Action Alert: Send a Fax to Nike

On May 12, 1998, Nike's CEO and founder Mr. Phillip Knight spoke at the National Press Club in Washington, DC and made what were, in his words, "some fairly significant announcements" regarding Nike's policies on working conditions in its supplier factories.

During the last three years we have kept a close eye on Nike's practices all around the world and have come to the unfortunate conclusion that although Nike has taken some steps in improving the working conditions for the workers that make their products, Nike is still ignoring the fundamental issues that create sweatshop abuses. Thus far Nike has treated sweatshop allegations as an issue of public relations rather than human rights. The promises made by Phillip Knight in his May 1998 speech were an attempt by the company to switch the media focus to issues it was willing to address while avoiding the key problems of subsistence wages, forced overtime and suppression of workers' right to freedom of association.

The inaction of the last three years shows that we are justified in treating the company with suspicion and demanding that factory monitoring be both genuinely independent from Nike's control and publicly reported in full. While Nike touts itself as an "industry leader" in corporate responsibility, Nike workers are still forced to work excessive hours in high pressure work environments, are not paid enough to meet the most basic needs of their children, and are subject to harassment, dismissal and violent intimidation if they try to form unions or tell journalists about labor abuses in their factories. The time has come for the company to adopt the reforms demanded by workers and human rights groups. It is indefensible that activists, consumers and most importantly Nike factory workers are still waiting for Nike to do it.

Still Waiting For Nike To Do It

Nike's Labor Practices in the
Three Years Since CEO Phil Knight's
Speech to the National Press Club

May 2001
By Tim Connor
Published by Global Exchange

Executive Summary

On May 12, 1998, Nike's CEO and founder Mr. Phillip Knight spoke at the National Press Club in Washington, DC and made what were, in his words, "some fairly significant announcements" regarding Nike's policies on working conditions in its supplier factories.

The announcements received favorable treatment from the press, with a New York Times editorial suggesting that Nike's new reforms "set a standard that other companies should match."

Nike's critics were more cautious, expressing concern that Knight's promises represented an attempt to sideline their demands for decent wages and rigorous factory monitoring and replace them with a significantly weaker reform agenda.

This report represents a comprehensive examination of Nike's labor performance in the three years since that speech was made. That performance is first assessed against the commitments Knight announced and is then compared with the human rights standards and independent monitoring practices labor rights organizations have demanded of the company.

Knight's May 12 Promises: What Have They Meant for Workers?

Knight made six commitments:

1st Promise: All Nike shoe factories will meet the U.S. Occupational Safety and Health Administration's (OSHA) standards in indoor air quality.

Nike was the subject of considerable scandal in 1997 when it was revealed that workers in one of its contract factories were being exposed to toxic fumes at up to 177 times the Vietnamese legal limit. Although Nike claims that its factories now meet OSHA standards, it gives factory managers advance notice of testing, giving them considerable scope to change chemical use to minimize emissions on the day the test is conducted. Nike is also not yet willing to regularly make the results of those tests available to the interested public. Rights groups have challenged Nike to put in place a transparent system of monitoring factory safety standards involving unannounced monitoring visits by trained industrial hygienists.

2nd Promise: The minimum age for Nike factory workers will be raised to 18 for footwear factories and 16 for apparel factories.

Nike was severely embarrassed on the child labor issue in 1996 when a major story in Life magazine featured a photograph of a very young Pakistani boy sewing a Nike soccer ball. Evidence continues to emerge of young persons under the age of 16 employed in Nike contract factories. In the absence of economic development in their communities, however, excluding children from factories may force them into even more dangerous and degrading work. Global Exchange believes that payment of a living wage to adult workers would be by far the most effective means of benefiting children in areas in which Nike's goods are made.

3rd Promise: Nike will include non-government organizations in its factory monitoring, with summaries of that monitoring released to the public.

As far as rights groups are concerned, this was the most important of Knight's promises. Three years after it was made, Nike has contracted one non-profit organization to conduct one audit of one factory and is able to list a number of other NGOs with which it has held discussions which it claims will improve its monitoring program. What the company is still unable to say is which NGOs, if any, will be allowed to regularly monitor factory conditions and when summary statements of that monitoring will be released.

4th Promise: Nike will expand its worker education program, making free high school equivalency courses available to all workers in Nike footwear factories.

The education program has expanded, but wages paid in Nike factories are so low that the great majority of workers cannot afford to give up overtime income in order to take one of the courses. Payment of a living wage would give Nike workers with an interest in achieving a high school education the time and the means to do so.

5th Promise: Nike will expand its micro-enterprise loan program to benefit four thousand families in Vietnam, Indonesia, Pakistan, and Thailand.

It is much cheaper for Nike to give micro-loans to several thousand individuals outside Nike factories than to ensure that the 530,000 workers producing the company's product are paid a wage that would allow them to live with dignity. Nike's first responsibility is to the workers in its production chain. The company should commit to a living wage before it seeks public relations kudos by funding charitable programs like this.

6th Promise: Funding university research and open forums on responsible business practices, including programs at four universities in the 1998-99 academic year.

The company has refused reputable academics access to Nike factories to conduct research, and that research it has funded seems geared to providing private information to Nike rather than stimulating academic debate and increasing knowledge. If Nike is genuinely interested in investing in credible academic research into responsible business practices, the company should establish an independent committee made up of reputable and independent academics to determine which research should be funded.

Sins of Omission: What Labor Rights Groups Wish Knight Had Promised

The demands which rights groups have made of Nike but which Nike has deliberately ignored can also be grouped into six categories:

1st Demand: Protect workers who speak honestly about factory conditions.

Nike's track record in protecting workers who blow the whistle on sweatshop conditions is very poor. The company has turned its back on individual workers who have been victimized for speaking to journalists, and has cut and run from other factories after labor abuses have been publicized. Until this changes, Nike workers will have good reason to keep silent about factory conditions for fear that speaking honestly may result in them and their fellow workers losing their jobs.

2nd Demand: Regular, Transparent, Independent and Confidential Procedures for Monitoring Factories and Investigating Worker Complaints.

Activists have repeatedly asked Nike to allow rights groups to educate workers about their rights and to ensure workers can make confidential complaints to independent monitors when those rights are infringed.

Instead, Nike has made it the responsibility of each factory to educate workers about Nike's code of conduct and to establish a complaint mechanism. This deliberately ignores the interest factory owners have in keeping workers ignorant of their rights. All independent research indicates that the overwhelming majority of Nike workers do not understand their rights under Nike's code and do not believe factory owners can be trusted to resolve worker grievances.

Rights groups have also called for a factory monitoring program which is independent and rigorous. In response Nike has set up an elaborate array of different schemes for monitoring and factory assessment. While this variety of programs looks impressive in a public relations sense, Nike has deliberately set up each of these programs so that they fail two or more of the key tests of effective monitoring: independence, transparency, regularity and a relationship of trust with workers.

The quarterly program of S.A.F.E. (Safety, Health, Attitude, People, Environment) assessments, conducted by Nike staff, is obviously the least independent. There is no evidence that Nike staff actually interview workers as part of these assessments let alone attempts to establish a relationship of trust with them.

Nike's program of annual factory monitoring by PricewaterhouseCoopers also lacks independence. PwC was selected by Nike, reports to Nike and conducts a monitoring program designed by Nike. To the extent that independent observation of PwC's monitoring practice has been allowed, it indicates that PwC auditors fail to establish a relationship of trust with workers and that the quality of their monitoring can be extremely poor. Dara O'Rourke (an assistant professor at MIT) recently observed several PwC factory audits first hand and concluded that they had "significant and seemingly systematic biases" in favor of factory owners and against the interests of workers (O'Rourke 2000).

While there are elements of the Fair Labor Association's (FLA) proposed monitoring program that represent important improvements on Nike's current very poor system, the Association's ability to ensure that workers' rights are respected will be significantly undermined both by the questionable independence of its external monitors and by the long delays between factory monitoring visits--which will on average occur in each factory only once every ten years. The Global Alliance for Workers and Communities is an attempt by Nike to shift focus away from the human rights agenda promoted by the company's critics. The Alliance deliberately avoids investigating key human rights issues and its research methodology does not allow time for researchers to create a relationship of trust with workers.

Nike has vigorously opposed the Workers' Rights Consortium, a factory monitoring program that is independent, transparent and makes it a priority to build relationships of trust with workers. In contrast, Nike's monitoring and factory assessment programs are not independent, lack full transparency and have so far made very little effort to win workers' trust so that they can speak honestly about factory conditions without fear of reprisal.

3rd Demand: Decent Wages

Nike has rejected demands that it ensures that Nike workers are paid a living wage--that is, a full time wage that would provide a small family with an adequate diet and housing and other basic necessities. Instead, the company has used statistics selectively and in a misleading fashion to give the false impression that wages currently paid to Nike workers are fair and adequate. Meanwhile those workers struggle to survive on wages that are barely enough to cover their individual needs, let alone those of their children.

4th Demand: Reasonable Working Hours

Independent research indicates that in many factories Nike workers are still being coerced into working up to 70 hours per week and are being humiliated in front of other workers or threatened with dismissal if they refuse. Nike workers also frequently report that it is extremely difficult to obtain sick leave and that the annual leave to which they are legally entitled is often refused, reduced or replaced with cash without the worker having any choice in the matter.

5th Demand: Safe and Healthy Workplaces

Nike has made important progress in reducing the use of toxic chemicals in sportshoe production. Unfortunately, on the few occasions in recent years that genuinely independent health and safety experts have been allowed access to Nike contract factories, they have found serious hazards including still dangerously high levels of exposure to toxic chemicals, inadequate personal protective equipment, and lack of appropriate guards to protect workers from dangerous machinery. There is also considerable evidence of workers suffering stress from spending large amounts of time in high pressure and frequently abusive work environments.

6th Demand: Respect for Workers' Right to Freedom of Association

So far Nike's promise to protect this right has been largely empty. A considerable proportion of Nike's goods are made in countries like China where independent unions are illegal. Nike has refused to call on the Chinese government to allow workers to organize and has actively opposed calls for trade pressure to be put on the Chinese government to encourage it to improve its record in this area.

Nike has abjectly failed to prevent the suppression of unions in a number of its contract factories, including the PT Nikomas Gemilang and PT ADF factories in Indonesia, the Sewon and Wei Li Textile factories in China, the Formosa factory in El Salvador, the Natural Garment factory in Cambodia, the Savina factory in Bulgaria and factories owned by the Saha Union group and the Bangkok Rubber group as well as the Nice Apparel, De-Luxe, Lian Thai and Par Garment factories in Thailand.

On those few occasions when Nike has taken any steps to advance this right in specific factories, it has done so grudgingly and after considerable public pressure. While elements of Nike's eventual response to the current dispute in the Kuk Dong factory in Mexico have been positive, Nike's actions on the issue been characterized by unnecessary delays, lack of follow through and failure to actively promote the urgent need for a free and fair union election.

Conclusion

Thus far Nike has treated sweatshop allegations as an issue of public relations rather than human rights. The promises made by Phillip Knight in his May 1998 speech were an attempt by the company to switch the media focus to issues it was willing to address while avoiding the key problems of subsistence wages, forced overtime and suppression of workers' right to freedom of association.

The projects Knight announced have been of little benefit to Nike workers. Some have helped only a tiny minority, or else have no relevance to Nike factories at all. The most significant promise, to allow NGOs to monitor its factories and release summary statements of that monitoring, has simply not been fulfilled.

Health and safety is the one area where some improvement has occurred. But even here the company is not willing to put in place a transparent monitoring system involving unannounced factory visits. On the few occasions when independent safety experts have been allowed to visit Nike factories, they invariably have found very serious hazards.

The inaction of the last three years shows that rights groups are justified in treating the company with suspicion and demanding that factory monitoring be both genuinely independent from Nike's control and publicly reported in full. While Nike touts itself as an "industry leader" in corporate responsibility, Nike workers are still forced to work excessive hours in high pressure work environments, are not paid enough to meet the most basic needs of their children, and are subject to harassment, dismissal and violent intimidation if they try to form unions or tell journalists about labor abuses in their factories. The time has come for the company to adopt the reforms which rights groups have advocated. It is indefensible that activists, consumers and most importantly Nike factory workers are still waiting for Nike to do it.

Nike's New Game Plan for Sweatshops

SEPTEMBER 20, 2004(Business Week)

Unlike giants such as Wal-Mart, it now has a system to inspect -- and try to improve -- working conditions at supplier factories

For many years, Nike (NKE ) has been a lightning rod for criticism about sweatshop labor conditions in the low-wage countries that produce its sneakers. When Nike was getting pummeled on the subject in the 1990s, it typically responded with anger and panic. Executives would issue denials, lash out at critics, and rush someone to the offending supplier's factory to put out the fire before it spread.

Since then, Nike has constructed an elaborate program to deal with labor issues in the 900-odd supplier factories (none owned by Nike) that churn out its products in some 50 countries. Today, a staff of 97 inspects several hundred factories a year, grades them on labor standards, and works with managers to improve problems. Nike also allows random factory inspections by the Fair Labor Assn. (FLA), a monitoring outfit founded by human rights groups and companies such as Nike, Reebok (RBK ), and Liz Claiborne (LIZ ).

"DROP IN THE OCEAN." As a result, when most human rights groups and even student protesters find a problem at a Nike factory, they now deal with the company directly instead of pounding it with public demonstrations. That's one reason why you don't see Nike getting hit with ugly sweatshop publicity so much these days. "You haven't heard about us recently because we've had our head down doing it the hard way. Now, we have a system to deal with the labor issue, not a crisis mentality," says Maria S. Eitel, Nike's vice-president for corporate responsibility.

None of this means that Nike or any other businesses have come close to solving the sweatshop problem. Far from it. The monitoring systems set up by a Nike and handful of other Western outfits such as Mattel (MAT ) or Adidas have helped to address some of the more egregious problems at some factories, such as locked doors and unsafe chemicals, human rights experts say. But the inspections they do are limited and periodic and can't possibly catch all of even the most egregious problems.

In addition, only a handful of multinationals have serious monitoring efforts like Nike's in the first place. Most others, including retailers such as Wal-Mart (WMT ) and Target (TGT ), which have the most control over consumer prices, do virtually nothing, labor experts say. "What we do is a drop in the ocean out of the 90,000 or so factories that export to the U.S. from around the world," says FLA President Auret Van Heerden.

STILL UNDERPAID. What's more, even the best anti-sweatshop efforts like Nike's have done little to address the two most difficult issues in most cheap-labor countries: Low wages and unionization. The problem is only going to get worse next year, when the phase-out of U.S. textile quotas is expected to bring a massive global shift of production to China, where wages are the lowest and independent unions are illegal.

"Nike and others are making progress, but not on the harder things like underpayment of wages and freedom of association," says Heather White, the executive director of Verite, a nonprofit U.S. group that does extensive labor monitoring of companies around the globe.

Still, you have to give Nike some credit for trying. It has performed about 600 factory audits since it built up its in-house monitoring staff two years ago, including repeat visits to those with the most problems. Each inspected factory is given a score of 1 to 100 based on a wide variety of labor issues.

BROADER TESTS. The scores are used, along with interviews with management and other factors, to grade each factory. A relative few get an A, the best, or a D, a warning that Nike may yank production unless remediation efforts improve quickly. Most factories get a B, which means they have some problems, or C, which indicates that serious issues aren't being corrected fast enough.

This year, Nike plans to expand the grading process to include environmental safety and health issues. "Before, it was all anecdotal, but now we have a system to measure factory improvements," says Nike Compliance Vice-President Dusty Kidd, who heads its labor-compliance efforts. That may make for safer working conditions. But it won't help the wages of Chinese workers making only 20 cents an hour.

Nike Chronology

Jeff Ballinger from Press for Change has provided a chronology of the Nike Anti-Sweatshop campaign. His account focuses on Indonesia in particular but it is still useful for those studying the campaign in other areas of the world. 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 1988 Newspaper of Indonesian trade union publishes investigative report on South Korea-based shoe company producing for Nike. 1989 Articles appear in Indonesian newspapers about wage protests at Nike contractors Tae Hwa and Pratama Abadi. Most shoe factories illegally paid workers "training wage," which was less than the standard eighty-six cents a day. U.S.A.I.D.-funded study on minimum wage compliance finds major shoe companies persistent violators. Labor rights complaint against Indonesia submitted to office of US Trade Representative by International Labor Rights Research and Education Fund and Human Rights Watch. Calls for review of country's benefits under Generalized System of Preferences. 1990 Strike at Tae Hwa and protests at Sung Hwa. Latter action in response to workers killed in crash of overcrowded company bus. Rise of Setia Kawan (Solidarity) independent trade union -- subsequently crushed by Indonesian authorities after less than a year. 1991 (top) Strike at Hardaya Aneka (HASI) factory after fire kills two workers. Strike at Pratama Abadi. Indonesian daily Media Indonesia runs three-day report on abuses at shoe factories. Headline second day: World Shoe Giants Rape Worker Rights. Korean businessmen repeatedly warned in newspapers about abusive labor practices. Thames TV (UK) broadcasts investigative report on Nike contractor in Indonesia. The Economist reports on unrest at shoe factories producing for Nike. Departmental strikes at Tae Hwa and Pratama Abadi. Knight Ridder (US) wire report on Nike-producing shoe factories. Correspondent spoke with Indonesian workers. Institute of Technology (Bandung, W. Java) and Dutch Institute for Social Studies publish report on shoe industry in Indonesia. Leads to attack by Indonesia's Minister of Investment Coordination and subsequent restriction on press reports about low wages and abusive conditions at shoe factories. 1992 (top) Oregonian (US) newspaper prints lengthy article on Nike's Indonesia operations -- Phil Knight (Nike CEO) writes angry denunciation (which includes substantial factual inaccuracies). US State Department report to Congress on Human Rights highlights shoe factories' refusal to pay Indonesia's minimum wage. Strike at Sung Hwa. Nike formulates "Code of Conduct and Memorandum of Understanding" for contractors. Cover story of Far Eastern Economic Review looks at Nike's Asian operations -- cites "rough side" to Nike's "…Just Do It dream: the ruthlessness with which Nike pares its costs. The company is forever on the lookout for cheap production sites ". Harper's magazine publishes "Nike: The New Free-Trade Heel" by Jeff Ballinger. Los Angeles Times -- "New Shots Fired in Indonesia Wage War" (Nike and GSP) 1993 (top) Sung Hwa protest leaders sacked after ten-week investigation by local security forces -- included intimidation and interrogations. Twenty-four workers subsequently won case against contractor at Supreme Court of Indonesia (1997). Critical reports published in New York Times, The International Herald Tribune, The Economist and Jakarta Post. Sung Hwa protest leader (Sadisah) attends meeting in Paris hosted by advocacy group Agir Ici and travels to UK, Germany and Holland. Sneaker campaigns undertaken in Holland (IRENE & Komitee Indonesie) and Italy (Centro Nuovo Modello di Sviluppo). Nike Boycott launched in Germany by Evangelische Kirchengemeinde Duisburg-Neumuhl. Strike at Pou Chen (locally known as Nikomas). CBS-TV (US) broadcasts highly critical report on Nike contractors' labor practices in Indonesia. Press for Change organized to report on Nike shoe factories in Indonesia. Sports Illustrated cover story dubs Nike "The most powerful force in sports" owing to the marketing/promotion budget of several hundreds of million dollars. Indonesia's highest labor court rules in favor of Sung Hwa protest leaders. Nike contractor appeals order to re-hire workers and pay restitution. 1994 (top) Amsterdam-based SOMO (Center for Research on Transnational Corporations) completes study, "The Nike Method". New campaigns launched in UK (Christian Aid) and France (Agir Ici). Research grant from Press for Change to Jakarta-based Urban Community Mission provides information for first Nike in Indonesia newsletter. Criticism of Nike contractors in New York Times Op-Ed (Cavanagh & Barnett), ABC-TV (US) Prime Time Live and The Economist. Extensive Indonesia sweatshop report in The Rolling Stone (US). First meeting of ad hoc Sport Shoe Campaign Group at IRENE-sponsored conference in Brussels. Nike hires accounting firm, Ernst and Young to do "social audits" at Indonesia-based contract factories. Random House publishes Donald Katz' Just Do It. Katz characterizes Indonesian operations as "management by terror and browbeating." CEO Knight appears with Katz for Portland book-signing. IRENE newsletter reports on international campaign to pressure Nike's contractors. Press for Change study in Indonesia documents continued wage-cheating. Strikes at Nagasakiti Paramshoes (NASA) and Tae Hwa. Major investigative reports in Boston Globe and Los Angeles Times. Corrupt Indonesian Minister of Manpower overrules top labor court on Sung Hwa case, in favor of Nike contractor. Strikes at Pou Chen and Pratama Abadi. Press for Change runs ads in alternative weeklies in three major cities. Nike lawyers respond with libel action threats against two publications. Chicago Tribune report, "Wages of Shame", details struggle of workers making Nike shoes in Indonesia and quotes Nike's Indonesia manager, Tony Nava, who says company "can't know" if labor practices reports by contractors are actually true. Nava criticizes newly-formed independent trade union only weeks after Indonesian authorities jailed the group's leader. 1995 (top) Manager at Pratama Abadi lines up and slaps fifteen women from quality control section. (Press for Change interviewed witness who was herself slapped in a separate incident.) Nike offices in Jakarta and Oregon informed -- no response received. Ms. Magazine (US) publishes "The Globe-Trotting Sneaker" by Cynthia Enloe. US A.I.D.-sponsored research wraps up three-year research study -- 155,000 Indonesian workers interviewed at several hundred factories. Over 500 workers at Nike-producing factory in Majalaya, W. Java report problems such as forced overtime and illegal wage deductions. Canadian group, Developpment et Paix, begins two-year campaign to monitor and report on overseas production of Nike footwear and Levi's jeans. Director travels to Indonesia and interviews dozens of workers. Article in Marie Claire: "Worked to Death" mentions Nike's Indonesia production and "Code of Conduct." Administrative Court in Jakarta overturns Manpower Ministry's arbitrary and capricious ruling on Sung Hwa protest organizers. Ministry appeals to Indonesia's Supreme Court. Oxfam brochure "Made in Dignity" describes abuses in Nike-producing factories in Indonesia. Coalition for Development Action (Brussels) publishes report of IRENE's Peter Pennartz: "Competition Policies -- The Case of Nike" in ICDA Journal. Sisbikum, and Indonesian NGO, helps shoe workers to form new advocacy group (Perbupas) with elected leaders from rank-and-file. Developpment et Paix supports new research by Press for Change in Indonesia. Information sent out in two new Nike in Indonesia newsletters. The International NGO Forum on Indonesian Development (INFID -- Jakarta and The Hague) begins series of discussions on worker rights with New York-based Council on Foreign Relations. Nike rated "worst" U.S.-based multinational in worker rights area. Amnesty International publishes in-depth look at problems of women in Indonesia and E. Timor with lengthy examination of female labor activists' plight. Deborah Spar, Asst. Prof. at Harvard Business School (HBS) does study of impact of foreign investment on labor rights in Indonesia. Strike leads to dismissal of 13 activists at Pou Chen. Nike increases bloated advertising by 22% while The Economist quotes Korean contractor for Nike in Indonesia, "Wages go up, but the buyers still try to force costs down." (Referring to 30% increase in Indonesia's minimum wage -- now $155 a day.) Ballinger presents paper on Corporate Responsibility to conference on international development (jointly sponsored by HBS, Kennedy School of Government and Tufts). Conference in Pisa, Italy -- presentation by Press for Change on Nike in Indonesia and address by newly-released Indonesian independent union leader, Muchtar Pakpahan. Second meeting of Sport Shoe Campaign Group. Dutch "Fair Play" campaign is launched. In Switzerland, Declaration de Berne and Pain pour le prochain launch a study on sweatshops; researchers travel to Thailand and Indonesia. London-based Christian Aid commissions study of shoe factories in four Asian countries. Published report has tremendous media impact in UK. Australian researcher, Peter Hancock, does in-depth report on Nike-producing factory in Majalaya, W. Java. PhD candidate, Bama Athreya (University of Michigan), finishing field research for dissertation on Indonesian women workers, interviews dozens of workers from HASI and Pou Chen factories. Sydney-based Community Aid Abroad (CAA) contacts Press for Change and compiles useful bibliography on struggle of Indonesian workers making Nike shoes. Washington-based Multinational Monitor names Nike to annual "Ten Worst" list and publishes article by Jeff Ballinger. Students at U. Wisconsin battle proposed endorsement contract with competing shoe companies. Reebok ultimately wins deal, but an embarrassing "non-disparagement" clause is deleted because of student activism. Press for Change contacted by Interfaith Center for Corporate Responsibility (ICCR). 1996 First 6 Months (top) Portland organization, Justice, Do It Nike, begins regular protests at Nike store. Press for Change organizes first protest at Reebok's annual Human Rights Award ceremony. New research by Press for Change in Indonesia uncovers widespread violations of Nike's own "Code of Conduct". Reports in several Indonesian newspapers lead with "forced overtime" issue, due to death of worker at Reebok-producing factory (Dong Joe). Five NGOs in Indonesia form Independent Sportshoes Monitoring Group (ISMN) and pledge to increase pressure on shoe companies. Continuing discussions with Press for Change, ICCR and General Board of Pensions, United Methodist Church leads to submission of "anti-sweat" resolution to Nike shareholders meeting. Meeting covered by CBS-TV. Joint report on Indonesia's suppression of labor rights by Human Rights Watch and RFK Memorial Center describes shoe factory protest led by courageous young labor activist, Dita Sari. (She was jailed for unrelated protests organized six months later.) An AFL-CIO "Impact Project" in Indonesia surveys workers in factories producing for Nike and finds that 36% of them had been involved in strike actions. mid-1996 (top) National Labor Committee (NYC) brings unprecedented attention to sweatshop issue with Kathie Lee Gifford controversy. Almost overnight, Nike's labor record is examined in dozens of publications. This is due in part to the incredible media activism of Global Exchange, the protests coordinated by Campaign for Labor Rights and the tremendous archives documenting the struggle of Indonesian workers. Contributing to the archives were several European groups, a couple each in Australia and in N. America and, first and foremost, the brave workers and activists in Indonesia. Press reports from mid-1996 forward are far too numerous to mention; following is a brief description of NGO and worker activism: White House forms "Apparel Industry Partnership" to deal with the acutely embarrassing issue of U.S. corporations involved in labor rights violations in the world's most corrupt and repressive countries. Sacked worker from Nike-producing factory in Indonesia is denied chance to speak at AIP's founding conference in Washington. Rev. Jesse Jackson is refused visit to Nike-producing factory while in Indonesia. Community Aid Abroad publishes "Sweating for Nike" report, based on research in Indonesia. Press for Change confers with European groups and two Indonesians from ISMN group at IRENE-sponsored conference in Duisburg, Germany. Agir Ici distributes 150,000 post-cards in sport shoe campaign in France. Swiss groups, led by Declaration de Berne, undertake Indonesia sport shoe educational activities. Developpment et Paix undertake second year of research and educational activities; over 80,000 postcards are sent to Nike and, across Canada, newspaper ads are bought to draw attention to campaign. Fired Nike workers' lawyer, Apong Herlina, visits New York for CEDAW meeting -- reports that case of 24 workers now sits before Supreme Court in Indonesia. Brutal political crackdown in Indonesia leads to re-arrest of Muchtar Pakpahan and the suspension of most worker rights educational activities. Fired Nike worker tours U.S. Thuyen Nguyen, after consulting with Press for Change, organizes Vietnam Labor Watch, based in New York. Nike sends five-page letter to universities across N. America to "explain" child labor controversy. Chicago Tribune article: "Indonesia's Big Crime: Oppressing Workers -- U.S. Plays Role by Not Imposing Trade Sanctions." 1997 (top) Phil Knight, Nike CEO becomes sixth richest person in U.S. with $5.3 billion (all from shoes/apparel). Several Nike shoe contractors in Indonesia apply for exemptions from paying new minimum wage in Indonesia. Increase is from $2.25 to $2.46 a day. Massive protest march by HASI workers to regional parliament building. Australian CAA launches post-card campaign and inaugurates Nike campaign email list-serv. Strikes by thousands of Nike-producing workers in Vietnam. Canadian Auto Workers sponsor second N. American tour of Cicih Sukaesih, fired Nike worker. Nguyen of VLW meets workers in Viet Nam. Global Exchange organizes press conference for Nguyen -- also attended by Press for Change and AFL-CIO Vice-President, Clayola Brown. Portland's Jobs With Justice helps to organize big May Day protest at Nike store. Tiger Woods shrugs off sweatshop question at British Open. Nike hires former UN Ambassador, Andrew Young, to tour Asian factories. Young uses Nike translators and his report is viewed as shallow and unhelpful. Protests conducted at new Nike store openings in Seattle, San Francisco and Boston. 50,000 more postcards delivered to Nike from Canadians -- organized by Developpment et Paix. Massive protest and three-day strike at Garuda Indawa -- severance pay issue. Asian economic crisis brings Nike contractors' per-day labor cost down from $2.50 a day to $.70. Subsequent strengthening of Indonesian rupiah to dollar brings wage back to about $1.10 by year-end. Indonesian owner of HASI factory complains that Nike demanded all savings attributable to crash of rupiah. Campaign for Labor Rights organizes world-wide day of protest concerning Nike's labor practices. Actions in fifty cities. Centro Nuovo Modello di Sviluppo debate with Nike official before crowd of 300 in Rome. Joint report on Nike contractors in China by Hong Kong Christian Industrial Committee. and Asia Monitor resource Center. White House panel on sweatshops announces "standards" for apparel and shoe companies. Severely criticized by most anti-sweat groups. Study by NCOS (Belgium) about Nike production in Indonesia leads to 85,000 protest signatures gathered by union and community groups. Nike objects to second shareholder resolution by General Board of Pensions, United Methodist Church. U.S. Securities and Exchange Commission backs Nike objection, rules that resolution will not appear on the proxy statement. Berkeley-based Transnational Resource Action Center releases report documenting severe health problems at Nike shoe factory in Viet Nam. Student protests against Nike links with universities erupt at Univ. Illinois, Penn State, Univ. N. Carolina, Colorado, Florida State, Michigan and others. Nike official complains about modest rise in minimum wage in Indonesia (20 cents per day); veiled threat to move production. Nike announces 10-year $200 million deal with Brazil's national football team. International Confederation of Free Trade Unions issues report documenting Nike "Code" violations in Malaysia -- paying Bangladeshi "migrant" workers less than Malaysian co-workers. 1998 (top) Nike official tells Newsweek reporter that the company would like to raise wages in Indonesia, but the government had banned all pay hikes as "inflationary." Inflation reaches 80% in Indonesia so that shoe workers' real wages fall 40% behind 1997 (pre-Crash). This is taking into account Nike's emergency 30% pay increase for shoe workers. (The first time contractors there were ever forced by Nike to pay above the statutory minimum.) Nike CEO, Phil Knight, gives talk on Nike's Asian labor practices at National Press Club in Washington, D.C. Announces new initiatives such as education for workers and micro-enterprise loan programs. Vows to eliminate hazardous chemicals from shoe production. Pharis Harvey, head of International Labor Rights Fund, is denied tour of Indonesian factory by Nike officials. (ILRF has been Nike "partner" on White House panel for over a year, at this point.) CAA Sydney begins intensive effort to establish ties between campaign groups and worker advocacy organizations in Indonesia. Unions and Interfaith Center on Corporate Responsibility leave White House panel on sweatshops due to irreconcilable differences on monitoring and reporting compliance. Indonesia's Supreme Court rules in favor of 24 "Sung Hwa" protest organizers. Doson workers stage protest after Nike contractor reneges on meal allowance pledge. Universities under increasing pressure from students; "sweatshop" concern spreads to apparel made for college bookstores bearing university-licensed logos. Filmmaker Michael Moore, interviews Phil Knight for movie, "The Big One." Fired Nike worker Cicih Sukaesih honored by US-based "100 Heroines" group. Workers from NASA ("Nagasakti" Nike contractor in Tangerang) join "Greater Jakarta Labor Organization" to increase chances of effective collective bargaining. Nike announces second pay increase (25%) for Indonesian shoe workers. Wage now 250,000 rupiah ($23) per month. "Real wages" still 30% behind mid-1997 figure. First year, post-Crash wage savings for Nike exceeds $10 million -- even given the two "increases" above the Indonesian minimum wage. Michael Jordan, Nike's premier endorser, makes the first of several promises to visit Asian production facilities. Manager at Pou Chen factory in Viet Nam pours paint on the head of a worker for making a mistake. She is paid $15 compensation. Organizers at Nike apparel maker, PT Tainan are sacked. Both begin labor court cases. Julia, a worker at Nike-producing "Formosa" factory in El Salvador, is beaten and fired for taking a day off to care for her sick child. Hero of E. Timor independence struggle, Jose Ramos Horta, likens Nike contractors' operations in Indonesia to Japanese occupation of the archipelago. 1999 (top) Joseph Ha, a top advisor to Phil Knight, sends letter to highest-ranking labor official in Viet Nam portraying "anti-sweat" activists as enemies of the state with a "political" agenda. Par Garment (Thailand): the Pathum Thani provincial office of the Thai Ministry of Labor rules against the Nike contractor, and orders them to pay the 50% of back wages for 45 days to 161 employees. Par Garment contests the judgment. (There are also two other cases outstanding, one regarding fired workers and another regarding a dispute over the collective bargaining agreement.) Nike goes on trial in Australia for refusing to comply with "home-work" rules. It is the only apparel-maker to contest issue. Ms. Nurhayati, union activist at PT Doson is sacked (a strike had taken place six months earlier). Nike offers consumer advocate Ralph Nader $25,000 to endorse a running shoe. He declines. Launch of "The Global Alliance for Workers and Communities" -- Nike, Mattel, World Bank and the MacArthur Foundation. Do-gooder activities to be carried out by U.S.-based International Youth Foundation. Retired generals in Indonesia offer to sell intelligence information to foreign businesses. Viet Nam survey shows that worst manufacturing pay rates are in footwear sector. Nike refuses to allow local worker advocacy NGOs to accompany ILRF representatives on Indonesia factory tours. (Nike and ILRF are both members of "Fair Labor Association.") US students and activists meet Indonesian workers with Press for Change director, Jeff Ballinger. Group meets with surveyors about to undertake six-week study of workers in shoe and apparel factories. Nike increases advertising spending by 53% for coming year. Strike and protest over holiday bonus at Pou Chen factory and violent demonstration over same issue at PT ADIS. "Free Speech" lawsuit filed in federal district court in Manhattan against Nike and St. John's University. Former asst. coach of soccer team, Jim Keady, claims that head coach insisted he wear jacket with Nike "Swoosh" in order to continue coaching. Haryanto, fired former Nike worker, tours U.S. -- organized by Campaign for Labor Rights. He tells audiences about his attempts to inform fellow workers about their rights, which led to his dismissal. Efforts by CLR and CAA force Nike to insist that contractor re-hire him (a "first"). Nike signs new sponsorship agreement with the University of Texas for a reported $20 million. Nike factory in Viet Nam was scene of country's largest food-poisoning incident of the year. Urban Community Mission completes survey of 4,000 workers in Nike-producing factories near Jakarta. Protests in Seattle support efforts of workers in all countries to insist on the right to form independent unions and to demand that employers sit down in dignity for collective bargaining. New book, "No Logo; Taking on the Brand Bullies" by Naomi Klein (Picador, 1999) gives good review of rise of anti-sweatshop struggle. 2000 (top) Shoe-industry group in Indonesia makes publicity campaign against strikes in shoe factories. Wall Street Journal profile of Yue Yuen -- Nike's biggest contractor in the world --describes very profitable company. Indonesian official links bribe-taking by police and military to low wages paid to factory workers.

Chasing Cash; University treasuries used to be sleepy and slow. But now the race to pile up money is on.

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It was clear the good times were over. After the dot-com crash, University of Washington treasurer V'Ella Warren saw that record growth in the college's endowment was finished without a professional at the helm. "I believed that going forward, markets would be tougher," she says. "To increase returns we would have to be smarter."

So Warren did what a growing number of college treasurers are doing: she hired a blue-chip-fund manager from the private sector--in this case, Keith Ferguson from Fidelity Investments. Since Ferguson's arrival in January 2005, the UW's fund has delivered an annual return of 14.7 percent and grown to $1.7 billion. It now ranks as the 32nd largest endowment in the United States, and proves how far the endowment-growth boom has spread beyond the famous successes of Stanford, Yale and Harvard.

American colleges and universities are now among the world's most admired investors. The average return on endowments rose 9.3 percent last year, down from 15.1 percent in 2004 but still better than most rivals--and enough to draw imitators. Foreign universities are now following the lead of U.S. peers, flocking to a weeklong investment seminar held each year by the Commonfund Institute, which manages the endowments of nonprofits worldwide. Cambridge Associates LLC, a Commonfund counterpart, opened an office in Singapore five years ago in response to growing Asian interest. "If you look among professional fund managers and ask who are the best investors, they'd tell you U.S. colleges and universities," says Cambridge Associates manager James Bailey. "In general, they have performed a couple of hundred basis points better than any U.S. pension fund over the last 30 years."

Nothing lures new money like high returns. Last year, American colleges and universities received $26.7 billion in donations, up 4.9 percent from the previous year. A 2005 survey by the National Association of Colleges and University Business Officers found that academic endowments in the United States are worth some $300 billion--roughly the size of the Polish economy. Growth is more broad-based than ever, with an overwhelming number of institutions boasting endowments worth more than $1 billion. Such sizzling growth is prompting many academics and alumni to wonder if endowments are bulking up too fast, particularly in risky assets such as commodities and hedge funds. "The academic community is in an arms race for larger endowments and more resources," says Tim Cook, president of Kailas Capital, a Stamford, Connecticut-based hedge fund that counts several universities as clients. "You have some large colleges returning 20 percent a year, and they still feel the need to raise tuition."

It wasn't always so. Until recent decades, the typical college treasury was a sleepy place run by a retired college grandee who based his investment decisions on tips from his stockbroker or golfing buddy. Then, in 1973, pioneer investor George Putnam was hired to modernize Harvard's endowment and quickly brought in crack advisers, who moved into hedge funds, foreign currencies and the array of investments that has since made Harvard the endowment-race leader, with a war chest of $25.4 billion.

So with such impressive returns, why do tuition rates keep going up, often beyond the rate of inflation? Universities say they are paying bills today for last year's programs and facilities, in an endless game of catch-up. As endowments grow, though, so does frustration among alumni over endless requests for fresh donations and new study programs, sports facilities and lecture halls. "We are entering a point where our top institutions are at risk of being populated either with the superwealthy or the extremely talented," says Cook. "In other words, those who can afford to pay and those who can get in on a full scholarship."

On the other hand, schools like Berea College in Kentucky and Massachusetts's Franklin W. Olin College of Engineering are using flush donor funds to reduce tuition fees--a fine idea, investors say, absent the kind of stock-market dive that even college donor funds cannot ride out completely. Worries about such a calamity are growing, say academics, as many universities use endowment returns to finance a growing share of their budgets.

The risk is particularly high for state schools plagued by shrinking public funds. Writing in The Chronicle of Higher Education, Mark Schneider, a professor and member of the strategic-planning committee at Iowa's Grinnell College, recently spelled out what might happen to newly free schools if the market fell and the number of incoming students rose: "The board demands a sudden return to tuition, with faculty and staff cutbacks that lead to bad press off the campus and a drop in morale on the campus--certainly a scenario to give trustees and administrators pause." Perhaps. But for now the race is on, and most schools are winning.

Paying The Price; Europe's universities must start considering innovative new methods of raising money if they want to stay competitive.

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Blair is the prime minister of Britain.

Academics have a venerable tradition of sharing ideas and knowledge across national boundaries. In today's shrinking world, the universities that employ them must also look outward to survive, compete and grow. And governments must be more imaginative in finding the right funding solutions to support that growth.

Throughout the developed world, a growing proportion of the population is accessing higher education. Across Europe, there are now upwards of 17 million students, 20 percent more than in 1997. In England, 10 percent of secondary-school graduates went to university in 1966; today 42 percent of those under 30 have college degrees--a proportion we expect will rise to half by 2010.

Student numbers are growing as the economy places knowledge at a premium and traditional blue-collar jobs migrate in search of lower wages and production costs. So today's graduate must be ready to work in a world where jobs are rarely for life and where adaptability is as prized as knowledge and creativity.

This presents governments and universities with big challenges. With the demand for college graduates increasing rapidly, the costs of higher education can no longer be borne by taxpayers alone. Universities have to find extra resources through student fees, overseas recruitment, industry partnerships and alumni donations.

The reasons are clear. In the U.K., we are fortunate in having many great universities, including Oxford and Cambridge. But to remain world leaders, they need to continue to provide the highest standards of instruction and research. To remain competitive our universities must attract the right level of public and private investment. The European Commission has calculated that across the EU there is a spending gap with the United States of 150 billion.

European universities, some of which stretch their lineage back to the Renaissance, find these challenges difficult; their governments even more so. Free tertiary education has been regarded as sacrosanct as free primary or secondary schooling throughout much of the Continent.

Yet those who benefit from higher education earn substantially more than their fellow citizens, whose taxes pay their fees--which is why tuition fees are increasingly on the agenda. European governments are starting to recognize that it is no longer feasible to continue providing wholly free higher education from general taxation, and many are considering fees.

In England, we have introduced undergraduate fees of up to 3,000 ($5,000) a year from this September (they were 1,175 until last year, but, before 1998, no fees were paid). Students effectively borrow the cost of tuition along with money for their living expenses, and repay it alongside their income tax after they graduate and start earning. There are grants available for lower-income students.

Fees are not enough on their own. The U.K. government provides substantial research funding to its universities, but research is increasingly supported by industry and business foundations, too. Such links can help make research more useful to economic development. The United States has had a long tradition of giving by alumni; U.K. universities are starting to build similar programs, and have reported a growth in donations.

And as Lambert and Butler's recent report shows, diversity must also be part of the solution. The future success of higher education will depend on more than just world-class research, though that is a crucial element. It will also require good business schools, opportunities for lifelong learning, strong teaching universities and good regional schools.

Each can and should play to its strengths. But to thrive and survive, universities cannot stand still. There will be more mergers and partnerships. Innovation will be an increasingly prized commodity. European governments must give their great universities the same freedom to innovate that their American--and even Chinese--counterparts enjoy through strong independent governance.

As our world gets smaller, our capacity to acquire and apply knowledge must expand. This is not just a challenge for individual countries or universities. It is an imperative for the entire global community.

No Degrees Necessary; China expands its vocational training to narrow the economic divide.

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China is turning to vocational training as a means of prolonging its economic ascendancy and quelling unrest. It's an urgent priority, given that recent college graduates can't find jobs and the lack of educational opportunities in the countryside is stoking rural unrest. Last month the All-China Federation of Trade Unions announced a "small business-credit plan for nationwide workers," which will provide $125 million in loans to help some 250,000 laid-off workers get additional vocational training in order to find new jobs. Similarly, the Shanghai Committee of the Communist Party of China endorsed a development blueprint to create a "new socialist countryside," including higher subsidies to farmers for training in modern agricultural methods.

The appeal of vocational schools is growing partly in response to the growing realization that a Chinese university degree can be a ticket to nowhere. When China's schools reopened after the Cultural Revolution, there weren't enough universities to accommodate a generation of disenfranchised scholars. Now the opposite is true. In the last seven years the number of Chinese college graduates has quintupled, reaching 4.1 million this year. But the National Development and Reform Commission reports that at least 60 percent of these graduates can't find work.

In contrast, vocational schools are popular because students learn real skills, from plumbing to nursing, that can be applied outside the classroom. When Li Xiangdong graduated from high school last year, he defied his parents' wish that he find a job, and enrolled in a vocational school near his home in southwestern Beijing offering classes in Leisure Sports Service and Management in anticipation of the 2008 Beijing Summer Olympics. "Now I know I will have the training to find a better job when I graduate," he says. "I will be able to assist my family and improve my future."

And while urban universities draw the best and the brightest from the countryside--worsening a vast urban-rural divide--most of China's more than 17,000 vocational schools are located in small villages. "Vocational training can help improve the standard of living of an entire community," says Peng Peigen, an architecture professor at Qinghua University. Peng's China First Joint Venture Architecture Firm endowed a vocational school in China's southern Yunnan province last year to train what he calls "barefoot architects" to take energy-efficient building methods to farm regions. And to make a better living for themselves.