Fair Labor Standards Monitored and Enforced In Nike
Philip H. Knight, CEO of athletic shoe and apparel maker Nike Inc, met track coach, Bill Bowerman and athlete Phil Knight at the University of Oregon in 1957. They formed Blue Ribbon Sports, (Nike‘s forerunner in the year 1962. They started importing high-tech sports shoes from the Japanese company Onitsuka Tiger. Blue Ribbon Sports began its own shoe line by sub-contracting in 1971 and soon after in 1972 they launched the brand Nike. The main focus was on innovation so they started producing innovative training shoes and this led them to become a major player in the American athletic shoe market. In the year 1978, they were officially known as Nike Inc. and the sales of its product expanded to South America and Europe which was a turnaround in their history.
The company offered a common stock of about 2 million to the public in the year 1980 and this contributed towards its rapid growth and expansion throughout the decade. In spite of the early economic recession in the 1990s, Nike‘s turnover was US$750 million in 1987 to $4 billion in 1993. Nike‘s stock was to hit $76 and future orders had reached a record high by the spring of 1997. Mechanization had not been considered very much effective in manufacturing shoes due to the fragile materials used and also the short life spans of styles of athletic shoes. Therefore shoe manufacturing was highly dependant on labor. Apparel manufacturing had brought Nike into new countries but this was largely on the basis of the quota system as opposed to the need to find lower labor costs.
However, working in relatively low-paid employment in footwear or apparel manufacturing often becomes less attractive to factory workers and Nike looks for cheap labor. The development of Nike‘s Code of Conduct for labor practices arose out of a mixture of internal concerns and the aspirations for improvement of labor conditions, and external media and activist pressure on the company labor. They constituted a new NGO engagement strategy which would eventually lead to the establishment of formal partnerships with NGOs to address the educational, health, and safety needs of Nike workers and socio-economic development issues in Nike manufacturing countries. The major development in the evolution of Nike‘s Code of Conduct and labor policies came in the mid-1998 when the company launched a series of new initiatives. These included:
- Introduction of new minimum age requirements for the workers in their factories (18 for footwear factories and 16 for light-manufacturing of apparel, accessories, and equipment)
- adoption of US Occupational Safety and Health Administration (OSHA) for the air quality permissible exposure limits for all footwear factories
- Expansion of education programs for the footwear workers
- Inclusion of NGOs and other stakeholders in current independent monitoring
Fair Labor Standards Monitored in Nike:
- Forced Labor. They do not use forced labor in any form such as prison, Indentured, etc.
- Child labor: They do not employ any person who is under the age group of 18 for the production of footwear. In Nike, they follow employee standards and they made it compulsory that no person below the age of 16 are not employed to work to produce apparel, accessories, or equipment in their manufacturing unit.
- Compensation: Every employee in Nike is given compensation with at least of the minimum wages or maybe the industry wages whichever is higher. This amount will not be deducted from the employee’s pay and it is given in a separate document which helps the employee to have a clear picture.
- Benefits: Every employee in Nike is given benefits which are legally mandated benefits and these benefits may include meals, cash allowances for transportation and other worker‘s compensation in the form of child care, health care, and these benefits may vary from country to country.
- Hours of Work/ Overtime: They comply with legally mandated hours of work and use overtime only when each employee is fully compensated.
- Each employee at the time of hiring is intimated if mandatory overtime is a condition of employment; and, on a regularly scheduled basis, provides one day off in seven, and requires no more than 60 hours of work per week, or complies with local limits if they are lower
- Management of Environment, Safety, and Health (MESH). Nike provides safe and healthy guidelines and also they provide Occupational Safety and Health Administration (OSHA); provides Personal Protective Equipment (PPE) free of charge and these all comply which is applicable in the local environment.
- Documentation and Inspection: Nike maintains files or documents in which they keep the entire documents needed and these documents are available for inspection only when the designated auditor requested and when the notice is given before the inspection.
Fair standards enforced in Nike
- Fines and deposits: Every worker in Nike should be fully compensated for all time worked. They enforce that the earned income cannot be reduced due to performance or disciplinary shortcomings. Performance or behavior issues were dealt with with the standard management tools including counseling, warnings, and/or ongoing training. This policy helps the employee from restricting or eliminating bonuses or others. benefits.
- Pregnancy and maternity leave: One of the governing principles of the Nike Code of Conduct for enforcing fair standards is that of equal opportunity for each individual. In that spirit, Nike management practices not to discriminate against job seekers on the basis of gender, race, creed, political or religious beliefs, sexual orientation, or marital or maternity status.
- Annual leave: In order to maintain fair standards Nike maintains work and family balance. Contractors are required to provide annual leave as part of their employee’s compensation and benefits package
- Pay management: Every employee must receive a personal printed copy of a clear, understandable payment record in the local language. Such records will ensure that there are no misunderstandings between management and workers regarding compensation and all relevant calculations are. made available to each employee. This practice protects the rights of both the factory and the worker and should be accompanied by worker training
Training wages, piece rates, and overtime pay: Newly hired workers are given training and they are compensated at or above the country/region minimum wage level, regardless of local allowances for training wages. Workers must be compensated no less than the country / regional minimum wages, regardless of quota or piece rate agreements. (Murphy and Mathew).
References
Murphy, David. F., and Mathew, David. Nike and Global Labour Practices: A Case Study Prepared for the New Academy of The Business Innovation Network for Socially Responsible Business. 2009. Web.
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