It's a global trend; migrant workers increasingly play a role in industry. It's the case in footwear, apparel and equipment manufacturing, where laborers seeking work will move to another country where workers are in short supply. Nike is aware of this situation and works with contract manufacturers to stress that workers of all nationalities should be treated equally and with dignity, and that factories must adhere to either local labor law or Nike's Code Leadership Standards; whichever one is the more stringent.
In July 2008, an Australian television station reported that Hytex Apparel, Ltd., a Nike-contracted apparel factory in Malaysia, employed hundreds of migrant workers in unacceptable conditions. The report stated that workers from Bangladesh, China, India, Indonesia, Myanmar, Nepal and Vietnam, were housed in dormitories with overcrowded sleeping quarters, unhygienic toilet facilities and poor kitchen sanitation. It also reported on migrant workers' complaints that their wages had been garnished to pay for work permits, their passports taken and withheld by factory managers, and that they were not given a copy of their labor contracts in their local languages - all required by Malaysian law and expressed in the source country's memorandum of understanding (MOU) with Malaysia.
Nike investigated. Though the factory's hiring practices and safekeeping of passports were within bounds of Malaysian Immigration regulations, Nike found the overall situation to be unacceptable, especially the workers' temporary living conditions and the garnishing of wages to pay for permits.
Nike met with factory management to evaluate the allegations and found serious breaches of its code of conduct. Nike immediately demanded action to resolve these serious violations. Immediate corrective actions included providing workers free access to their passports, ceasing all deductions in connection to workers' levy/work permit fees, improving dormitory conditions and implementing a system to reimburse migrant workers what they paid agents for recruitment. Nike also provided workers the phone number of its local compliance team if they experienced further difficulties. Hytex began repayment of garnishes for work permit levies through an installment plan which began July 2008 and is expected to be complete in 2010.
Nike requested that within 30 days, management evaluate transferring workers to new apartment-styled dormitories that were intended to house migrant workers but had not been completed in time. Management met this goal: all migrant workers were transferred to the newly completed and inspected apartments. The factory also agreed to pay airfare of any migrant worker who wanted to return to their home country irrespective of reason, including breach of employment contract.
Nike has learned a great deal from the Hytex experience. Though we have worked for more than a decade at improving labor conditions in contracted factories, we recognize significant work remains to be done. For one, Hytex highlighted the fact that Nike did not have internal policies specific to migrant labor. As a direct result of this experience, we do now.
Engaging with a range of stakeholders, especially local groups on the ground, is critical for us to determine the treatment of workers at contract factories. Robust engagement plays an important role in enhancing our factory auditing process. Moreover, we recognize our responsibility to advocate for greater local government engagement in our efforts to monitor contract factory conditions, both in Malaysia and globally.
We believe this experience has strengthened our overall work commitments to improve conditions for workers in our supply chain around the world. To help ensure the above corrective actions are maintained, Nike implemented a robust migrant worker policy that covers not only the issues found in Malaysia, but the employment of migrant workers throughout our global supply chain.
We aren't the only ones learning from the experience. The government of Malaysia is now much more acutely aware of the expectations of major global customers and brands related to providing fair and reasonable treatment to workers. The government witnessed the response of a buyer, heard from local factories, and participated in several meetings with Nike. These three channels of information provided them with valuable insight and perspective about how seriously we take the issue of treatment of workers when our standards are not met.