the ESPN program, "Outside the Line", went on the air, this woman was grilled by factory managers for speaking with ESPN. She was demoted to cleaning the toilet from a team leader position. After many bouts of threats and deliberate humiliation of this woman, the Nike factory forced her to sign a letter of resignation.
U.S. Companies Refuse To Meet With Indonesian Unions on Wage Relief
Washington, DC. (7 May 1998). The effects of devaluation and inflation in Indonesia as a result of the financial crisis there has taken a tremendous toll on the wages of Indonesian wages. Real wages, or purchasing power, of Indonesian workers have fallen about 60% since the economic crisis hit. Last month the Indonesian government refused to increase the legal minimum wage. A huge increase in the price of fuel two days ago sparked off riots in cities throughout the country, taking the chaos in the streets to a new level of desperation. The sharp devaluation of the Indonesian currency means far lower labor costs for American companies whose products are mad in Indonesia.
With this as a backdrop, a group of Indonesian trade unionists from the Textile and Garment Workers Union of the FSPSI, and from the FBSI union (whose leader is the imprisoned Muchtar Pakpahan) sought to meet with representatives of leading U.S. apparel and footwear companies, when those representatives gathered in Jakarta on May 7 to attend a separate meeting help by Business for Social Responsibility (BSR). All of the U.S. companies contract with supplier firms in Indonesia to have their products made.
At the request of the trade unions to help facilitate a meeting with the U.S. companies, the Jakarta-based representatives of the AFL-CIO’s American Center for International Labor Solidarity sent a letter on April 21 to nine companies inviting them to meet with the Indonesian labor leaders on May 7. (Copy of a letter attached.) The unions wanted to meet with company representatives immediately following the BSR meeting the minimum wage and wage increases in general. The companies receiving the faxed letter of invitation were Eddie Bauer, The GAP, Hallmark Cards, Levi Strauss, Liz Claiborne, Nike, Polo/Ralph Lauren, Reebok, and Walt Disney.
None of the nine firms responded to say that they agreed to meet with the trade unions and at least one, Levi Strauss, wrote that "…we must decline your invitation to discuss this matter." (Copy of letter attached.) Despite this rebuff, at 3:00 P.M. on May 7 a joint delegation of both FSPSI and FBSI trade unionists went to the room where the BSR meeting was taking place. This was an unprecedented joint action by the FSPSI and FBSI, spurred on by the massive economic problems overwhelming Indonesian workers. The unionists wanted the American companies, whose influence on their contractors practices is decisive, to hear first hand of the punishing effects of devaluation and inflation on the workers who make their branded products and the need for wage increases as a humanitarian measure of relief.
Approximately 12 companies were present at the BSR meeting, including Nike, Reebok, the GAP, Polo/Ralph Lauren, Mattel, Hallmark Cards, Eddie Bauer, Liz Claiborne, Levi Strauss, and Walt Disney. A message on behalf of the joint FSBSI and SBSI delegation was sent into the BSR meeting room which said that a joint union delegation was waiting outside and wanted to be allowed at the end of the meeting to come in and ask one question. (The question was to be "Why won’t the companies even sit down and have a dialogue with us?")
The BSR meeting ended a few minutes later, but there was only one door out of the room and the union delegation was positioned in front of it. As the company representatives came out, the trade unionists began introducing themselves. Most of the company reps just brushed by the unionists without stopping. Some stayed and talked and an informal dialogue of sorts ensued. Those who stayed and heard what the FSPSI/FBSI had to say about wages, and about the need for freedom of association, were representatives from Walt Disney, Reebok, Levi Strauss, Polo/Ralph Lauren, and the GAP. The companies that ducked and ran were Nike, Hallmark Cards, and Eddie Bauer. [Will update if there were others.]
Despite the impromptu meeting of some of the company representatives with the unions, the American corporations en masse turned down the April 21 letter of invitation to a meeting. The inescapable question is: in the face of the increasing ferment and chaos in Indonesia, why are these major American corporations (whose Indonesian labor costs are much lower because of the devaluation and economic collapse) resisting a face-to-face meeting with a calm delegation of unionists to hear first-hand about the effects on beleaguered workers and the need for wage relief? It should be particularly noted that union delegation that they stiffed was a first time joint, cooperative action by the two major worker organizations in Indonesia, one of them legally permitted-the FSPSI- and the other declared illegal- the SBSI.
5 May 1998
Indonesia’s Supreme Court rules against Nike contractor and key friend of Suharto
Thou, O man, art verily laboring toward thy Lord, a hard laboring; then, thou art going to meet him.
Quoting a verse from the Holy Qu’ran, lawyers for a Nike shoe contractor in Indonesia defended the company’s decision to fire 24 workers for organizing a strike. PT Eltri Indo Footwear may have had little choice but to fire the workers, since the list of names had been delivered to them by security forces after concluding a three-month investigation in and around the workers’ squalid encampments.
Just weeks ago, a Jakarta-based judicial officer announced to the workers that the Indonesian Supreme Court had ruled in their favor, affirming a decision five years ago by the country’s highest labor court. The labor panel had ordered Eltri to reinstate the workers and pay lost wages. The case was quietly cleared off the Supreme Court’s crowded docket in mid-February. About the same time, some members of the U.S. House of Representatives’ Banking Committee were subjecting U.S. Treasury Secretary Robert ("Minimum Bob") Rubin to harsh criticism for not requiring political and labor rights reforms in the proposed International Monetary Fund bailout of Indonesia.
A young attorney from the respected Indonesian Legal Aid Institute, Apong Herlina, has seen the case through from the beginning. She is now the chief of the Institute’s largest office in Jakarta, managing a staff now inundated with requests for help in political "disappearance" and brutality cases. She won’t get much of a chance to savor the workers’ victory.
Most observers of industrial relations in Indonesia’s export sector are cautious about interpreting what the government has done, especially since the Eltri factory is part of the Astra conglomerate – run by President Suharto’s number-one golfing buddy, Bob Hasan. Would Manpower Ministry officials in Indonesia really enforce a back-to-work and wage-settlement decree against a Suharto crony? Astra has steadily increased its athletic shoe production since 1993 and recently became the fourth-largest maker of Nike shoes in the world. Many businesses that use cheap labor depend on authoritarian governments to keep wages low by banning the formation of independent trade unions and by guaranteeing that, when the factory gates slam shut in the morning, managers can do whatever they wish to workers – for as long as they wish. The records released by the Indonesian Manpower Ministry bear this out: In all of 1996, the 700-strong office of labor standards inspectors only managed to get about three dozen cases to the first adjudicative step. Seven years earlier it was even worse – only 14 prosecutions out of over 17,400 reported violations.
The recent crisis has the government desperate to mollify critics on the labor rights front, however. Most call for the dropping of subversion charges against Muchtar Pakpahan, the country’s best-known independent union leader. Groups such as Amnesty International, USA have also mounted a campaign for the release of Dita Indah Sari, a young worker rights activist serving a six-year sentence for "sowing hatred." Amnesty organizers cite her arrest for "participation in a demonstration calling for an increase in the minimum wage," as an act in defense of Article 25 of the Universal Declaration of
Human Rights. Two years ago, she was briefly detained for leading workers at a Reebok-producing factory on a march and sit-in at the National Assembly.
Clearly, U.S.-based companies which benefit from low labor standards and lax enforcement of basic worker rights need to be leading the effort to re-educate leaders in the developing world; most of what they have been hearing to date is that their countries’ comparative advantage is a defenseless workforce.
When challenged in the late-1980’s about factory conditions and wage-cheating in Indonesia, Nike began by saying that the company was not to blame, that the Nike representatives there were only buyers. In 1992, the company formulated a Code of Conduct for contractors, insisting that Nike staff oversaw the contractors’ compliance with basic labor laws, among other things. Yet, the main complaint of the workers fired from Eltri in 1993 was non-payment of the minimum wage, months after the Nike code was promulgated. Also in early-1993, the U.S. State Department issued the annual report to Congress on human rights practices around the world. Indonesia’s labor rights section singled out the athletic shoe industry for persistent minimum wage violations.
As in all stories of sweatshop abuses, the question arises, "Compared to what?" Nike finally admitted, in 1994, that the Canada-based company, Bata – which produces cheap shoes for the Indonesian market – paid much better wages than the contractors producing expensive Nike shoes for export. Still, it took until six months after the crash of the Indonesian Rupiah – which brought the shoe contractors’ daily wage for workers from $2.46 down below 65 cents a day – for Nike to even suggest that they would like to ease the workers’ suffering somewhat by giving a small raise. Last year, after a 20-cent increase in the daily minimum wage, a Nike spokesperson said, "there’s concern what that could do to the market – whether or not Indonesia could be…pricing itself out of the market." Last April, for the first time in a decade, Indonesia did not increase the minimum wage. "You never overpay for things that are good," Nike president Thomas Clarke said last year. But he was talking about the $200 million endorsement deal Nike had just signed with the Brazilian soccer team, far at the other end of the spectrum.