Nike Investigating Wage Abuse Claims in Indonesian

Nike Investigating Wage Abuse Claims in Indonesia

Minimum wages are regulated at provincial and district levels in Indonesia but authorities have mulled giving exemption to factories deemed unable to afford the hikes. A Nike supplier filed for exemption prompting protests from labor activists.  

JAKARTA -- Nike Inc. (IW 1000/209) said Tuesday it was looking into claims by labor activists that its manufacturers in Indonesia were trying to evade paying its workers the minimum wage.

"Nike takes these claims seriously and company representatives are investigating the claims," said global corporate communications director Greg Rossiter.

Nike's code of conduct is "very clear", he said, adding the company expected workers producing for Nike to be "paid at least the minimum wage required by country law and provided legally mandated benefits", such as holidays, leave and severance pay.

Following massive protests, Jakarta workers won a 44% minimum wage rise to 2.2 million rupiah ($228) a month, effective on January 1, and other provincial governments are following suit at different rates.

Minimum wages are regulated at provincial and district levels in Indonesia but authorities have mulled giving exemption to factories deemed unable to afford the hikes.

Jim Keady, head of the U.S.-based NGO Education for Justice (EFJ), has said at least six Indonesian suppliers had applied for exemptions.

After the EFJ visited the western Javanese city of Sukabumi, it reported a Nike supplier there had won approval from the district wage council to pay only 1.1 million rupiah, instead of the new minimum wage of 1.2 million rupiah.

"Nike unfortunately exercises imperialist values -- values that run counter to the commitments to democracy and human rights," Keady said.

Surya Tjandra, director of Indonesia's Trade Union Rights Centre, said while those seeking exemptions appeared to be Nike's local contractors, the company was ultimately responsible for ensuring its code of conduct was upheld.

"Factory workers are paid poorly in Indonesia. They barely have enough to pay for food, what more health, school and other living expenses," Tjandra said.

"Nike should not only be concerned about making profits, which often come at the expense of workers' welfare."

Indonesia is the world's third-biggest producer of Nike footwear and apparel, after Vietnam and China, with 40 factories in the country employing 171,000 workers producing Nike goods.

Despite fears that wage increases will encourage businesses to move to neighboring countries like Vietnam, Indonesian factory workers remain some of the lowest-paid in Asia, often earning less than workers in China or India.

Copyright Agence France-Presse, 2013

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