Nike targets abuse in Malaysian factories From The Wall Street Journal Asia
KUALA LUMPUR, Aug 4 — Nike Inc said it has taken steps to correct worker-abuse problems in a factory it uses in Malaysia, an action that the athletic-apparel giant said reflects its concerns about the country’s chronic labour shortage and how it affects factory workers.
Nike on Friday alleged abuse at Hytex Integrated Bhd., a Kuala Lumpur-based garment manufacturer that owns a factory producing Nike T-shirts. Nike, which is based in Beaverton, Oregon, the United States, said it had completed its initial investigation into “claims of unacceptable living conditions, withholding of worker passports and garnishing of wages” that began after an Australian television report last month alleged worker mistreatment at Hytex.
In some cases, migrant workers complained that their passports were confiscated by managers, said Hannah Jones, Nike’s vice-president of corporate responsibility.
The practice may have been used by the factory to compel workers to pay their own employment-permit fees, ordinarily paid by the company itself, she said. Nike said that all current employees will be reimbursed for fees associated with employment while from now on, any such fees “will be paid by the factory as a cost of doing business.”
Also, Nike said it found that the majority of housing for employees was “unacceptable.” It said all workers will be transferred to new Nike-inspected housing within a month.
Michael Saw, executive director of Hytex, said the company met Nike compliance officials about two weeks ago to discuss violations of Nike’s code of conduct for foreign contract manufacturers and that Hytex has “rectified” the issues. “We have been working for Nike for the past 15 years,” Saw said, maintaining that the allegations of abuses by the Australian reporter were “out of proportion” to the facts.
Like many businesses in Malaysia, Hytex depends on migrant labour. The country has an estimated 2.1 million foreign workers legally employed. Estimates of illegal workers range from 500,000 to 1.2 million.
The recent issues highlight a growing concern for Nike’s manufacturing operations in Malaysia, where the US company focuses primarily on apparel.
The country, once viewed by the industry as a possible alternative to China for manufacturing, has found itself crippled by a labour shortage as a prospering populace of 27 million shifts away from factory jobs.
That has left Malaysia dependent on workers from as far as Nepal and Pakistan, who are offered fewer rights in the country, setting the stage for the kinds of abuses that can embarrass American partners. Nike itself has battled criticism of its labour practices on and off since the 1990s.
The Malaysian government has tried, with limited success, to impose order on the migrant-worker situation. Labour officials have vowed to prosecute employers who break labour laws and have periodically announced crackdowns. But corruption, porous borders and lack of strict legal enforcement have impeded progress.
“Many Malaysian policies for bringing in migrant labour into the country are enabling some of the behaviour we think is unacceptable,” said Nike’s Jones. “The issue of foreign migrant labour is very new to us.”
Hytex’s Saw said Malaysian garment operations like his company are almost completely dependent on migrants. “We have no choice,” he said. “Malaysia is not a third-world country anymore … Malaysians don’t like factory work. If you ask them to do things like sewing, they’re not interested.”
Saw complained that the TV report alleged that Hytex and other Malaysian contract garment makers used “forced labour,” a charge he disputed. He said the workers at the apparel plant — mainly from Bangladesh and Vietnam — held Malaysian work permits and were legally recruited through employment agencies.
“Nobody is being forced to work here,” Saw said. “Our facilities are similar to those for locals for pay, overtime, etc … We treat the foreigners equally as local workers.” Saw acknowledged that housing for the migrant workers at what he described as a “temporary hostel” was inadequate. He said Hytex had begun shifting the workers into new housing as demanded by Nike.
Saw said withholding migrant workers’ passports was a common practice among Malaysian employers and was done simply to secure the documents.
“If we didn’t keep the passports, they might be lost or stolen,” he said. Nike said all workers will now “have immediate and total free access to their passports.”
Last week, Nike met representatives from its 37 apparel factories in Malaysia to reiterate its policies.