> Subject:      Nike Increases Wages in Indonesia
>
> And those damn liberals have the nerve to complain about the circumstances
> in Indonesia! Geez, to say that 12 year olds are working in sweat shops,
> what an outrage, the minimum age is 14!
>
> March 29, 1999
>
> Nike Increases Wages by a Penny an Hour in Indonesia
> --Raising Wages from 14 cents to 15 cents an Hour=97
> &  issues a press release outlining Nike=92s =93Social Responsibility
> Agenda=94
>
>
> * A penny an hour increase:  Nike workers in Indonesia now earn 15 cents
> an hour, and $6.07 a week.
>
> * While announcing its 6 percent wage increase, Nike forgot to mention
> that the inflation rate in Indonesia was 54 percent in 1998, and that
> the local currency lost 70 percent of its value.  In fact, in dollar
> terms, Nike has slashed wages 45 percent from 27 cents an hour in
> mid-1997 to the current 15 cents.
>
> * In the last quarter, Nike=92s profits were up 70 percent, which--no
> doubt=97helped pay the way for the 1 cents wage increase.
>
> * Nike has 70,000 workers in Indonesia and does not make a single
> sneaker in the United States.  There are only 37,000 footwear workers
> left in the entire U.S.
>
> * The direct labor cost to assemble a $90 pair of Nike sneakers is
> approximately $1.20, which means that the workers=92 wages amount to just
> 1.3 percent of the retail price.
>
> * There are no independent unions in Nike=92s factories in Indonesia.
>
> * Nike continues to refuse access to its factories to respected,
> independent Indonesian human rights organizations.  What is Nike afraid
> of?
>
> # # # # # # # # # # # # # #
>
> * Raising Wages a Penny an Hour:  On March 19, 1999, Nike issued a
> glowing press release headlined:  =93Nike to Improve Minimum Monthly Wage
> Package for Indonesian Workers.=94  As of April 1, Nike commits to
> =93increase the entry-level case wages for its Indonesian footwear factory
> workers from 250,000 rupiah to 265,000 rupiah per month.=94  Nike makes it
> sound pretty good.  It=92s an awful lot of rupiah, and it is a six percent
> wage increase.
>
> In reality however, this amounts to just a penny an hour increase,
> raising the wage from 14 cents to 5 cents an hour.  With the increase,
> Nike workers in Indonesia will now earn:
>
> * 15 cents an hour;
> * $6.07 a week;
> * $26.29 a month, and;
> * $315.54 a year.
>
> [Note:  The average exchange rate in 1998 was 10,078 rupiah to $1.00
> U.S.  265,000 rupiah ?10,078 =3D $26.29/month;  $26.29/month x 12 =3D
> $315.54/year;  $315.54 / 52 =3D $6.07/week;  $6.07 / 40 =3D 15 cents/hour.
> This represents a penny an hour increase over the 250,000 rupiah monthly
> wage.]
>
>
> * Nike Forgets to Mention the Soaring 54 percent Inflation and 70
> percent Currency Devaluation.  In announcing its six percent wage
> increase, Nike somehow forget to mention that the inflation rate in
> Indonesia in 1998 was 54 percent=97actually running at nearly 80 percent
> in November and December.  Nike also overlooks the rather relevant fact
> that the Indonesian currency lost 70 percent of its value against the
> U.S. dollar in 1998, which means that in U.S. dollar terms, Nike pays
> much less=97about half=97in wages now that it did in 1997.  Hourly wage
> rates for Nike workers in Indonesia have actually fallen from the
> stunning heights of 27 cents an hour to the current 15 cents-an-hour
> rate.  This is a 45 percent decline in dollar wages.
>
> Real wages for Nike workers in Indonesia will continue to fall in 1999,
> since even by the most optimistic government assessments inflation is
> predicted to run 13 percent for the year.
>
> Note:  The exchange rate in 1997 was 2,909 rupiah to the dollar, rising
> to 10,078 rupiah to the dollar in 1998.  So the rupiah lost 70 percent
> of its value in dollar terms in one year.  Nike claims it paid its
> Indonesian workers 137,500 rupiah per month in mid-1997.  137,500 /
> 2,909 =3D $47.27 per month;  $47.27 x 12 =3D $567.21/year;  $567.21 / 52 =
> =3D
> $10.91/week;  $10.91 / 40 =3D 27 cents an hour.
>
> Note: Under its most optimistic scenario, the Indonesian government
> hopes the rupiah can regain some of its value in 1999 to trade at 8,000
> rupiah to the dollar on average for the year.  This would mean that Nike
> footwear workers in Indonesia would be earning 19 cents an hour, which
> is still 30 percent lower than their wages in mid-1997.  Also, with the
> 13 percent inflation in 1999, their real hourly wages would be worth 16
> =BD cents.
>
> * Nike Profits Up 70 Percent.  Nike=92s recent 70 percent increase in
> profits, no doubt eased the way for the penny an hour raise Nike gave
> its Indonesian workers.
>
> In its recent third quarter (December-February), Nike reported a 70
> percent increase in profits, to $124.2 million on sales of $2.18
> billion.
>
> * Nike has 70,000 workers in Indonesia.  Nike does not make a single
> sneaker in the United States.  In fact, there are only 37,000 footwear
> workers left in the entire U.S.
>
> * Direct labor cost to make a pair of $90 Nike sneakers is approximately
> $1.20=97which means that the wages Nike pays its workers amount to just
> 1.3 percent of the retail price of the sneakers.
>
> Question:  What would happen if Nike raised the wages 50 percent in
> Indonesia?  That would mean the labor cost to assemble a $90 pair of
> Nike sneakers would now be just $1.80, which is still only two percent
> of the retail price, leaving Nike and its contractors holding onto 98
> percent of the retail price of the sneakers.
>
> * There are no independent unions in any of Nike=92s factories in
> Indonesia.
>
> * Nike continues to block access to its factories by respected,
> independent Indonesian non-governmental human rights organizations.
> What is Nike afraid of?
>
> * Nike spends $650 million a year for public relations=97advertising and
> marketing.
>
> * Nike again admits that full public disclosure of factory names and
> addresses is no trade secret:  Nike claims it cannot unilaterally raise
> wages in it contractors=92 apparel factories in Indonesia until all the
> other retailers producing their labels right next to Nike=92s agree.  Does
> this sound as if these retailers have exclusive contracts with
> particular factories?  Of course not.  In reality, there are no such
> exclusive contracts.  This is just a smokescreen used by companies like
> Wal-Mart so they can continue to hide their sweatshops from the American
> people.
>
> # # # # # # # # # # # #
>
> Notes:
>
> * Economic figures come from =93EIU Country Reports,=94 December 4, 1998,
> The  Economist  Intelligence Unit, Ltd.
>
> * =93Nike=92s 3rd Quarter Earnings up by 70%=94 New York Times, 3/19/99
>
> * =93Footwear Manufacturing Fact-finding Report,=94 March 1998, Interfaith
> Center for Corporate Responsibility.
>
>