Nike Under Fire Over Indonesia Factory Wages, Conducting Investigation

The battle over factory pay in Indonesia "is intensifying, with vocal local trade unions joining hands with a U.S. non-governmental organisation to pressure Nike suppliers into paying minimum wages," according to Ben Bland of the FINANCIAL TIMES. A "gap is opening up between employers, who argue that hefty minimum wage increases are destroying their profitability," and trade unions, which argue that "wages must rise further and employment conditions be improved." The Jakarta city government hiked the minimum wage by 44% to Rp 2.2M ($228) on Jan. 1, "and other provinces have followed suit with hefty increases." Indonesia is Nike's third biggest source for shoes, after only Vietnam and China, with 40 factories and 171,000 workers, 79% of whom are women. The campaigners have also accused Nike suppliers of "intimidating workers to accept the wages below the legal minimum." The U.S. company states in its code of conduct that it expects all contract factory workers to be paid at least the minimum wage required by the respective country law. Nike said it "takes these claims seriously" and is investigating them (FT, 1/14).