Worker wages is a critical issue along the supply chain and we are working to address it.
Nike requires our suppliers to pay workers at least the locally mandated minimum wage and benefits, and any additional benefits outlined in individual employee contracts or collective bargaining agreements. We require contracted manufacturers to comply with a standard against which we can audit consistently. Where factories are found not to have met these standards, we require remediation action.
The issue of wages elicits debate on multiple fronts. There is debate on what constitutes fair, competitive wages around the world, and there is debate on how those wages are then paid in a way that does not negatively impact growth and jobs. The last 18 months of the global recession, and the peak in oil and commodity prices before that, both added new complexity and dynamics to that discussion.
The global economic crisis has had a devastating impact on worker welfare across the globe. In the apparel and footwear industry, millions of jobs have been lost. For those fortunate enough to maintain employment, many have seen their income decline. Industry-wide overtime work (and subsequently overtime pay) has often not been available due to decreasing orders. In an effort to control costs, some factories have eliminated optional benefits, such as transportation allowances or attendance bonuses. These have so far been short-term, recession-based industry trends; we are hopeful that many of these benefits can be regained through the ongoing economic recovery.
We see four complementary work streams; three now and one into the future (see below):
Among the factors affecting the wage debate are the competing concerns of various constituents. Shareholders want to see strong returns on their investments. Consumers want products at competitive prices. Manufacturers need to earn a profit to sustain their business and grow. Governments want to attract and retain investment in order to fuel growth, jobs and revenue. Most important, workers want to earn wages that meet their basic needs and enable their families to take advantage of growing educational and economic opportunities.
Nike believes that local wage setting is best done by negotiations between workers, labor representatives, the employer and the government. Because the success of this process varies by country, Nike increasingly sees the need for further regional and global discussions among suppliers, governments, NGOs and - importantly - workers, about the degree to which wages across the industry are meeting workers' needs.
We believe there is ample room for innovation in this area, and that progress must occur throughout the industry, and at the governmental level, not only in Nike's supply chain. In the meantime, we are committed to deepening our understanding of workers' challenges and exploring different mechanisms for improving their welfare through new industry collaboration, public policy advocacy and other efforts aimed at positively impacting workers' ability to save and thrive.
The fourth workstream goes beyond just meeting minimum requirements. Nike believes that a responsible, competitive industry which invests in its work force will bring about locally relevant wages for workers over the long term. And we're acting on that belief by partnering with contracted manufacturers in piloting education programs which combine initiatives such as lean and HRM to enable manufacturers to control costs and experience firsthand how investing in workers improves product quality and the health of their business. Even in areas where labor is in abundant supply, factories with high levels of productivity, efficiency and stable orders tend to provide attractive, equitable benefits to workers.