Nike Sweatshop in Indonesia

Question: Discuss about the Nike Sweatshop in Indonesia. Answer: This assignment consists of summarizing the Nike Sweatshop in Indonesia and relating it with Responsible Commerce. The elimination of trade obstacles and advancement of free deal agreements between U.S.A and emergent countries like Taiwan, Indonesia and China is increasing more American Companies to transfer their production facilities to those developing countries respectively. The production launching by the American companies facilities companies to exploit workers moderately at lower costs in developing countries (Nisen 2013). Nike is one of the world most popular multinational corporations that produce shoe manufacturing. Nike has its presence in developing countries like Vietnam, China and Indonesia. Nike manufactures and produces these shoes in developing countries generally on a contract basis. Moreover, Nike does not hold any manufacturing amenities rather it produce it goods where they can exploit workers at a lower cost. As a result of this scenario, Nike faced a lot of problems in developing their businesses and the corporation has been all over the news due to complains about paying low wages to their employees, long hour of shifts and also imposing child labour practices in those countries respectively. Nike has also made contracts with many celebrity sports stars, those who charge a lump sum of money to promote their goods like multimillion-dollar agreements (Howeidi, Ghauri and Ilyas 2016). The organization Nike has admitted the fact that they only manufacture in those countries that are genera lly in their developing phase and consists of cheap labour and lack of human rights movements. Due to these practices, Nike has made huge margins of profit and nearly paid mere 20 cents an hour to its valuable workers. The success of Nike not only based on brand movements and costly advertisement but also the tormented faced by workers and child labors respectively. The main challenges faced by Nike Corporation are to enforce their codes of conduct and utilize their power to make certain that their employees and workers obtain proper human and labor rights accordingly. Moreover, these sweatshops are away from the reach of U.S. Laws and jurisdiction (McCaughey and Ayers 2013). Impact on Society: According to the researcher, Nike should be answerable and accounted for all the poor working environmental circumstances that are prevailing in the factories of developing countries. The Nike Corporation must not only take the benefit of contemptible working labor in foreign soils but also take adequate amount of responsibilities of all the employees working with them. As being one of the multinational organizations of the world, they must provide their employees with clear understanding of their roles and objectives worldwide. For example, Nike should implement the strategy of Coca Cola industries in India. Coca Cola industries were in the news due to using preservatives and pesticides in their cold drinks. However, after proper inspection of their manufacturing facilities, Coca Cola ensured that their manufacturing services must follow the universal rule and initiate equal standard of water purification across each manufacturing unit globally. Coca Cola also imp lanted that its employees and workers are least amount wages and the organizations have taken numerous steps to provide their employees with better working conditions in the manufacturing factories. Thus, with these initiatives Coca Coal Company became socially responsible towards its employees in their respective countries of operations (Landry 2013). Nevertheless, Nike is precisely far away from all this responsibilities, it is clear that Nike should take proper care for their sub contractors those who develop the workers in foreign soil. Nike should have made changes in the working situations of their employees and pay good amount of wages to them, it would not only benefit the workers but also the organizations in the long run. Nike only concentrates on making their shareholders happy and always tries to improve their value respectively. Moreover, the employees of developing countries were happy and eager to work under this crucial circumstances due to the earnings they get are moreover same or equal to what they get from other companies respectively (Howeidi, Ghauri and Ilyas 2016). This evaluates the fact that the environment that are measured unethical in urbanized countries are ethical in budding countries where the manufacturing is done. There needs to be a good combination of Standards that must prevail in U.S. and other developing countries simultaneously where Nike has its mechanized factories facilities. If Nike is enforced to follow the same standards of United States in developing countries, the company will not be benefitted with low cost of labor and other environmental advantages of producing a shoe (as seen in figure 1). On the other hand, if Nike Corporation follows only the foreign standards the organization will not been able to concur with the Human Rights issues that a international multinational corporation must follow (Kelley 2014). Therefore, it is very much necessary that Nike have to utilize both perspectives accordingly and make a good combination of standards respectively. This will ensure the organization to provide their workers with minimum wages across several countries globally. Moreover, Nike will also ensure better working conditions to their employees by combing the standards effectively . By doing so, Nike will gain good public relation rather than wasting their money by creating defensive public relation strategies (Anner 2013). Fig.1. Spending on No Sweatshop Labeled goods Source: (Rosenthal and Hawkins 2014) Presence of Nike in Indonesia: The everyday wage rate varies from country to country and the labor laws of that country fix it accordingly. Nike began its business operations in Indonesia in 1996. Nike not being paying bare minimum wages to their employees in Indonesia but they were also fling petition to the government of Indonesia to reduce the daily wages of their workers. The wage rate in Indonesia is $2.29 a day and the government of Indonesia itself fixes it. This wages covers up to 70% of the fundamental needs of a person to survive and sustain in the society. The wage rate also differs from city to city the workers lives in, experience of the employee, skill set of individual workers and the indispensable product prices in that city (Kingsley, Gray and Suri 2014). Another profound difficulty that the Indonesian employees and workers face is that quite a few organization factories pay an trainee wage for the new workers that is quite underneath the minimum wages that are fixed by the government. This trouble is mostly associated with female workers as the organization justifies that woman workers and employees needs much more time to be trained to manufacture shoes perfectly. Moreover, it is well observed that the female workers are trained in few days and in few extra hours and they are directly placed in production facilities. Nevertheless, the apprentice wage is just a simple way to cheat the workers and make them harassed accordingly (Kelley 2014). In the year 1999, the government of Indonesia announced that the wage rate would be increased to $26 per month. Moreover, for the first time in the prevailing year, Nike has also initiated to pay and increase their wage rate of their several factories over the world and paid much higher than the government allocated wage rate (as seen in figure 2). The new customize wage rate of Nike was $30 per month and a extra bonus of $37.60 per month. This is one of the biggest step forward in the wage structure by Nike Corporation in Indonesia but the wage rate was far below to maintain an regulate a average family in Indonesia (Aghar 2016). Due to the fact that majority of workers in Indonesia are unmarried womens and teenagers and from ages between 18 to 30 years. The average target for the employees is 4.5 pair of shoes a day and they only receive $2.50 as daily wages in Indonesia. To cover the basic needs of life a single person needs a wage rate around $38 every month as confirmed by the G lobal Exchange. Moreover, Nike only pays a minimum wage to the workers those who manufacture shoes that sell for $100. Nike Corporation concludes that they pay more wages to their workers than what the farmers get in the same region. The organization Nike should be criticize, for this if their sub contractors do not obey the rules set by the government, provides minimum wages to their workers and make better working environment for them. The comparison between the farmers and workers are not proportional as the farmers receives loan and allowances from the government but not the workers of Nike (Misra 2014). Fig 2. Hourly wages in Sweatshops in different countries Source: (Bartley and Child 2014) There were different kind of accusations in the year 1990 for example, Nike was accused for accusation of child labor, the company was paying wages to their workers that are well below the poverty level, and most of the workers were not paid on paid on overtime (as seen in figure 3). Moreover, Nike was also accused for physical abuse of their employees by the management, poor working conditions prevailing in the shop floor and bad air quality. For example, when Nike was in Vietnam, one of the factory officials was condemned of physically abusing the workers, and left the country during police investigations (Bartley and Child 2014). Ethical Dilemma: Nike Corporation started to face workers strikes after the implementation of human rights group activities. More than 10,000 Indonesian personnel from Nikes factories went on Strikes to remonstration against the payment of low wages and poor working conditions in the year 1997. Moreover, at the same time, 1300 worker from the Vietnam factories started their strike operation in order to ensure a raise of one cent per hour to their wages. Nike Employees and workers in China also started protesting against the dangerous work culture prevailing within the factories (Sethi and Rovenpor 2016). There were demands of human right groups that were denied and ignored by the Nike Company. It included things such as to protect workers, those who speak honestly about the working conditions of the factory. Maintain transparent and independent classified procedures for observing and examine workers complaints. Paying decent wages to their workers and trying to provide sound reasonable working hours of the employees is essential. The Companys Code of demeanor was introduced in 2002 in order to maintain and adjust the safety and other security of working conditions in the factory. All of their contracted factories use the obligatory sources respectively. In the year 2004, an additional health and labor standards and monitoring plans were developed that provided Nike to regulate Nikes Responsibility Report (Brunk 2017). The full details of all the factories of Nikes were listed in the report accordingly. This report initiated a motivation towards workers as the report stated every details of the factory it is easy to make independent public investigations. After the implementation of this report, Nikes public image trend to improve and all the problems regarding sweatshop decreased with this regulating document. The changes also initiated positive changes in the organization politics (Rosenthal and Hawkins 2015). Recommendations: In the year 1998, Nikes CEO Phillip Knight made some official announcement about the organization policies on providing better working conditions in manufacturing factories. Phillip Knight implemented standards for shoe industries that all the other companies must follow. The promises made by Phillip Knight are as follows. All the factories must meet the U.S. Occupational Safety and Health Administration principles in air quality. The least age of the workers and employees will be raised to 18 for the footwear factories and to 16 for apparel factories (Rosenthal and Hawkins 2015). Nike Corporation must implement non-governmental organizations to monitor their factory operations. Nike will also try to provide their workers with education program and make proper high school courses for their employees. Moreover, Nike must grant loan and expand their loan program benefits to the following countries like Vietnam, Pakistan, Thailand and Indonesia. Nike will also try to initiate funding on university research on making responsible business practices in their factories (Aghar 2016). Therefore, it is concluded that the Labor rights in Nikes Sweatshop in Indonesia has made a deep influence on the Industry itself. The exploiting workers of sweatshop are trying to improve their working conditions. It is been observed that the wages of Nikes Factories were increased in the due course of the business but not considerably. Moreover, nowadays people are becoming much more concerned about the fair trade practices of labor and it is one of the peak times for Nike to adopt all the suggested measures. Otherwise, it will be very difficult for them to sustain their business. References: Anner, M., 2013. Workers power in global value chains: Fighting sweatshop practices at Russell, Nike and Knights Apparel.Transnational trade unionism: Building union power, pp.23-41. Asghar, M.S., 2016. 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