Diane Ketler
International Labor Standards: Nike, the World Trade Organization and the International Labour Organization
In early 1997, athletics giant and shoe manufacturer, Nike, was involved in an international scandal involving its controversial labor practices outsourced to countries like Vietnam, China and Indonesia. Reports of poor working conditions, employee abuse and pitifully low wages surfaced, putting the big name corporation in the hot seat for its questionable labor standards (Varley, 251). Although Nike received the media’s full attention and a blast of scrutiny, stories of unethical working conditions are prevalent all over the world. Labor production standards differ by country and company, as well as one’s attitude of what is ethical or unethical. Countries with more developed economies tend to have higher standards that address human rights, in comparison to underdeveloped countries who, at a bare minimum, struggle to even pay workers the established minimum wage. The problem lies in determining a set ofinternational standards that can be agreed upon. The World Trade Organization and the International Labour Organization both play a role in drafting conventions and treaties addressing this issue (Amnesty, 27 and 30). Though these organizations try to protect the human condition, there is controversy in creating standards that protectworkers, but also don’t discriminate against undeveloped countries who cannot meet the requirements (WTO website).
Regardless of standards and conventions, controversy still remains to exist.
Nike’s scandal was one of immense examination. Nike, rather than owning factories, contracts its labor to Asian nations like China, Vietnam, Taiwan and South Korea. In Indonesia, for example, Nike filters through 17 factories and 90,000 workers, producing 7 million shoes a month (Varley, 256). By outsourcing the work, goods can be made cheaper and faster. But cheaper and faster isn’t always honest. The unveiling of Nike’s production process began with a factory inspection by U.S. businessman,Thuyen Nguyen (Herbert).
In his examination of a Vietnamese factory, Nguyensaw what he could only describe as a boot camp. He reported cases of molestation and abuse, restricted bathroom breaks, and wages that barely compensated for food, clothing and shelter (Herbert). In extreme instances, many of the women (who accounted for 85-90% of the employees) were subject to harsh physical and verbal abuse. One account showed the women running laps around the factory as punishment for wearing improper footwear. Other stories from factories in Taiwan include women being hit for their poor work, or having their mouths taped shut and being forced to write their mistakes over and over (Varley 260, 264). Employees in some of the Chinese factories worked grueling 72 hour work weeks, without receiving overtime. Chinese law also limits the work week to 48 hours, which was obviously neglected (Varley 66).
Nike claimed to have taken care of the incidents in the particular factories and instructed to remove supervisors involved in abuse. As for the compensation issue, Nike argued that the average $1.60 to $2.60 a day met the minimum wage requirement and that the workers were receiving more than most. Farmers, they claimed, were paid an average of a dollar a day. And the factory employees contracted by Nike had benefits like occasional free food, discounts, and health insurance (Varley 258-259).
Nike’s scandal shook the production Richter scale, leaving boycotts and protests in its wake. The stories come from all over the world, and not just from Nike. In Guatemala, women were reported being belted in the stomach every couple weeks to make sure they weren’t pregnant (Varley 59). And in India, workers in a glass factory were subject to extreme temperatures without ventilation or safety gear. “Conditions…have been compared to Dante’s Inferno… Children have to run very fast with molten glass before it cools. They often bump into one another, sometimes scorching each other’s bodies,”a study from the US Department of Labor reports (Varley 67).
Faced with situations like these, does the world turn its back, or can it put its foot down and raise the standard? Fortunately, there has been substantial progress since the twentieth century in creating international trade and labor standards. The World Trade Organization and International Labor Organization address issues including wages, child labor, safety and health of employees, and forced labor (WTO). Though neither system avoids controversy or debate, they progress in addressing human rights.
The World Trade Organization is just a baby, beginning in 1995 out of the General Agreement on Tariffs and Trade, GATT, which originated in 1948 (WTO). The WTO exists to promote the liberalization of world trade. “It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle disputes. It operates a system of trade rules”, outlines the WTO in their website description (WTO). The World Trade Organization handles all aspects of international business relations including goods, services and intellectual property. Though the majority of its agreements come out of GATT negotiations decided prior to the creation of the WTO, the organization quickly flexed its muscle after coming into existence.
Just a year after is creation, the WTO took a stance at the 1996 Singapore Ministerial Conference in deciding how to address labor standards. There was much debate on imposing labor standards worldwide (Moran 66). How would the standards be decided? Would all WTO countries have to ratify the standards? Would abiding by such standards be legally binding? Would the standards be worldwide, by country, or based oneconomies? Some argued that the World Trade Organization is a powerful organization and should use its presence to improve the workplace. Others argued that an international standard would discriminate against underdeveloped countries. Countries with low labor standards and a comparative advantage would no longer be able to trade if standards were enforced. Essentially, it was thought that any standard would be “’protectionist’-that is, that industrial countries would use the standards cynically, as a device to block imports from low-wage countries (Varley, 36)”. Additionally, countries that could not perform as well because of a lack of capital or technology would be at an unfair advantage.
As a result of the Singapore Ministerial Conference, the WTO assigned the International Labour Organization, ILO, with the task of creating labor standards (Varley 37). To date, there are no councils or committees in the WTO dealing with these issues, as responsibility is left solely for the ILO. The International Labour Organization is the oldest existing human rights organization, founded in 1919 after WWI to set minimum labor standards worldwide (Amnesty 30). The ILO works on the basis of conventions or recommendations. Each of these conventions has the status of a treaty and is voluntarily ratified by a nation’s government (Amnesty 31). Every year, the members of the ILO attend a convention in Geneva. Each member nation sends two government officials and both an employer and worker. All members are able to voice their opinions and vote on issues. As a result of the conference, international labor standards are created, a budget is decided upon, and the governing body is elected (ILO website).
The ILO conventions are the groundwork for setting the labor benchmark. For example, convention 29 addresses forced labor: “This fundamental convention prohibits all forms of forced or compulsory labor, which is defined as ‘work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily’ (ILO).” The ILO estimates that over 12 million people worldwide are subject to forced labor. By creating a motion against forced labor, the ILO is working to battle the issue.
Convention number 138 is also a heated topic, child labor. The convention creates a general minimum age of 15 years to work and sets the bar at 18 years for dangerous work conditions. The convention allows some leeway, allowing children in underdeveloped countries to work at the age of 12. Around the world, 250 million children between the ages of 5 and 14 are working. (Amnesty 4). The ILO is trying to significantly cut this number. Its goal is to eliminate the worst forms of child labor such as slavery, trafficking and child prostitution, outlined in convention 182 which was created in 1999. Any country that ratifies this convention must also take the necessary steps to remove children from these situations and rehabilitate them into society.
The International Labour Organization also created the International Programme on the Elimination of Child Labour, IPEC, in 1992. This organization is the largest of its kind and combats child labor in over 88 countries. IPEC instates support programs and removes children from harmful work environments. IPEC explains that not all child labor is targeted. Children helping their parents, doing simple chores, or working in a family business is acceptable. It’s when work “deprives children of their childhood, their potential and their dignity, and…is harmful to physical and mental development” that the problems occurs (ILO).
The ILO and IPEC have been extremely successful. In 2004, the number of children working worldwide dropped by an astounding eleven percent since the four years prior to 218 million (ILO). Even though so much progress has been made, there are problems with the organizations. Legislation in the ILO is voluntarily ratified. Thus, if a country chooses not to follow a particular standard, they may decline ratification and are not bound to the convention (Varley 33). Several countries, like the US, often do not ratify conventions to avoid conflict with their own national laws. Others may choose not to sign simply because they do not want to abide by the standards.
Another problem is that in order to show compliance, governments submit reports to show they have abided by the conventions (Amnesty 31). This trust system does not always work, because countries often ratify standards but do not honor them. The problem with this is that there is a limit in the ILO’s power to enforce the conventions. Enforcement is based on good faith and ‘peer pressure’ and is not legally binding (Varley 34). For example, China and the US signed an agreement to ban prison labor. However, in 1992, China enlisted more than 10 million prisoners into forced labor programs in which they were unpaid and often put in dangerous working situations (Varley 73). Prestigious US companies like Boeing and Chrysler were caught receiving exports from China using its prison labor.
Even though standards are put into place, countries and companies will often do as they please until someone shakes their finger and takes a stand. If Nike, the company who puts its name behind sports giants like Michael Jordan and Tiger Woods, and tells consumers to ‘just do it’, can be caught in such an unethical tangle of sweatshops and employee abuse, one begins to question the integrity of any company behind closed doors. Fortunately, the goodwill of humans prevails in the end with the creation of organizations like the WTO and ILO. The World Trade Organization and the International Labour Organization, despite flaws and criticism, have made significant progress in this stance for the human cause and will continue to fight for labor rights for years to come.
Bibliography
Amnesty International.Global Trade, Labour and Human Rights. London: Centurion
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Herbert, Bob. “Nike’s Boot Camps” The New York Times 31March 1997, 26 May 2008.
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Moran, Theodore H. Beyond Sweatshops: Foreign Direct Investment and Globalization in Developing Countries. Washington D.C.: Brookings Institution Press, 2002.
Varley, Pamela. The Sweatshop Quandary: Corporate Responsibility on the Global
Frontier. Washington D.C.: Investor Responsibility Research Center, 1998.
World Trade Organization Website,