Nike's Vietnam Venture: Broken Labor Laws

Nike has been accused of breaking several labour laws in Vietnam, including those relating to minimum wage, overtime, health and safety, and working conditions. In 1997, it was revealed that Nike was paying its workers in Vietnam $46 a month, one of the lowest wage rates in Asia. In addition, Nike was found to have violated laws covering overtime wages, night shift wages, and Sunday wages, with workers receiving below the minimum wage during their first three months of employment. The company also failed to comply with the legal maximum of 200 hours of overtime per year and did not implement health and safety recommendations from local health departments.

Nike broke minimum wage laws

Nike has been accused of breaking minimum wage laws in Vietnam. In 1996, CBS News' 48 Hours program revealed that Nike workers in Vietnam earned an average of 20 cents per hour, or $1.60 per day. This was below the minimum wage of $45 per month in Vietnam at the time. In addition, workers received a wage of $37 per month during the first three months of employment, which is also below the minimum wage.

Nike responded to the allegations by claiming that the workers were paid a lower wage because Vietnamese law allows for a training wage that is less than the minimum wage. However, Vietnam's legal code specifies that the training wage can only be paid for a "trial period" of 6 days for jobs requiring less than high school education. Nike workers interviewed by Vietnam Labor Watch (VLW) confirmed that they received a wage lower than the minimum wage for 90 days when they first started working at the factory.

VLW obtained pay stubs from 1996 and 1997 that confirmed CBS News' report of Nike violating Vietnamese laws regarding minimum wage and forced overtime. VLW also found that Nike had violated the training wage provision of Vietnamese labor law.

In 1997, Nike's largest subcontractor, Sam Yang Vietnam Corp., was sentenced to six months in prison for forcing employees to run laps as punishment for not wearing regulation shoes. In May of that year, Sam Yang issued a public apology after a Vietnamese newspaper revealed that it had cheated workers on overtime pay.

Nike has faced criticism from human rights and labor groups for its treatment of workers, including low pay and long hours. In response, Nike has stated that it has carried out "an action plan" to improve working conditions, including reducing overtime, improving safety and ventilation, and reducing the use of toxic chemicals.

Nike broke overtime laws

On average, Nike workers were forced to work 500+ hours of overtime per year. This was confirmed by pay stub records, which also showed that one Nike factory worker worked 238 hours of overtime from April 1996 to October 1996, and another worked 236 hours of overtime from May 1996 to October 1996.

Workers also complained about not getting paid for overtime, even when they worked overtime hours. They were forced to work extra hours without pay to meet their daily quotas.

Nike's subcontractors were found to be violating many critical Vietnamese labor regulations, including laws covering overtime wages, night shift wages, and Sunday wages. The Ernst & Young report, which was prepared for Nike's internal use only, also confirmed that employees at the Tae Kwang Vina factory were forced to work 65 hours a week, far more than Vietnamese law allows.

Nike tried to downplay the issue, claiming that they had carried out "an action plan" to improve working conditions since the report was issued. However, the company's own monitoring system failed to detect these violations, and Nike only addressed them after they were made public.

Nike broke health and safety laws

In 1996, CBS News reported that workers at Nike shoe manufacturing plants in Vietnam made an average of 20 cents per hour. Team leaders were making $42 per month, less than the Vietnamese minimum wage of $45 per month. Regular workers made even less.

In March 1997, Vietnam Labor Watch (VLW) released a report detailing the working conditions of workers at factories in Vietnam that make Nike products. The report found that Nike contractors were exploiting Vietnamese workers in many areas, including wages, working conditions, and health and safety practices.

VLW found that Nike subcontractors violated many critical Vietnamese labor regulations, including laws covering overtime wages, night shift wages, and Sunday wages. They also found that workers were not being paid a livable wage. Over 90% of Nike workers in Vietnam at the time were women, and most of them were between the ages of 15 and 28. These women reported that they had to choose between eating a balanced meal or paying rent, as the daily wage of approximately $1.60 was not enough to cover both.

The treatment of workers by factory managers was also a cause for concern. Verbal abuse and sexual harassment were frequent, and corporal punishment was often used. For example, on International Women's Day in 1997, 56 women workers at a Nike factory were forced to run around the factory premises because they weren't wearing regulation shoes. Twelve of them suffered shock symptoms and fainted, and had to be taken to the hospital.

Nike factories also ignored many health and safety standards in Vietnam. In March 1997, VLW found that a Nike factory had not implemented any of the health and safety recommendations made by the Ho Chi Minh City Health Department in September 1996. It was common for several workers to faint from exhaustion, heat, and poor nutrition during their shifts. The medical facilities at the factories were also inadequate, with only one doctor working for two hours a day at the Sam Yang factory, which operates 20 hours per day and has approximately 6000 employees.

In addition to these health and safety concerns, Nike factories in Vietnam also violated labor laws regarding minimum wage and overtime. In 1996, many workers worked over the legal maximum of 200 hours of overtime per year. In 1997, some workers were already reaching the yearly limit within the first two months of the year.

An internal document from Ernst & Young to Nike, leaked in 1997, also detailed many problems in the Tae-Kwang Vina factory in Vietnam. The report found that poisonous chemicals such as toluene and acetone were present at levels far exceeding the legal limit. As a result, 77% of workers tested by the Health Department had respiratory problems, and an increasing number of workers had developed skin, allergy, and throat issues. Despite these issues, the factory ignored recommendations by the Health Department to move workers with respiratory problems to a different section with less chemical exposure.

In response to these issues, Nike has implemented initiatives to improve factory conditions. Beginning in 2002, the company began auditing its factories for occupational health and safety. In 1998, Nike introduced a program to replace its petroleum-based solvents with less dangerous water-based solvents. The company has also allowed human rights groups and organizations to inspect factories and speak personally with workers.

Nike used sweatshops

Nike has been accused of using sweatshops and worker abuse to produce footwear and apparel in East Asia. In the 1970s, Nike began contracting in countries in East Asia, including Vietnam, as labor costs rose in Korean and Taiwanese factories. Nike sub-contracted factories without reviewing the conditions, basing their decisions on the lowest bid.

In 1996, a report by CBS News program 48 Hours detailed the abuse of Nike workers in Vietnam. The report led to the formation of Vietnam Labor Watch (VLW), a group of concerned Vietnamese Americans who decided to investigate labor practices in Nike factories in Vietnam.

In March 1997, VLW released a report on their findings, which included interviews with 35 Nike factory workers. The report found that Nike contractors were exploiting Vietnamese workers in many areas, including wages, working conditions, and health and safety practices.

• Minimum wage violations: VLW obtained pay stubs from 1996 and 1997 that showed Nike was paying workers below the minimum wage, particularly during the first three months of employment. This was a violation of Vietnamese labor law, which allows for a lower training wage to be paid for a maximum of 30 days for jobs requiring high school education and 6 days for jobs requiring less education.
• Overtime violations: The VLW report found that many workers worked over the legal maximum of 200 hours of overtime per year. Pay stubs showed that some workers had worked over 70 hours of overtime in just the first two months of 1997.
• Wage cheating: The report also found irregularities in compensation that suggested a systematic form of wage cheating. Workers complained about not receiving the correct compensation for overtime wages, night shift wages, and Sunday wages, which are required to be paid at higher rates under Vietnamese labor law.
• Health and safety violations: Nike factories were found to have ignored many health and safety standards in Vietnam. For example, a Nike factory had not implemented any of the health and safety recommendations made by the Ho Chi Minh City Health Department in September 1996. There were frequent incidents of workers fainting from exhaustion, heat, and poor nutrition during their shifts.
• Humiliation and corporal punishment: The VLW report also documented instances of verbal abuse, sexual harassment, and corporal punishment by factory managers. For example, on International Women's Day in 1997, a supervisor at a Nike factory forced 56 women workers to run around the factory premises in the hot sun, resulting in 12 of them fainting and being hospitalized.
• Unfair working conditions: Workers also complained about unfair working conditions, such as not being allowed to drink water more than twice per 8-hour shift or go to the bathroom more than once per shift. They were given warnings and could be dismissed after three warnings.

In response to these allegations, Nike has denied wrongdoing in the past, claiming that it has little control over sub-contracted factories. However, the company has also taken some steps to improve conditions, such as implementing social responsibility reports in 2005 and participating in initiatives to improve factory conditions.

Nike used child labour

Nike has been accused of using child labour in its factories in Vietnam. In 1996, a photo of a 12-year-old Pakistani boy sewing a Nike football was published in Life magazine. While Nike has denied these claims in the past, the company has faced significant backlash and scrutiny from the media, human rights groups, and labour organisations.

In response to the allegations, Nike has implemented several initiatives to improve its factory conditions. Since 2002, the company has been auditing its factories for occupational health and safety, and it has also introduced social responsibility reports. Nike has also participated in coalitions and agreements with labour rights organisations to ensure basic labour rights are respected and to improve factory conditions.

In Vietnam specifically, Nike has been accused of breaking labour laws by not paying workers the minimum wage, forcing employees to work more than the country's overtime limit, and cheating workers out of overtime pay. These issues were detailed in a report by Vietnam Labor Watch in March 1997, which also provided pay stubs from workers as evidence.

Nike's response to these allegations in Vietnam has been mixed. While the company has released internal documents detailing labour violations and taken some corrective actions, it has also been accused of trying to control the narrative and mislead the public.

The use of child labour and the violation of labour laws in Vietnam have damaged Nike's public image and led to protests and campaigns against the company. Despite Nike's efforts to improve conditions, the company continues to face scrutiny and pressure to ensure its factories meet basic labour standards and provide a living wage for workers.

Frequently asked questions