Dow Jones Newswires Brussels Nike contractor illegally refusing to make severance payments By Multa Fidrus November 21, 2002 Some 2,500 of 6,890 former workers of PT Doson Indonesia, a subcontractor of U.S. shoe giant Nike in Tangerang held a rally on Tuesday to demand severance pay, which they claimed had not been paid since the company closed its factory in September. The workers began their rally at the Tangerang District Court on Jl. Taman Makam Pahlawan Taruna at 10 a.m., and at 11:45 a.m. proceeded to march down Jl. Jendral Sudirman and Jl. MH. Thamrin in Tangerang, to the Serpong tollway. However, 150 police officers led by Tangerang Police chief Adj. Sr. Comr. Herry Prastowo managed to disperse the workers after they fired several warning shots at about 2:15 p.m. Mimin, a female worker fainted as she was shocked by the police warning shot that apparently whizzed past her ear, and she had to be carried away by her fellow workers from the Jakarta-Merak toll road under the Serpong flyover and taken to a nearby hospital. Djoko, former work unit chairman at PT Doson, said that the workers began their rally at the district court to demand the court to uphold Minister of Manpower and Transmigration Jacob Nuwa Wea's decree regarding the company. He said the minister issued decree No 197/X/PHK/2002 on Oct. 1 that had allowed PT Doson to dismiss its workers, but ordered the company to quickly pay severance pay to its 6,890 workers, a compensation fund for workers' housing and any unpaid salaries for work done in September. "As of today, the district court had not yet implemented the decree, while many workers are now so poor they have resorted to eating nothing more than rice with salt and were behind on their house rent," Djoko told The Jakarta Post. Bastarial, a staff member at the District Court said that the court had ordered PT Doson's leaders to sell their assets so they would have enough money to pay the workers, but it also had to take into account a judicial review application brought by Doson contesting the decree. "But the decree cannot yet be implemented because of Jakarta State Administrative Court's ruling No. 165/G.TUN/2002/PTUN.Jakarta, ordering the postpone of the decree's execution in response to PT Doson's suit against the minister's decision," he said. PT Doson closed its business in September as Nike stopped its shoe orders from the Indonesian firm. Indonesia Businessman Association's (Apindo) Tangerang branch chairman Herry Rumawatin told The Jakarta Post that so far this year Nike had reduced its orders from its Indonesian subcontractors by some 40 percent. "We expect the order reduction will go as high as 50 percent later this year, causing thousands more workers to be laid off in Tangerang," he said, adding that there are seven subcontractors, with more than 20,000 workers, of Nike still in operation in the regency. back to top The Jakarta Post Doson Workers hold rally against Nike October 2, 2002 JAKARTA (JP) - Around 500 workers of PT Doson Indonesia, a subcontract firm of the shoe giant Nike, held a demonstration on Wednesday in front of the BRI building, which houses the U.S. firm PT Nike. But unlike their previous demonstration, they could not enter the building as security guards blocked the area and installed barbed wire in front of the building. They flocked to the slow lane of Jl. Sudirman in front of the BRI building, causing traffic jams and disrupting the traffic flow toward the Hotel Indonesia traffic circle. The demonstrators came to protest Nike's decision to stop shoe orders from PT Doson. The decision has caused the bankruptcy of PT Doson and thousands of its workers have been fired. back to top Nike Challenges State Ruling On Work Condition Statements October 26, 2002 Asserting that its right to speak freely is at stake, Nike Inc. has asked the U.S. Supreme Court to overturn a California ruling allowing a suit against the company for advertised statements about conditions at its Asian contractors' shoe and garment factories. The San Francisco Chronicle reports October 16 that if the California Supreme Court decision stands, companies accused of wrongdoing will be able to protect themselves from a potentially crippling financial reward, “only by refusing to say anything," Nike's lawyers, led by Harvard Law Professor Laurence Tribe, said in the October 21 filing. The state court had ruled 4-3 in May that a San Francisco man could sue Nike for statements in press releases, letters to newspapers and other public statements disputing accusations of sweatshop conditions. The court said the statements were intended to promote sales and could be treated like advertisements, which can be the subject of regulation and lawsuits when they contain false or misleading statements. Because of the ruling, Nike said, it has canceled publication of its annual "corporate responsibility" report. back to top The Age [Melbourne] Sole searching: An Industry in Strife By Matthew Moore September 23, 2002 For more than a decade Australians have been used to buying sports shoes with a "Made in Indonesia" label. But there are signs now that "Made in China", "Made in Vietnam" and even "Made in Myanmar" stickers will steadily replace them. Indonesia's huge and lowly paid workforce, and its stable if dictatorial government, were the perfect ingredients for a booming manufacturing industry, which looked certain to follow Taiwan and Korea. But as shoe workers such as Juli, of Sumatra, are about to find out, Indonesia's manufacturing base is now looking precarious - and so is Juli's future. "It's a good job," she said of the only work she has had since she left her village eight years ago to come to West Jakarta's dusty industrial belt. There she found work sticking soles on Nike sports shoes with a Korean-Indonesian sub-contracting company called PT Doson Indonesia. Some time in the next week, when the last Nike order is filled, Doson will close, and Juli's job will disappear along with those of almost 7000 of her colleagues. Indonesia's share of Nike worldwide shoe production has fallen in the past five years, from 38 per cent to about 26 per cent. Nike is so anxious to avoid adverse criticism that its spokesman was not allowed to talk to the media to confirm these figures or discuss the reasons for shifting their orders. In press releases they have insisted they remain committed to producing shoes in Indonesia, cryptically pointing to "Nike's ongoing evaluation to develop a more versatile Indonesian manufacturing base that is compatible with its global footwear strategy". That means fewer factories. For Juli that means no job for her or for her husband. It also means they are likely to join the country's 40 million people without real work. With no social security system in Indonesia, no health care, no education, it also means little hope for the future. At 33 and with a four-year-old son, she is pessimistic. "I think I am too old to get a new job now. It's the preference of most factories to employ 18 to 25-year-olds. They are the most productive. I am scared. If I don't have money I cannot eat." But age is not the only problem. It is also the lack of new jobs being created in all manufacturing. Some of the problems arrived with democracy after the fall of President Suharto. Workers have greater freedom and better wages, but there are also questions over the country's long-term stability. An expert on the Indonesian economy, the Australian National University's Professor Hal Hill, says the trend in the shoe industry is particularly worrying because shoe and clothing manufacturing are normally crucial industry steps for emerging economies. Making shoes is simple technology, and with Indonesia's low wage rates and weak currency it should be in a great position to attract orders. "If you can't do it in shoes, you probably can't do it anywhere," Professor Hill said. The president of the Association of Indonesian Shoe Manufacturers, Anton Supit, rejected predictions that Indonesia's shoe industry could be gone in five years, but agreed it was facing a huge challenge. In addition to the normal commercial yardsticks of price, quality and delivery, which buyers used to assess a product, "human rights, labour relations, security issues and the environment" were all issues companies looked at in deciding where to do business. While Indonesia could compete on the conventional measures, the country was in transition and was still struggling to overcome an image problem, he said. And issues such as law reform were important because investors were unsettled by reports that suggested that if you went to court you could bribe a judge. Professor Hill agreed that the vagaries of a nascent democracy inevitably affected the investment climate. Unions were competing for members, and sometimes strikes or demonstrations turned ugly. "Under Suharto it really was predictable," he said. "That has now completely gone. There have been some nasty incidents, especially in Korean factories, and there have been some violent protests and sabotage, so Indonesia, in a sense, is on the nose." President Megawati Sukarnoputri has many critics, but she has delivered Indonesia's most stable government since Suharto's fall. The macro economy is under control, the government has established a new team to help business, and some influential voices, including the former head of the World Bank in Indonesia, Mark Baird, reckon the country has a chance to make real headway. But that has not been enough to stop some Japanese and Korean companies, in particular, from closing some factories and threatening to move others. Wage rises are another issue that has alarmed investors, even though half of Indonesia's more that 210 million people live on less than $A4 a day. Indonesia's economy is growing modestly at between 3 and 5 per cent, with inflation under control, but such a benign performance is not enough to stop the steady growth in unemployment, which many believe poses the greatest long-term threat to Indonesian stability. back to top Dow Jones Newswires Brussels Adidas Sweats Over Third World Subcontractors Sweatshops By Victoria Knight September 23, 2002 The working conditions were terrible. More than 3,000 women toiled for up to 70 hours a week in a stifling hot factory without access to cool, clean drinking water. They risked being fired, or even prosecuted, for joining unions. And they were paid a mere EUR2 a day. When activists uncovered that Adidas Salomon AG (G.ADS) was buying sweatshirts produced in these conditions from the PT Dada factory in Indonesia, the German company responded. It forced the Indonesian factory’s management to install water coolers, reinstate fired union activists, and stop humiliating punishments. "High profile retailers know they must act because consumers want this issue addressed," says Scott Nova, executive director of the Washington-based Worker Rights Consortium. Human rights campaigners such as him are successfully stepping up pressure on European companies to improve working conditions in poor developing countries. Some, like Adidas, are trying to cooperate but others are resisting and Third World governments aren't doing much to help. And even the most receptive multinational companies find that their best efforts aren't enough to satisfy many critics. Until recently, European textile companies escaped censure. Anti-sweatshop campaigners such as the Fair Labor Association were born on U.S. campuses. Activists focused their energies attacking Nike Inc. (NKE) and other U.S. companies. In the past few years, however, the issue has crossed the Atlantic. Human rights leaders, trade unions, and religious groups have formed a loose alliance called the Clean Clothes Campaign and have begun attacking Adidas, Hennes & Mauritz AB (S.HEM), Benetton Group SpA (BNG) and other European companies who buy textiles everywhere from Indonesia to India, Mauritius to Moldova. Governments around the globe provide only limited guidance. Both the Organization for Economic Cooperation and Development and the UN's International Labor Organization sets out minimal standards, banning child and forced labor for example. But both companies and campaigners complain that many Third World governments don't enforce ILO rules. And the OECD guidelines aren't binding on companies. As a result, campaigners prefer to pressure companies through damning exposes. They fed information to journalists about Benetton subcontractors who they claimed were using child labor. The Italian garment maker denied the charges. In Adidas's case, activists leaked news about its Indonesian subcontractors to German television stations. The German company hired a former Save the Children Campaigner to run its subcontracting program, joined the Fair Labor Association and began pressuring its suppliers. It commissioned a study of incomes and living costs in Indonesia and when the results are released in the second half of 2003, Adidas has promised to use them to set workers' future pay levels. For companies that cooperate with activists, the payoff is a potentially powerful marketing tool. Fair Labor Association members can sew the Fair Labor Association 'FLA' label into their clothing. Cooperation also serves a defensive purpose. In the U.S., Nike went through a painful consumer boycott during the mid 1990s and European companies fear similar actions might cross the Atlantic unless they act. And yet, the activists continue to tussle with textile makers, even with the good student Adidas. One major issue concerns monitoring. Who should check that companies live up to commitments? In April this year, the German company agreed to let independent monitors conduct unannounced inspections at factories and do follow-ups at those plants that don't make the grade. Many activists still don't think this is enough. They criticize the Fair Labor Association because it doesn't have any trade union members on its governing board. Campaigners also test company claims. Last year, the Clean Clothes Campaign attacked Holland's largest retailer Vendex KBB NV (N.VDX), saying some of its Indian and Sri Lankan subcontractors force workers to stay on the job for up to 90 hours a week for only EUR40 a month. "Vendex's current code of conduct and monitoring system are ineffective," the organization said. Vendex says it is in talks with Dutch activists to tighten its monitoring. It's Hema subsidiary also is considering independent checks of its subcontractors. "We do our best to ensure that all our suppliers are treating their workers correctly, but there's always a possibility that an NGO finds a situation," says Bonnie Linthorst, a Vendex spokeswoman. She can't confirm or deny the chargers against Indian and Sri Lankan subcontractors, saying the factories involved weren't named in the report. Trade unions and human rights activists are also targeting Pinault-Printemps-Redoute SA (F.PPR), the French retail conglomerate that owns Gucci and a string of other luxury high street brands. The campaigners allege that Pinault's La Redoute sourced some of its products from Myanmar, formerly Burma, a country with a record of using forced labor. "We made the decision not to import goods from Burma" and "we don't run sweatshops," counters Thomas Kamm, a Pinault spokesman. Once problems are identified, most campaigners and companies agree that it is better to work with suppliers than desert them. Adidas has cancelled contracts in a few cases in China after discovering factories that employed children and using forced prison labor. But aside from such outright violations, the company presses management to make improvements. Otherwise, it fears workers will suffer the most, losing their only source of income. "Only if there's no cooperation will we terminate contracts," says William Andersen, Adidas's Director of Social and Environmental Affairs for Asia. Dealing with subcontractors in the developing world requires coalition building. When the Hong Kong Christian Industrial Committee complained about conditions for workers making footballs at a factory in mainland China, Adidas started pressuring the factory's management to increase pay, reduce working hours and improve safety. But Adidas's leverage is limited. It accounts for only 10% of annual production. So it has asked other major buyers to make similar demands. Negotiations on the issue continue. Simple economics will always continue to push multinationals to search out low cost production centers. Developing countries are desperate for their investment. But since consumers insist on safeguards, expect much more sweating in coming years over Third World sweatshops. back to top Associated Press Nike Workers In Indonesia Protest Production Cutbacks August 20, 2002 JAKARTA, (AP) - Banging cans and waving anti-Nike banners, about 4,000 workers staged a peaceful protest Tuesday in the Indonesian capital over the footwear company's plans to cut back production. Angry workers in recent weeks have staged a serious of protests over plans by Nike Inc. (NKE) and Reebok International Ltd. (RBK) to terminate contracts with local producers. One such protest featured the burning of a giant Reebok shoe. Workers at Nike-contracted factories expect the cutback could cost 7,000 jobs while those making Reebok products fear 5,400 workers will be laid off. Protesters clogged traffic Tuesday as they marched through central Jakarta to the U.S. Embassy. Carrying banners, they demanded Nike compensate laid-off workers. They said Nike's local contractor - PT Doson Indonesia - has offered workers compensation from $66 to $132. "Nike has no social responsibility," said Rustam Aksam, president of the Indonesian Textile, Garment and Leather Worker's Union. "They are just exploiting the workers, getting their profit and then leaving." Nike confirmed it will terminate a contract with Doson Indonesia in November. But the company said it will continue to work with 47 other factories that employ 123,000 workers. It has offered Doson workers continued medical care, loans and training. But it has called on Doson Indonesia to provide other compensation. "We understand the concerns of Doson Indonesia workers and we have emphasized to the management of Doson Indonesia our expectation that they meet all their obligations to the employees in the event that layoffs occur," said Jeff DuMont, general manager of Nike Inc. Indonesia. Many foreign manufacturers have moved their operations to Vietnam and China, where productivity is higher and wages are lower. back to top Ananova Nike Workers Protest Against Cutbacks August 20, 2002 Thousands of Indonesian Nike workers have marched on the US embassy in Jakarta to protest against planned production cuts. Workers at Nike-contracted factories expect the cutback could cost 7,000 jobs. Around 4,000 workers carried placards and demanded that Nike compensate laid-off workers. Rustam Aksam, president of the Indonesian Textile, Garment and Leather Worker's Union, says: "Nike has no social responsibility. They are just exploiting the workers, getting their profit and then leaving." Nike has confirmed it will terminate a contract with Doson Indonesia in November. But the company says it will continue to work with 47 other factories which employ 123,000 workers. It has offered Doson workers continued medical care, loans and training. But it has called on Doson Indonesia to provide other compensation. Jeff DuMont, general manager of Nike Indonesia, says: "We understand the concerns of Doson Indonesia workers and we have emphasised to the management of Doson Indonesia our expectation that they meet all their obligations to the employees in the event that lay-offs occur." To see an excellent photo of the demonstration, please click here. back to top Associated Press Nike says it will take free speech suit to U.S. Supreme Court by Andrew Kramer, Associated Press Writer August 2, 2002 Nike Inc. will ask the U.S. Supreme Court to review a free speech case arising from its advertising campaign to defend working conditions at overseas plants. The California Supreme Court ruled in May that an activist can sue the Beaverton-based company for allegedly violating false advertising laws during a 1996-1997 ad campaign. The suit claimed Nike deceived consumers by falsely stating it guarantees a "living wage" to all workers, and that its workers in Southeast Asia make twice the local minimum wage and are protected from corporal punishment. The California court ruled Nike's campaign constituted commercial speech, and is thus subject to California consumer protection laws that are among the least friendly to business in the country. Nike says it is taking part in a constitutionally protected political debate. The court fight has not yet determined whether Nike made false statements, focusing instead on whether the suit can go forward. The California Supreme Court rejected a petition to reconsider its May decision on Wednesday. An attorney for Nike, the world's largest athletic shoe maker, said the company will ask the U.S. Supreme Court for a ruling. "This decision will have far reaching implications not just in California, but across the country," said Laurence Tribe, Nike's lead attorney. Nike says it's unfair that its critics are protected by the First Amdendment, while the company must conform to a specialized set of laws against false advertising which were never intended for political or social debates. "The net effect of this novel ruling is to make it extremely dangerous for virtually any business or other organization to utter anything beyond the most innocuous and vaporous generalities about its practices," Tribe said in a statement released by Nike Thursday. The suit filed by San Francisco resident Marc Kasky had been dismissed by a trial court and a state appeals court before going to the California Supreme Court. back to top Behind the Label Indonesian Protestors Shot During Labor Rally August 27, 2002 (excerpt) On August 19, over 15,000 garment workers marched through Bandung, the capital of West Java in Indonesia, to protest anti-union labor legislation currently being deliberated by the Indonesian House of Representatives. The International Monetary Fund (IMF) and the Indonesian government are backing the legislation which they say will make it easier for Indonesia to attract foreign investment — but that unions say will crush workers rights and bring more sweatshops to Indonesia. While the protest was largely non-violent, things quickly turned sour when two of the leaders of the rally were shot by police. To read more about this incident, visit: www.behindthelabel.org HOME