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Garment Workers Blast ‘Dangerous’ New Normal at Nike

Garment workers in the global South are tired of watching the world’s biggest brands cash in on what they have characterized as wage theft. Companies like Nike, Levi Strauss and The North Face owner VF Corp., they say, have quickly bounced back from the early Covid-19 slowdown to watch their profits skyrocket. In contrast, they’ve continued to struggle from the income loss that was foisted upon them in the darkest days of the pandemic.

Now, a group of 20 garment-sector unions representing workers in Nike’s supply chains in Cambodia, India, Indonesia, Pakistan and Sri Lanka is fighting back. Together with the Asia Floor Wage Alliance (AFWA) and the Global Labor Justice-International Labor Rights Forum (GLJ-ILRF), they filed an international labor complaint with the Organisation for Economic Co-operation and Development (OECD) in Washington, D.C., on Monday accusing the sportswear giant of violating the inter-governmental organization’s guidelines for responsible business conduct by multinational enterprises.

Nike, they allege, has not only contributed to “severe human rights impacts” at the factories it contracts but it also does not address and remediate them as required by guidelines. The complaint also claims that the Just Do It firm has not engaged with worker unions despite their requests for dialogue and the OECD’s own recommendations. Instead of compensating workers or investing in safety or productivity programs, it engages in buyback schemes to “falsely inflate” its stock price, it adds.

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Per OECD Watch, an international network of NGOs that maintains a database of OECD complaints, 35 complaints involving garments and textiles have been filed since 2001. Of these, only seven have been accepted.

Unions such as the Coalition of Cambodian Apparel Workers Democratic Union, the Karnataka Garment Workers Union and the Federasi Serikat Buruh Persatuan Indonesia say that workers have experienced layoffs, arbitrary pay cuts, unpaid wages and gender discrimination at an “unprecedented scale” since 2020. Nike and other brands like it, they add, “triggered this crisis” when they canceled orders that March, then reduced new orders “en masse” in response to the widespread economic uncertainty.

According to an AFWA survey of more than 2,000 garment workers, respondents lost on average three months of pay during 2020, leaving them unable to pay for food or rent without falling into debt and exacerbating the gender pay gap in an industry that employs mostly women. Its reverberations are still being felt today, said Anannya Bhattacharjee, international coordinator at the nonprofit.

“The reason we are still talking about the pandemic today is not because of the pandemic that happened three years back but because the pandemic practices have set a new normal globally,” Bhattacharjee said at a press briefing Tuesday. “This new normal is something we have to examine. It is dangerous and it can shape how the global recession that is predicted will be handled and what it will do to garment workers.”

Already, falling customer demand in the West is making itself felt in countries like Vietnam, where a Nike supplier owned by Taiwan’s Pou Chen cut 3,000 of its 50,000 positions, with another 3,000 on the line later this year, according to a Reuters report last month. In November, Taiwan-owned Footgearmex Footwear Co., which produces goods for VF Corp., announced that it would be laying off two-thirds of its Ho Chi Minh City workforce, or 1,200 workers, because of a “drying up of orders and financial issues.” As the World Cup kicked off in Qatar the same month, 300 workers who made Adidas-branded merchandise for the sporting event said they were let go with only half of their legally owed severance. Another 1,500 are expected to follow.

Covid-19, Bhattacharjee said, gave nameplates like Nike, Levi’s and VF Corp. a “new opportunity” to “experiment with how far they could go for extreme greed and extractivism,” such as profiting from the wage theft of workers who have already been “reeling for decades from poverty-level wages and mounting debts.” It’s almost as if brands thought they could get a “personal ‘get out of jail free’ card,” despite the fact that violating minimum-wage laws in many countries is a crime, she added.

Nike, which did not respond to a request for comment, noted at the outset of the pandemic that it would continue to pay its suppliers in full for finished products, as well as honor previously agreed-upon payment terms for anything still in production. In the case of canceled orders, it said, its policies and agreements with suppliers “are, and have always been, that Nike will pay the appropriate amount of the order, depending on the stage of production as communicated by our supplier to enable the supplier to recover costs associated with the canceled orders.”

Even so, the coalition made the Tiffany collaborator the target of its first OECD complaint because it has proven the “most unresponsive,” Bhattacharjee said. While the OECD’s guidelines have no legal heft, its U.S. National Contact Point (NCP) could mediate a discussion between Nike and the unions to discuss their grievances. If the Air Jordan maker refuses to engage in dialogue, the NCP could issue recommendations about Nike’s treatment of garment workers in its supply chain. “We always prefer dialogue over litigation but if we have to litigate, we will,” she added.

In a report that the AFWA published this week, it laid out some numbers in stark terms.

In spring 2020, the Knight family, Nike’s largest shareholder, reaped $74 million in dividends on Nike stock even as workers who made the brand’s shoes and clothes reported losing an estimated $9.3 million from reduced hours and pay, the organization said. A year later, Nike would record $44.5 billion in revenue, a 19 percent increase from the year before. This was soon followed by the commencement of a four-year, $18 billion program to repurchase shares of Nike’s Class B common stock.

“With the money that Nike has made from stock buybacks, they could have paid workers 2,000 times than what we are asking,” Bhattacharjee said.

Levi’s and VF Corp. also launched buybacks to the tune of $19.7 million and $34.4 million, respectively. Workers at their factories, meanwhile, say they’re owed $12.2 million and $2.5 million, respectively, from 2020 alone.

Buybacks, according to Sahiba Gill, a GLJ-ILRF senior staff attorney who spoke at the same briefing, are a “legal [means of] stock manipulation that enriches company investors at the cost of investing in workers.”

“Our complaint aims to create a process where unions can directly discuss with Nike the harm to workers that Nike helps cause in its supply chain, discuss the remedy that is required and discuss a path forward to transform Nike’s supply chain,” Gill said. “So that its garment workers have decent work and living wages, which is particularly critical to creating substantive equality for the women workers who make up 70 percent of Nike’s supply chain.”

In lieu of a direct response, VF Corp. referred Sourcing Journal to a November letter that it sent AFWA and GLJ-ILRF outlining its commitment to respecting human rights according to the major international guidelines and detailing its due diligence efforts to “prevent, mitigate and remediate” human rights risks in its value chain.

“With respect to your specific inquiry, VF Corp. has assessed actual and potential human rights impacts on our supply chain associated with COVID-19, proactively worked to prevent such impacts from materializing, and supported remediation if such impacts occurred,” it said. “During the pandemic, VF took a people-first approach with its international suppliers and proactively and directly informed our suppliers they must pay remuneration to workers for the manufacture of VF products.”

A Levi’s spokesperson said the jeans juggernaut’s “longstanding” supplier code of conduct requires that all suppliers meet their financial obligations to their workers in the required time frame and that any reports of failure to do so are “thoroughly” investigated and addressed “as quickly as possible.”

Still, Lalitha Dedduwakumara, chief organizer of the Textile Garment and Clothing Workers’ Union in Sri Lanka, said that complaining to the OECD is really a last resort. Speaking at the conference through a translator, she said that national laws and remedies have not made “any impact” over the past three years. Brands, she added, have failed to put into place measures to protect workers from unemployment risks. When discussions are held, those in charge seem to talk around workers—women, especially—rather than with them. Even now, employers and brands continue to use the economic crisis to “undermine the freedom of association rights of workers,” Dedduwakumara said.

“We speak here with facts,” she said. “Regardless of making quality products, these workers are denied basic rights like healthcare and food. Their children’s education was threatened. [But] brands are enriching themselves.”

Workers lost months’ worth of wages during the pandemic, regardless of whether they worked or not, Bhattacharjee added. “We are not talking about a little bit shaved off here and there,” she said. “We are talking about the massive ill-treatment of workers which goes well beyond the regular violations that took place [before Covid-19].”

It’s true that brands usually don’t own their own factories; neither are they in charge of payroll at their suppliers. That doesn’t make them less culpable, however, Gill said, particularly in light of the OECD guidelines, which direct companies to avoid contributing to human rights impacts, particularly when they involve the people who make their products.

“In those five countries alone, Nike has almost half a million garment workers,” she said, referring to the complaint. “That’s almost five times the number of formal Nike employees and that really does create obligations and expectations on Nike. And if there is to be really real, inclusive, sustainable development, then workers have to be involved in making key decisions about these companies’ supply chains, including how they responded to a crisis like Covid.”