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In the Dominican Republic, the poorest 20% of the population earn just5 percent of national income, the richest 10% earn nearly 40%. Over30% of the population live in poverty. In Indonesia, over 50% ofpeople earn less than US$2 a day. The wealthiest 10% of the countryreceive about 30% of its income while the poorest 20% of peoplereceive only 8%. These poverty levels and extremes of incomeinequality hinder economic development but provide a happy huntingground for predatory foreign businesses looking for cheap labour in abusiness environment free of social and environmentalresponsibilities.
But sourcing their main inputs from overseas, paying poverty wages andexempt from export duties, benefits from these export production zonesto local economies are few. Over the last decade environmentalproblems and the failure of free market capitalism to deliversustainable development have become increasingly self-evident andembarrassing. Neglect of labor rights has been a prominent feature. InApril this year the ILO issued a report citing 300 workplace accidentsa day in Indonesia, the worst record in South East Asia. This may ormay not be a direct result of the World Bank's notorious EastAsian Miracle report in 1994 which argued openly and forthrightly forthe suppression of free trades unions.5
The first factory at the new free trade zone near Ouanaminthe openedin August 2003 with 300 workers making Levi's Jeans. Grupo Mexpects to employ a total of 2,500 workers when the project iscompleted. Other companies hope to start up plants soon. But as theproject develops employees are finding they are prohibited fromorganizing. Workers have already been fired for seeking improvementsin working conditions.
None of these codes and monitoring procedures alter the fact that theonly worthwhile substantive defence of workers rights is a directfreely negotiated agreement between workers and their employers. Therecent behaviour of the P.T.Doson company in Indonesia showed clearlythe uselessness of Nike's adherence to any code of conduct. Nikehad outsourced manufacturing to P.T.Doson who made 7000 workersredundant when production was cut back. Doson reneged on statutoryobligations leaving thousands of workers without adequate severancepay.
Nike is big enough not to need any funding to facilitate itsopportunism. Penniless, vulnerable workers yield all the funds itneeds. Yeheskiel Prabowo also said at Davos, We are concerned thatjust as free and democratic unions are starting to emerge in Indonesiaand to campaign for better working conditions, foreign investors likeNike are reducing their investment and moving to countries where unionrights are not respected13, like Chinaand Vietnam.
But even within China, having dumped its long-suffering Indonesianworkforce, Nike is pressuring suppliers to cut costs. The only coststhose suppliers can cut are labor costs and costs incurredmanufacturing responsibly so as to protect the environment. InNovember this year the Standard and Poor's rating service assigneda BBB rating to the Yue Yuen company who supply Nike, Reebok andAdidas. The company supplies around 17% of the world market inathletic and casual shoes. Yue Yuen have just issued a US$300 millionbond to raise capital. The bond matures in 2008.
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