Nike criticized for holding back facts from Tuck report

by Ritika Nandkeolyar | 11/20/97 6:00am

When five second-year students at the Amos Tuck School of Business traveled to Southeast Asia to investigate wages paid by Nike-affiliated factories and published a favorable report, many met the overly optimistic conclusions with great surprise.

But now, about a month after the study's release, an article in the Valley News has claimed that Nike withheld significant facts from the original press release announcing the report's results -- including the fact that the study found that "one in 10 of the Indonesian workers surveyed said they did not earn enough to support themselves and half said they couldn't support their dependents."

A summary of the Tuck study was first released on Oct. 16, two days before a nationwide day of protest against Nike Inc.'s labor practices.

The summary stated that Nike pays its workers in Indonesia and Vietnam enough, so that after meeting basic needs, they still have money remaining for discretionary spending and savings.

According to Derek Calzini, a member of the Indonesia team, the press release was a result of a five-hour meeting the Tuck students had with Nike personnel to discuss preliminary data. The Tuck students presented the final report to Nike on Nov. 3.

The Tuck students argued that the accusations of an "overly optimistic report" amounts to misinterpretation of the data. As Jake Odden, the leader of the team in Indonesia, explained, the one in 10 figure cited by critics of the summary was from the response to the question "Can you support yourself?" rather than on actual measurement of income versus expenditures which showed that all the Indonesian workers could more than meet basic needs.

"I thought it was pretty good that 91 percent said they could support themselves. Would 91 percent of minimum wage workers in the United States say the same?" asked Calzini.

Calzini further explained that the majority of minimum wage workers who live with their families are not the principal wage earners and their income is typically viewed as supplemental.

"Nike jobs are viewed as attractive entry level alternatives to working in the agricultural and casual work sectors," said Odden

Nike has been under criticism since October 1996, when the CBS News program, "48 Hours" ran a segment detailing abuses of Nike workers in third-world factories. The show claimed that Nike paid a "training wage" to new workers that was below Indonesian's minimum wage. The Tuck study says this and other related claims made in the television segment are wrong.

Still criticism of Nike continues. There are several organizations, including the Clean Clothes Campaign that coordinate international protests against Nike's labor practices.

On Nov. 8, the New York Times ran a front page article titled "Nike Shoe Plant in Vietnam Is Called Unsafe for Workers." The article was based on a study by Ernst & Young for Nike's internal use that was leaked to the press.

The Ernst & Young report stated that workers at the factory near Ho Chi Minh City were exposed to carcinogens that exceeded local legal standards by 177 times in parts of the plant and that 77 percent of the employees suffered from respiratory problems.

The report also stated that workers were forced to work overtime exceeding that allowed by the Vietnamese government.

Nike counters criticism by pointing to its code of conduct that addresses main human rights concerns.

Nike also says that in 1996, it was the first company to join the White House Partnerships to eliminated sweatshops and is one of the seven companies who have agreed to abide to the code of conduct that the body produced.

Critics counter that the company does not adequately enforce its own code of conduct.

According to campaign literature, the real issue is the fact that Nike, an American company, subcontracts all its production to factories in third-world nations. Costs are cheaper there since wages and safety standards are lower and independent unions are not tolerated.

However, these concerns lie outside the focus of the Tuck study.

"The mandate of our survey was really just to profile the typical expenditure levels for basic spending categories," said Odden.

"That Nike monthly wages seem to offset the three categories of income needs -- food, housing and transportation -- is not enough to satisfy the conditions of a good environment. We do not claim that this equates to a perfect working environment," said Shawna Huffman, a member of the Vietnam team.

Although the team in Vietnam went on factory tours, most of their research was conducted in the neighborhoods around two factories rather than in them. Since they went door-to-door asking questions at every third house, the team interviewed both Nike and non-Nike employees.

The team in Indonesia distributed simple written surveys to 450 minimum wage workers at nine Nike-affiliated factories. Typically workers only earn minimum wage their first year of employment. Although there is a reasonable amount of turnover, the majority of employees have been there over a year and do not earn minimum wage.

According to Dusty Kidd, the Director of the Nike Labor Practices Department, the Tuck study was "one of the several initiatives that we've undertaken this year to further understand in broader context how the jobs that we create help or do not help people in the workplace."

For the Tuck students, this study was an academic exercise, part of a course titled "Field study in International Business."