by Jeff Ballinger
Director of Press for Change,
a consumer information organization
monitoring labor rights issues in developing nations
Author Francis Fukuyama made an address at a symposium to launch
New York University's "Krasnoff Program of Global Business
Studies." The symposium's main theme was the same as the
title of Fukuyama's latest book: Trust. According to George
G. Daly, Dean of NYU's Stern School of Business, "trust"
has been given short shrift as a subject for business students
because it "is viewed as a 'soft' topic, an ethereal, non-quantifiable,
non-scientific variable." There is, perhaps, no area of
human endeavor where trust is harder to come by than in the field
of human resources management; the tension between "labor
rights" and "management flexibility" cannot be
understated, even in countries with decades of labor-management
experience. When one complicates matters with up to a half-dozen
differing nationalities, two or three languages, unpredictable
host governments and conflicting laws, it seems hopeless to consider
undertaking to get workers, buyers, contractors and "interested
observers" to trust one another. Still, that is the mission
of the world-wide consumer campaign for sweat-free apparel.
In pushing ahead for real change, it is important to understand
that Fukuyama was talking about businesses using trust to build
informal information-sharing networks in highly-developed enterprises,
among highly-skilled workers, managers, etc. What he said about
the other end of the production scene, however, has relevance
here. He talked about the "implicit premise" of "Taylorism"
(the basic factory organizing principle for most low-skilled jobs);
that there are "economies of scale in managerial intelligence"
that benefit the enterprise; and that workers "react to this
system through their unions" and demand formal guarantees
about the operation of the workplace. Working without benefit
of trade unions, however, most apparel and footwear workers in
the developing world just go on from day to day in various stages
of alienation. While these young workers may benefit later in
life from Fukuyama's post-Taylorite "high-trust" organization,
it is within the consumer movement's power to deliver to them
a modicum of dignity and a chance to improve their conditions.
It is most important to get as close to the workers as possible
and not to impose "solutions" from above. I have watched
in bemusement for nearly nine years as literally thousands of
(mostly) well-intentioned people around the world have written,
re-written and circulated drafts of codes of business practices
for transnational corporations. How much different would these
codes read if they were drawn up by workers, I wondered. Once
I discussed code language and practice with "specialists"
from Reebok a company with thousands of Asian contract workers.
"During the five years of this code's existence," I
asked, "did you ever once sit with the vice-President
for sourcing and ask what it would cost to fix a problem like
forced overtime or punishment for taking a sick day?" They
had to admit that they had no idea what would be the cost involved
in fixing a couple of problems workers cited to our researchers
repeatedly. As for the Reebok code of conduct ("Human Rights
Production Principles"), those who pay attention to these
matters attest to that code as being pretty good. What workers
would think is another question altogether.
When I returned from Asia after more than a decade there,
I began to seek some answers for questions raised by our research.
As I had suspected from my own work, there were professional
sociologists who believed that the effort of research itself
was important to simple people in the developing world -- when
those simple people themselves were carrying out the research.
"Participatory Action-Research": I found it very helpful
to read the work of Muhammud Anisur Rahman (International Labor
Organization, Geneva) and Dr. Orlando Fals-Borda (President
of Latin American Council for Adult Education). Similarly, I
found the work of Prof. Ozay Mehmet (Carlton University, Ottowa)
most enlightening. For example, in "Westernizing the Third
World: The Eurocentricity of Economic Development Theories"
Prof. Mehmet develops his idea of "pro-labor development"
with a strong emphasis on "grassroots voices and reasoning"
and empowering local culture. He does see a role for "outsiders"
-- but only those who have come to learn about and appreciate
A word should be said about studies carried out by international
bodies such as the International Labor Organization and the United
Nations Development Program. Often, these studies are unavailable
outside government and donor circles. (Some have very mundane
titles such as "Employment Consequences of the Plywood and
Textile Export Surge"; others are more tantalizing, like
"The Serious Decline in Real Wages for Java and Its Effects.")
This makes it impossible for workers and their allies to address
the arguments of "development specialists" and their
own government officials. Through the years, I have wrested away
a few of these reports -- far more have remained confidential.
The workers have a right to gain all the knowledge they can about
how their national economies are being run. The plywood/textile
report, for example, notes the use of outrageously excessive overtime
in these industrial sectors, which are primarily foreign direct
investment. Since job creation is a dominant theme in the drive
to attract foreign investment, it would seem reasonable to limit
the use of overtime, thereby creating tens of thousands of new
jobs (reducing accidents, taking pressure off young mothers, etc.).
Workers and their advocates never had a chance to make these
policy arguments, however, because the statistics about the reliance
on excessive overtime were never made available to them.
We must move,then, in the direction of what Fals-Borda and
Rahman describe as "breaking the monopoly" of information
in the development field, not only by sharing information but
by putting the workers themselves in control of gathering the
In 1992, I designed the most extensive independent industrial
worker survey carried out in Asia in the last decade --Legal Assistance
for Industrial Dispute Settlement (LAIDS). Funded by the Jakarta
office of the U.S. Agency for International Development, the research
was carried out for 28 months (1993-96); during the year of most
intense activity, LAIDS had two hundred surveyors in the field.
Surveyors averaged sixty interviews per month, compiling a grand
total of 160,000 completed survey forms.
Years earlier, I administered a USAID Human Rights grant:
Minimum Wage Compliance in Factories on Java. While much smaller
than the LAIDS study, the impact was much greater, due to the
shocking results -- over 40% of employers were paying less than
the minimum wage, less than a dollar a day at the time. Meanwhile,
the government admitted that the wage was only about 60% of what
a single adult needed to survive. It was during this survey that
I found that the sport shoes-for-export factories were among the
most persistent law-breakers. To get an idea of the difference
between independent research and that which is controlled or used
for purposes other than improving the lives of workers, consider
the "inspections" of the Manpower Ministry (of Indonesia)
the year before the minimum wage survey was carried out: the
700 inspectors of the ministry found over 16,400 labor code violations.
Only 60 cases ever got to the first adjudicative step -- of those,
nine verdicts were posted. By contrast, the relatively tiny minimum
wage survey team was able to generate tremendous media pressure
on corrupt officials and lawbreaking foreign investors. Reliable
press reports indicate that, six months after the minimum wage
survey, compliance had improved by 15-20%.
The same year as the minimum wage survey, a group of young
Indonesian labor economists at the Institute for Technology at
Bandung (ITB) launched a joint study with the prestigious Dutch
Institute for Social Studies in the Hague. It was a study of
the shoe industry, from large export-oriented firms to the smallest
mom-and-pop operations. While the report did not surprise most
of those familiar with the depredations of the Korean and Taiwanese
investors, the government decided to put a brake on press reports.
Head of the influential Investment Coordination Board, Santoyo
Sastrowardoyo, indicated his strong displeasure and the authoritative
daily, Kompas, editorialized the next day, "Perhaps
the wages of shoe workers is too delicate a subject to be discussed
publicly." To be sure, the government of Indonesia finds
independent research annoying and, in certain cases, threatening.
For over two years, for example, LAIDS surveyors were kept out
of East Java -- a decision heavily influenced by the local military
command. Similarly, the Governor of Central Java -- a military
man himself -- kept the minimum wage survey out of Central Java
altogether. He openly stated that he wanted a "favorable
business climate" in response to criticism of his actions.
While dozens of garment factories were surveyed during the
LAIDS research, I only found one sport shoe-producing factory;
it had about 8,000 workers. Of the 550 interviewed there, 380
answered the final, open-ended question about special problems.
Almost sixty complained about "humiliating treatment by
management." Around forty complaints each were marked up
for: dirty drinking water; not being able to take a day off (even
with a doctor's note) without losing your attendance bonus; and,
forced overtime. One does not need to reflect on these complaints
for long before coming to the conclusion that it would not cost
a great deal of money to fix many problems which workers grumble
about. Without employing the proper survey techniques, however,
the goal of identifying and fixing some of those problems will
TAKING ON THE GLOBAL MARKET MACHINE
Time to Gear for a Revolution in Worker Rights
Two years ago, Kevin Sweeney, formerly an official at the
apparel company Patagonia, wrote an Op-Ed piece for the Los Angeles
Times titled: "We Can Work Up to a Living Wage." He
described the continuing efforts of the White House-backed Apparel
Industry Partnership to mount a credible campaign to curtail "sweatshop"
abuses at the factories of contractors in the developing world.
At the same time, the brave young activist, Dita Indah Sari,
languished in an Indonesian jail, having been sentenced to a five-year
term in 1997 for "sowing hatred." Amnesty International
honored her work among young, mostly female, factory workers in
a special tribute to those imprisoned for organizing around issues
outlined in the Universal Declaration of Human Rights. Amnesty's
"Defend the Defenders" postcard about Dita's work noted
that she had rallied Indonesians to demand their rights under
the UDHR's Article 25 -- the "decent standard of living"
provision. Only months before Dita Sari was arrested, she helped
workers to conduct a protest sit-in at the Indonesian parliament;
the factory workers were producing expensive shoes for export.
Ironically, the period around Dita's arrest could be viewed
as "the good old days" for Indonesia's low-wage workforce;
they had managed -- through five years of strikes and agitation
-- to push the country's minimum wage up to just about the government's
"minimum physical needs" figure for a single adult ($2.50
a day). That's 300% higher than when I arrived in Indonesia in
1988! Then it all came crashing down, when the "Asian Contagion"
hit. Western journalists who once lauded the workers' attempts
to tame huge multi-national enterprises (MNEs) began to write
that they were lucky to have any kind of job at all. In early-1998,
Nike and Reebok were praised for "increasing" Indonesian
workers' wages to $1.20 a day, despite the fact that this represents
a 25% decline in real wages compared to two years ago.
As workers and worker rights advocates struggle mightily
against repressive governments, their efforts are mocked by MNEs
that feign concern and busy huge teams of lawyers, accountants
and public relations consultants with "reform" efforts.
In recent years, they have come up against groups of university
students -- from BC to USC -- which are edging closer to victory
in their fight for accountability in the burgeoning student anti-sweatshop
Administrators are desperately trying to tamp down the students'
passion and commitment; a common ploy is the decision to join
the "Fair Labor Association" (FLA). Students like Nora
Rosenberg at Brown issued strongly-worded denunciations, criticizing
the FLA's low standards for compliance -- no living wage requirement,
for example -- and hostility to the key issue of disclosure of
factory locations. These same administrators express concern
about the effect that the enforcement of better conditions for
apparel workers might have on the developing nations so desperate
for foreign investment. This argument would be viewed with disdain
by the workers and activists I have encountered in Asia over the
past fifteen years.
Corporate misbehavior overseas "has become the most popular
human rights issue of the day in this country," said Richard
Dicker, who monitors U.S. corporations for Human Rights Watch.
Dicker. Sweatshop abuses now make headlines and every day more
consumers in the developed world are questioning how the goods
they are being offered are being made.
Companies know, and what needs to be understood by everyone else,
is that the exploitation of cheap labor-from the barrios
of Los Angeles and the maquiladoras in Mexico to the tightly
regimented factories of Asia -- conforms exactly to the business-first
model for economic growth promoted by the World Bank and the International
Monetary Fund (IMF) and embraced by successive U.S. administrations
in what is known as the "Washington Consensus." In this
model, MNEs play countries off against each other in their quest
for low-wage, tax-free, regulation-free manufacturing environments.
Human rights and labor abuses are but "complications,"
the word used by Jeffrey E. Garten, former Under Secretary of
Commerce for International Trade and one of the chief proponents
of the primacy of "commercial diplomacy" in the Clinton
administration, in an address to the Foreign Policy Association
in New York in 1995.
Labor and rights activists took pride in firing up the sweatshop
issue and in Congress's denial of fast-track trade authority to
the White House; the victory that helped to "warm up the
crowd" for the big anti-WTO demonstration in Seattle. But
MNEs and finance capital already are virtually free to operate
globally with little or no interference. The formal de-linking
of human rights and trade by the Clinton administration in 1994
signaled business that the doctrine of unfettered markets was
locked in and that all else is, well, complications, to be handled
by ever greater amounts of spin, disingenuous gestures and outright
What has been unleashed is a global machine which is enormously
powerful, mobile and quick, to borrow the imagery used by William
Greider in his book, One World, Ready or Not: The Manic Logic
of Global Capitalism. The campaign to expose the human wreckage
this machine leaves in its wake should continue and be expanded.
But new strategies and techniques need to be developed for the
long haul, based on the idea of creating a global civic movement,
if there is to be any real possibility for injecting democracy
into the market. A number of these are suggested in the last section
of this paper. One deserves mention here at the top.
The crux of the sweatshop issue at the moment is the issue of
factories being monitored by people and groups whom workers would
trust. Business is fighting it ferociously and ultimately will
retain the power, in alliance with anti-democratic and corrupt
regimes, to bar access to its facilities abroad by truly independent
What should and can be done, therefore, is to empower the workers
to be the monitors themselves. This means making far greater use
of participatory action research, an approach which thus far has
been vastly under-utilized but has proven effective in raising
worker consciousness and spreading self-organizational skills
in both the developed and developing worlds. One of the reasons
why the National Labor Committee, the Hong-Kong based Asia Monitor
Resource Centre and the Hong Kong Christian Industrial Committee
have been so effective in bringing worker abuses to the fore is
that their research is so thorough and carefully conducted. Consider
the potential if workers themselves were to acquire the same skills.
Greider is less than optimistic about the prospects for bringing
the global machine to heel, but he believes it is possible if
"people discover their social connections to distant others
around the world and act upon them." Participatory research
programs fit the bill. But first, a closer examination of the
"Nike is U.S. foreign policy in action."
Nike CEO Phil Knight in the 1996 Nike annual report
Knight's statement is probably one of the truest he has ever
made. Since the Reagan administration, a principal goal of U.S.
foreign policy has been strengthening American business abroad.
And despite the Clinton campaign's criticism of the Bush administration
for disregarding human rights as it promoted U.S. business interests,
commercial diplomacy quickly became paramount in Clinton foreign
policy, particularly in its approach to the developing world.
The Big Emerging Markets (BEMS) policy was announced early in
the watershed year of 1994 by Jeffrey E. Garten, in another of
his speeches to the Foreign Policy Association. He listed the
ten BEMS the administration had identified as offering "enormous"
commercial potential: the Chinese Economic Area (including China,
Hong Kong and Taiwan), India, South Korea, Mexico, Brazil, Argentina,
South Africa, Poland, Turkey and the Association of Southeast
Asian Nations (ASEAN), including Indonesia, Brunei, Malaysia,
Singapore, Thailand, the Philippines and Vietnam. But again, he
noted, there would be "complications," saying,
"Indeed, the coming great surplus in world labor will
be located in large part in these Big Emerging Markets. That means
that either these would-be workers will offer themselves to world
markets at well below market rates, or they will not find work
and they will seek to move to where the work is, causing the tensions
associated with migration issues. In either case, pressure on
workers in the industrialized countries seems inevitable."
In other words, as the U.S. government promotes the interests
of business, expect worker incomes to be suppressed on both ends
of the global system. But with such great opportunities for corporate
profits, that will just have to be part of the bargain.
U.S. commercial diplomacy converges perfectly with the model
of Third World economic development endorsed by the World Bank.
The model is laid out in detail in The East Asian Miracle,
a World Bank study commissioned by Lawrence H. Summers when he
was the bank's chief economist. Summers later became Clinton's
Secretary of the Treasury in the second Clinton term.
In The East Asian Miracle, the World Bank team of economists
hails the "High Performing Asian Economies (HPAEs)"
and endorses the suppression of worker rights as a key component
of their success. There has been no effort to conceal this study;
indeed, it was prominently featured on the World Bank's web site.
In Chapter 4, the study embraces what it calls the "Labor
"In Japan, Korea, Singapore, Taiwan and China (and to
a lesser extent Malaysia), governments restructured the labor
sector to suppress radical activity in an effort to ensure political
stability. Governments abolished trade-based labor unions and
pushed the creation of company- or enterprise based unions
"Labor movements in Indonesia and Thailand, while not
subjected to systematic restructuring, were nonetheless routinely
"Singapore courted foreign investment in labor-intensive
manufacturing by suppressing independent unions and assuring investors
The World Bank team then underlines one of the key advantages
derived from the suppression of labor -- namely, that it frees
government bureaucracies to implement the economic austerity measures
and wrenching structural adjustments that open the doors to private
investment. This benefit is referred to as "Insulating the
Economic Technocracy." The study says,
"While leaders have been authoritarian or paternalistic,
they have been willing to grant a voice and genuine authority
to a technocratic elite and key leaders of the private sector
The study goes on to say that 'insulation,' which enables
technocrats to operate without interference from 'politicians
and interest groups,' has been achieved in the field of labor
"Reorganization of labor from industry-wide unions into
company unionshas similarly reduced the marginal benefit and increased
the marginal cost of collective action. Thus, in contrast with
workers in many other developing economies, workers in the HPAEs
are more likely to refrain from work stoppages and other disruptions
and from lobbying the government for mandated wage increases.
Because employers faced fewer demands from labor they, too, have
had less incentive to press demands on the technocracy."
Finally, the World Bank team embraces the obvious, stating
that the principal benefit of wage suppression is "higher
profits" for private firms. The East Asian Miracle
credits more than 50 members of the World Bank staff, as well
as about two dozen economists from universities and think tanks
around the world, for carrying out and commenting on the study.
So, there we have the core of the reigning orthodoxy for economic
growth through global marketization in the developing world: anti-democratic,
anti-labor regimes suppressing wages to benefit private business
and foreign investors. Call it market authoritarianism. It is
a system in which people, their political and civil rights denied,
are treated as inhabitants of global markets rather than citizens
of nations. Former Chinese leader Deng Xiaoping pointed the way
almost two decades ago when he told the Chinese people in a speech:
"Ordinary people need not say too much; they should just
keep their heads down and work hard."
In China today, workers are under the control of Communist
Party cadres. As one Boeing plant manager said to William Greider,
"If you want something done, you go to the party member and
it's done -- like that." Some 17 million Chinese people
now work in factories funded by foreign investments in the burgeoning
industrial zones along China's southeastern coast. Labor analysts
Anita Chan and Robert A. Senser have done extensive research in
this region and described the conditions in Foreign Affairs
"The most repugnant abuse is physical punishment, including
beatings inflicted by supervisors or private guards, some carrying
electric batonsprohibitions against getting pregnant, married,
or even engagedWorkplace health and safety in such enterprises
is often scandalousBecause turnover rates are on the rise in southern
China, many factories have become more reliant on a kind of bonded
labor to retain workers."
Describing shoe factories in Guangdong province, a Beijing-based
executive of a national leather manufacturing association said
to Chan and Senser, "It's super-exploitation down there.
That's how they burn people alive."
Since 1995 investigators from the Asia Monitor Resource Centre
and the Hong Kong Christian Industrial Committee have regularly
researched worker rights and conditions in numerous sports-shoe
factories in Guangdong province, including plants where Nikes,
Reeboks and other brands are produced. Nike and Reebok argue that
conditions in the factories have improved. However, the two monitoring
groups have concluded, based on their most recent research from
May to July 1997, that "conditions have not improved, and
in some cases are even worse."
To briefly summarize just one example, workers at the Nority
Shoe Factory in 1997 were forced to work overtime beyond the limits
of China's labor law and were not paid the legal minimum wage
(the equivalent of $1.93 a day) or the legal wage for overtime
pay. Working conditions were "clearly hazardous to the workers'
health." A number of workers reported that they had been
beaten by security guards, and that workers could be fired for
becoming pregnant. Upon being hired workers had to pay one month's
deposit (illegal under Chinese law), which would be forfeited
if the workers quit or were fired. This is the type of bonded
labor that researchers Chan and Senser referred to above, what
José Benqoa, the United Nations Human Rights Commission
special rapporteur on economic, social and cultural rights, describes
as "new forms of slavery."
The Nority factory is Taiwanese-owned and produced shoes for Reebok.
The Asian rights monitors concluded that the entire operation
was in "flagrant violation" of Reebok's code of conduct,
which they found, "overwhelmingly, the workers in Nority
knew nothing about." In response, Doug Cahn, director of
human rights programs at Reebok, said to The Journal of Commerce
that the account by the widely respected Asian monitors -- one
of which, the Asia Monitor Resource Centre, has been researching
labor conditions in East Asia for more than twenty years -- "doesn't
reflect current reality" in China.
"China is the only cheaper labor force in the world."
Angelica Ayala Muller, president of the Western Maquiladora
Association of Mexico, quoted in El Financiero International,
25-31 March 1996
Market authoritarianism reached an apogee in Latin America under
former Mexican president Carlos Salinas (1988-1994). Salinas,
as a technocrat skilled in the ways of structural adjustment and
a politician presiding over a state-party system, embodied the
two elements of the model all in one person. As a result of his
free-market crusade, first as minister of planning and budget
under his predecessor, Miguel de la Madrid, then as president,
Mexican workers' real earning power shrank by nearly 70 percent.
For his performance, Salinas was given a seat on the board of
Dow Jones and presented with the highest award given by the pro-business,
corporation-funded American Enterprise Institute in Washington.
He also was a leading contender-the Clinton Administration's first
choice-to run the World Trade Organization (WTO). That is until
it was revealed that his government had been astonishingly corrupt,
even by traditional Mexican standards.
One of the, let us say, complications of "insulating technocrats"
is that it leaves them accountable to no one. The fact that so
many of them become crooks, their much- touted skills developed
into the crony capitalism which defines the elite-driven politics
of Latin America and Asia, led in no small part to the collapse
of the Mexican peso in 1994 and the ongoing crisis in Asia.
Ernesto Zedillo, Mexico's former president, adhered to Salinas'
low-wage, export strategy. He had little choice, because that
was part of the terms of the 1995 IMF bailout of Mexico, whose
principal architect was none other than U.S. Deputy Secretary
of the Treasury Lawrence H. Summers. Yes, Zedillo allowed electoral
reforms that led to unprecedented losses for his ruling party
in 1997 and the 2000 victory by Vincente Fox. But he continued
to play rough to satisfy foreign capital's appetite for cheap
Since the peso's collapse, independent Mexican unions have been
risking life and limb trying to organize workers in foreign-owned
plants and striking for better wages in the public sector. In
response, Mexico became increasingly militarized -- shades of
Indonesia -- and human rights violations, including torture and
disappearances, have soared. When former President Clinton made
his first trip to Mexico, the Zedillo government set up military
and police cordons throughout Mexico City. Standing with Zedillo,
"No two countries are working together on more important
issues with a more direct effect on the lives of their people,
than Mexico and the United States."
The most direct effect on people that day was the arrest of
scores of labor unionists who were planning to protest against
the North American Free Trade Agreement (NAFTA) and U.S. influence
over Mexico's economic policies, but instead found themselves
in jails on the outskirts of the city.
There are now close to one million workers, mostly women, toiling
in more than three thousand factories in Mexico's maquiladora,
or export-processing, sector. The assembly-for-export sector has
nearly doubled in size since 1994 as the MNEs have swarmed in
to exploit tumbling wages and safety rules that exist mostly on
paper. While a majority of the maquiladoras are found along
the border with the U.S., the past Zedillo government promoted
their expansion throughout Mexico. As of December 1997 it could
brag to foreign investors that, as in Indonesia, not one factory
had been organized by an independent union. Such is the Mexican
"As Nike goes, so we go, and the last couple of years
have been excellent."
Peter Nickerson, director of Hong Kong-based Growth-Link Overseas
Co., which makes Nike-brand shoes at joint ventures in China's
southeastern Fujian province, quoted in The Journal of Commerce,
10 December 1997
According to the reigning model of market globalization, Nike
has done everything right, and it shows on the bottom line. Nike
may have been stung in the media in recent years, but Phil Knight
could boast in the 1998 annual report of $9.2 billion in sales,
more than double Nike's revenues just two years ago, and a 44
percent increase in profits. According to Forbes, Knight's
personal net worth is several billion dollars.
Nike has now been declared a model-within-the-model by Jardine
Fleming, one of the biggest investment firms in Hong Kong. In
a report called "Tracking Nike's Footprints Across Asia,"
issued in early 1997, the firm attributed Nike's success to choosing
factory sites in countries with the cheapest labor and the most
authoritarian governments. Nike first used plants in Japan in
the 1960s. When labor costs there climbed a decade later, it moved
to Taiwan and South Korea which were largely under military rule
and where wages were suppressed. When those countries began to
democratize and labor unions gained strength in the late-'80s,
Nike shifted production to Indonesia, which has been in the grip
of the quasi-military Suharto regime since 1967, and Communist-controlled
China. Nike avoided the Philippines, where democracy of sorts
has existed since the late 1980s, and downgraded production in
Thailand when that country's democracy movement gathered strength
Recently, with wage pressures and labor protests increasing in
Indonesia, followed by stepped-up military repression, Nike has
been setting up shop in Communist-ruled Vietnam. In April 1997,
the Indonesian government raised the minimum wage from $2.25 a
day to $2.46, which by the government's own standards still falls
short of bare subsistence for a single adult. Nevertheless, Nike
was displeased. Nike spokesperson Jim Small said to Reuters, "there's
concern what that does to the market-whether or not Indonesia
could bepricing itself out of the market."
A month later, Nike paid $200 million for the exclusive endorsement
rights to the Brazilian national soccer team. Nike President Thomas
Clarke told Business Week, "You never overpay for
things that are good." Part of those costs now can now be
defrayed thanks to the economic upheaval in Asia. The region's
currency crisis dragged down the Indonesian rupiah by more than
55 percent between July and December 1997. That meant that the
legal minimum wage dropped from the equivalent of $2.46 to about
$1.20. As of December, the rupiah continued to plummet. Named
in January 1997 by Business Week as one of America best
corporate managers, Phil Knight is without doubt already exploiting
this windfall. Journalist Donald Katz, in his book about Nike,
Just Do It, described the regime in factories where Nike
shoes are made as, "Management by terror and browbeating."
Rather than excoriate Katz (as the company has done to most critics)
for such observations, Phil Knight adopted it as sort of a corporate
"Everything changed after the Wall fell in November
1989. That same month, Lawrence Eagleburger, a secretary of state
under President Bush, issued a 'Bill of Rights for U.S. Business.'
It told foreign-service officers what businesspeople could demand
from themwhen the Clinton administration took over, it redoubled
the business thrust."
Greg Steinmetz and Robert S. Greenberger, staff reporters
of The Wall Street Journal, "U.S. Embassies Give American
Companies More Help Overseas," 21 January 1997
Commercial diplomacy now dominates U.S. foreign policy, to
ensure that U.S. business maximizes opportunities for profit provided
by the new global model. On June 21, 1996, The Journal of Commerce,
an avidly pro-free trade daily, editorialized against a report
that called for using trade sanctions to promote human rights.
In the course of their argument, the editors said the following:
"The report, compiled by the New York-based Lawyers Committee
for Human Rights, is correct in implying the Clinton administration
has put the 'unfettered pursuit of commerce' above all else in
its foreign policy. This approach has reduced cabinet secretaries
to salesmen and state visits to sales missions. With planeloads
of corporate brass in tow, the late Commerce Secretary Ron Brown
traveled far and wide in search of deals. He measured his statesmanship
in the number of contract pledges he had obtained."
Rarely, however, are we given an on-ground look out how U.S.
commercial diplomacy is carried out. Bama Athreya, who wrote her
doctoral dissertation on women workers in Indonesia, was a junior
economic officer in the U.S. Embassy in Jakarta, Indonesia from
1992 through August 1994. The U.S. Ambassador at the time was
Robert Barry, a career foreign service officer. Ambassador Barry,
in an address to the Asia Society in New York, said his job was
to double U.S. business activity in Indonesia during his tour.
Athreya saw from the inside how that worked.
Under Ambassador Barry, staff meetings were increased from one
to two times a week. The second was held under the rubric of the
"Commercial Action Team," and every staff member --
all the way down to the consular office -- was required to report
what they were doing to support U.S. business in Indonesia. Moreover,
all were required to dig up and send leads to the U.S. Foreign
Commercial Service. They also were required to send these messages
by e-mail, so that there would be a record of their performance.
That dovetails with the report by Steinmetz and Greenberger in
the Wall Street Journal article cited above:
"The U.S. has long had foreign-service officers dedicated
to economic and commercial affairs, but their jobs were seen as
dead ends. Now, they are the fast track to promotion. Washington
considers what an officer has done for American companies."
During her tour Athreya saw that U.S. executives had virtual
run of the embassy, able to show up and get an audience with the
Ambassador without an appointment. One of them was Lou Clinton,
chief of Louisiana-based mining giant Freeport-McMoRan, a company
that has fouled the environment around the world, particularly
in Indonesia's province of Irain Jaya ("West Papua",
to those fighting the land-grab of former President Suharto).
Independent investigators have found, too, that the company's
workers have been severely disciplined by an armed private security
Athreya was assigned to escort a delegation from the Overseas
Private Investment Corporation (OPIC), a U.S.-government agency
that provides financing and project insurance to promote U.S.
exports. The delegation was looking into allegations that Freeport-McMoRan
was not abiding by OPIC rules which require respect for labor
rights and protection of the environment. According to Athreya,
when Lou Clinton got wind of that he asked for and was granted
"immediately" a meeting with Ambassador Barry. Athreya
was called in by the Ambassador to give Clinton and his chief
environmental engineer a detailed account of all the OPIC delegation's
meetings. When Athreya reported that a Deputy Minister for the
Environment in the Indonesian government had expressed concerns
about the effects of Freeport's operation on the environment,
the Freeport environmental engineer seemed surprised, turned to
Clinton, and said, "I thought we'd taken care of him."
The Embassy sided with Freeport and pressed OPIC not to lift the
company's privileges. Environmental conditions at the Freeport
installation in Irian Jaya were so poor, however, OPIC saw no
way around suspending the company's privileges. But following
continued lobbying by the embassy and Freeport's own team of high-priced
flacks in Washington, the company's OPIC benefits were soon restored.
In early 1994, a U.S. Trade Representative (USTR) delegation
arrived in Jakarta to continue what was then an already two-year
review of labor rights violations in Indonesia. The Generalized
System of Preferences (GSP) allows the U.S. to give preferred
trading privileges to developing countries, but under GSP law
it is barred from doing so if countries do not show improvement
in providing acceptable conditions for workers, guaranteeing the
right of workers to form independent unions and allowing them
to bargain collectively.
Indonesia failed miserably on every count. Labor law enforcement
has been practically nil as factory owners or managers are almost
never legally sanctioned. Independent union organizers were subject
to arbitrary arrest and prison terms on vague charges of "inciting
to riot" and "subversion," the latter of which
can carry a death sentence.
But the U.S. Embassy in Jakarta, heavily lobbied by the phalanx
of U.S. companies doing business in Indonesia, sided with the
Indonesian government, which was trying to sell cosmetic changes
to its labor laws as proof that it was committed to labor rights.
According to Athreya, in communications between the U.S. Embassy
in Jakarta and the USTR, the Embassy acknowledged that the Indonesian
government's case was very weak, but argued that if GSP privileges
were taken away, it would hurt U.S. business. In other words,
the needs of U.S. business override U.S. law.
The USTR delegation was feted at a reception held by the American
Chamber of Commerce in Indonesia, and a number of heads of Indonesian
companies were on hand. Athreya participated in a conversation
in which the head of one Indonesian conglomerate said straight
out to members of the delegation:
"Yes, we know the workers suffer, but we have to keep
them weak. If the workers get out of control, it is not the United
States or the Indonesian government that will get hurt, it is
we who will be killed."
Athreya says other embassy officials quickly went into a damage-control
mode and moved the conversation in another direction. But the
USTR delegation had heard perfectly what the man had said and
there could have been no clearer indication that the plight of
Indonesian workers was not about to improve.
It did not matter. Soon after, with plans underway for President
Clinton's trip to Jakarta later that year, Mickey Kantor, the
U.S. Trade Representative at the time, suspended the GSP review
and Indonesia retained its trading privileges. Kantor justified
it by pointing to a memorandum of understanding the Indonesian
government had agreed to regarding improvements in respect for
labor rights. Greg Talcott, now retired from the foreign service,
was also with the U.S. Embassy in Jakarta at the time, charged
with overseeing labor rights monitoring. On November 3, 1996 he
was quoted by Merrill Goozner in The Chicago Tribune:
"Our guys were just looking for any movement to allow
them off the hook. Everyone knew how the negotiations would turn
The memorandum of understanding was just window-dressing.
Within weeks of its signing, the government threw independent
labor leader Muchtar Pakpahan in jail. Following the 1996 U.S.
elections, there were allegations that the Clinton administration
had allowed Indonesia to keep its GSP privileges in exchange for
campaign contributions from two wealthy Indonesian families, both
linked to the Lippo Group conglomerate. But Sidney Jones of Human
Rights Watch/Asia had it right when she expressed doubt that any
foreign contributors played a role in the White House's decision.
Quoted by David E. Sanger in The New York Times on October
17, 1996, Jones said:
"They didn't have to, because the Fortune 500 did it
for them. American companies were afraid that there would be retaliation,
and that big contracts would go to the Europeans and the Japanese.
And that's how you really get this Administration's attention."
In November 1994, three months after Bama Athreya had finished
her tour and resigned from the foreign service, President Clinton
arrived in Jakarta. At the same time that he was reportedly chiding
Indonesian President Suharto on human rights, Commerce Secretary
Ron Brown was witnessing the signing of 15 mega-deals for U.S.
business in Indonesia.
As reported by Elaine Sciolino of The New York Times, President
Clinton was "stone-faced" during his photo session with
Suharto, the same face he would wear during Chinese President
Jiang Zemin's gala state visit to the U.S. in 1997. It is doubtful
that Suharto was in any way moved. He, as well as every other
autocrat and Big Emerging Market leader in the world, were far
more impressed by the White House's decision the previous May
to de-link human rights from trade issues and retain trade privileges
for China. As Amnesty International said in a statement prior
to President Clinton's arrival in Jakarta:
"The message to China and the world was that human rights
will be the sacrificial lamb to trade."
As if to underscore that very point, President Clinton, right
after his meeting with Suharto, addressed a gathering of U.S.
business executives and, according to The New York Times,
"did not disguise his glee at the news of the business deals."
The President told them, to great applause:
"I know that there is increasing wealth in Indonesia
and throughout Asia, but where I come from $40 billion is still
real money - and we're grateful for the business."
"We're going to work very hard for fast-track. We're
also going to work very hard for labor standards."
U.S. Secretary of Labor Robert Reich, The Journal of Commerce,
29 August 1996
The Clinton administration's officials worked hard to give
the appearance that human rights and labor issues somehow remained
a part of the U.S. foreign policy agenda. For example, Jeffrey
E. Garten, the garrulous former Under Secretary of Commerce, said
in an address to the New York Chamber of Commerce on December
2, 1994, a month after President Clinton went to Indonesia:
"Let me say a special word about human rights, because
they do loom so large in our values as a nation and in our foreign
policy. Perhaps the best example of the dilemmas we face are to
be found in China, where our human rights goals and our commercial
goals are both so important and receive equal priority."
Equal priority? Only months before Garten spoke, a Clinton
administration official described quite clearly how policy actually
functioned after the White House had de-linked trade and human
"When we met with the Chinese before, human rights was
first on the agenda and business second. Now it's business first,
business second and human rights if we have time."
The quote was carried by UPI, which reported that the official,
not surprisingly, was speaking on the condition of anonymity.
The quote later appeared in Reputation Management (January/February
1995), a public relations trade publication.
The Clinton administration maintained that the use of economic
sanctions was counterproductive in moving countries to respect
labor rights. But it had no qualms about using sanctions on behalf
of U.S. business. The White House slapped trade sanctions on China
when the intellectual property rights of U.S. enterprises were
threatened by Chinese knock-offs of American video-tapes and compact
disks. The U.S. Department of Commerce then wielded the same club
in getting Indonesia to agree to copyright protection for U.S.-manufactured
music cassettes. On the day sanctions were to be applied every
pirated cassette disappeared from stores throughout Indonesia.
Applying pressure gets results. Based on performance, however,
it is clear that Washington is willing to turn the screws only
on behalf of U.S. business interests. It is a policy which gives
priority to private property over the legal rights of people and
conforms exactly to the orthodoxy which holds that the law of
supply and demand supersedes the laws made by men and women, that
markets override morality, that markets in the end are
In July 1996 Cicih Sukaesih, an Indonesia worker fired along with
23 others from a Nike plant for demanding that they be paid the
minimum wage, came to Washington D.C. for a week to tell her story.
Secretary of Labor Robert Reich declined to meet with her and
John Shattuck, Assistant Secretary of State for Humanitarian Affairs,
said he had "no time." Shattuck, moreover, was in the
Indonesian city of Surabaya at the time when Indonesian labor
activist Dita Sari's trial was being held there, and did not even
make an appearance during the proceedings which culminated in
Sari's six-year sentence for "subversion."
In August 1997 Secretary Reich vowed that the U.S. would take
a strong stand on labor rights at the meeting of the World Trade
Organization (WTO) in Singapore. At the meeting -- held in Singapore
in December 1996 -- U.S. Trade Representative Charlene Barshefsky
made a tough-sounding speech on the need to incorporate into the
WTO basic labor standards, such as the right to organize unions
and bargain collectively. But, as Robert Kuttner reported in his
column in Business Week:
"word was leaked immediately that this was not a serious
U.S. negotiating priority. Barshefsky might as well have said:
'Treat this as merely a bone we need to throw the AFL-CIO.'"
In the end, the WTO adopted an empty resolution which stated
that trade liberalization would in itself promote labor rights-echoing
the White House line-and that labor standards must not be used
to question the comparative advantage of low-wage countries. All
of which meant that labor issues would remain confined to the
International Labor Organization (ILO), which investigates labor
rights abuses but has no authority to impose sanctions for violations.
The former ILO Director-General Michel Hansenne was even denied
the opportunity to address the WTO. After the meeting, U.S. officials
claimed Washington would continue to press in the WTO on labor
rights. Hansenne, in turn, said to The Journal of Commerce
that those who think trade and labor rights will be linked at
the WTO "are still dreaming."
On the day the WTO resolution was signed Muchtar Pakpahan, already
jailed in Indonesia, went on trial for "subversion,"
a charge which carries a possible death penalty.
Washington weighed in again on behalf of business in 1997, this
time on the domestic side. In July, the Securities and Exchange
Commission (SEC) issued a no-action letter which allowed Nike
to omit a shareholder resolution on sweatshops from the company's
1997 proxy statement. It was the first time the SEC had allowed
a company to omit such a statement. It was a clear victory for
business as anti-sweatshop activists increasingly have turned
to shareholder meetings to try and force improvements in labor
conditions at shoe and apparel factories.
Later that year, the SEC proposed a package of rule changes which
would prevent socially-conscious investor groups from bringing
to the attention of management and other shareholders important
social issues relevant to companies. Timothy Smith of the Interfaith
Center on Corporate Responsibility, which represents 275 religious
organizations with about $80 billion to invest, said to The
Washington Post in October, "We are very concerned that
these new rules will be a crippling blow to shareholder advocates."
"We have an oversight system that works."
Nike CEO Phil Knight, in a letter to The New York Times,
21 June 1996
Thanks to the "Washington Consensus" on global marketization
and the commercial diplomacy of the Bush, Clinton and Bush II
administrations, U.S. business has had its way in the world with
little or no interference, at least until the sweatshop issue
came to the fore. The principal response from U.S. companies has
been various public relations gambits that usually revolve around
the adoption of codes of conduct. It is clear by now that companies
are far more interested in promoting rather than applying their
codes. Much like the White House's rhetoric on labor rights, these
efforts can be filed under reputation management.
The article cited earlier from the January/February 1995 issue
of Reputation Management, the sister publication of Inside
PR, was called, "China's Growing Market is a Temptation,
but a Troubling One." The magazine was concerned that human
rights issues could undermine the ability of its readers/clients
to capitalize on investing in China. It encouraged U.S. business
leaders to think about adopting codes of conduct, maybe even consider
a code similar to the Sullivan principles which were applied during
the apartheid regime in South Africa. What emerged from the magazine's
interviews with business executives was their dismissal and disdain
for codes and an attitude which indicated they believed that,
anyway, they were untouchable.
Robert McNeill, for example, executive vice chairman of the Emergency
Committee for American Trade, which represented business in lobbying
for maintaining China's Most Favored Nation status, said, "The
danger with codes of conduct that are initially voluntary is that
they can become statutory." In other words, codes could deprive
us of the impunity to do whatever we want.
Robert Kapp, president of the U.S.-China Business Council said
that a code of conduct "simply gives credence that business
is morally responsible for the human rights situation in China,"
and that critics of China's rights record are "trying to
impose their values on others, basically interfering with national
sovereignty." Sovereignty, of course, is the card readily
played by all autocrats, who in reality are not defending their
nations' sovereignty, but their own sovereignty within them. Kapp
not only denies business's responsibility on human rights, he
goes a step further and flacks for a regime that represses them.
Similarly, Zhuang Nanbin, public affairs director for AT&T
China said that Beijing would perceive codes of conduct as interference
in their internal affairs and therefore "would be detrimental
to U.S. business." Norman Givant, a Shanghai-based U.S. corporate
lawyer, sought to make his case on cultural grounds, saying that
the issue "reminds me of American missionaries in the 19th
century preaching to the Polynesians to wear clothes." In
1997 Jeffrey E. Garten, now Dean of the Yale University School
of Management, also brought out the culture card to argue that
U.S. business was not responsible for rights violations in countries
such as China and Indonesia:
"In many cases we're going to have to basically swallow
hard, because we're dealing in cultures that will have rhythms
that are very uncomfortable for us. They're uncomfortable in terms
of the way people are treated or the environment is treated"
In making that statement Garten, like Mr. Kapp, finds himself
performing public relations for Asian autocrats who hide not only
behind sovereignty, but justify their anti-democratic rule with
the idea that "Asian values" make them exempt from the
Universal Declaration of Human Rights. Garten's words also lend
greater resonance to a statement by former President Clinton,
which was prominently featured on the "Big Emerging Markets"
page of the U.S. Department of Commerce web site:
"Places like China and Indonesia, Mexico and Brazilwe
have unashamedly been an active partner in helping our business
enterprises to win contracts abroad."
It is therefore no surprise that companies like Nike, Reebok,
Mattel, Disney, Wal-Mart and all the others who exploit and abuse
cheap labor abroad are irritated by the criticism they are receiving.
After all, they have simply followed the playbook. But as marketers
of high-profile consumer goods, the spotlight has fallen on them.
So, at the urging of their public relations specialists, most
have taken the code-of-conduct route.
When report after report by independent investigators proves that
these codes are generally ignored in practice, companies respond
in different ways. Reebok, for example, continues to give out
five $50,000 human rights prizes each year and keeps promising
to do better. Disney, on the other hand, either stonewalls or
denies, as when Disney spokesperson John Dreyer said to The
Journal of Commerce in February 1997, contrary to all available
evidence, "We don't use sweatshops. Why focus on us?"
Dreyer went on to claim that Disney is criticized only because
the company has a high profile.
The case of Nike is particularly instructive. Nike, much to the
benefit of the anti-sweatshop cause, has led with its chin from
the outset, every arrogant denial laid to waste by another detailed
report about its subcontractor's factories. Nike once hired Andrew
Young, former civil rights leader and ambassador to the United
Nations, to investigate conditions in its plants in Indonesia,
China and Vietnam. Young's report, exposed as a whitewash by human
rights specialists far and wide, proved once and for all that
Nike cannot be trusted to enforce its code of conduct, and that
in reality it has no intention of complying with even the most
minimal labor standards.
Young did not even address wages, the most fundamental issue,
which put him squarely on the side of the writers of The East
Asian Miracle and the other proponents of unfettered market
globalization. Nor did Young even speak with many of the experts
listed in the appendix of his report whom he claimed to have consulted.
The World Bank is now saying that it is concerned about labor
issues, and one of the experts Young said he spoke with was Maniza
Naqvi, a child labor expert at the bank. According to Stephen
Glass, who wrote a devastating critique of the Young report for
The New Republic, Naqvi told him that she did not even
know she was listed in the appendix until Glass called her. "My
only connection to Nike is that I wear their shoes for running,"
said the World Bank's labor advocate.
Nike also has provided overwhelming proof that hiring accounting
firms to monitor compliance with codes of conduct is no remedy.
For a number of years Nike has employed Ernst & Young, saying
that the firm subjects Nike subcontractors to "systematic,
unannounced evaluation." Nike, Reebok and the other companies
which are members of the Fair Labor Association say such monitoring,
with little or no public disclosure of violations, is sufficient
to enforce the watered-down standards the task force agreed to
in April 1997.
In November 1997 a confidential report prepared for Nike the
previous January by Ernst & Young was leaked. The report concerned
conditions at the Tae Kwang Vina factory in Ho Chi Minh City.
It stated that workers were subject to compulsory overtime far
exceeding the limits prescribed by Vietnamese law and were paid
just $10 dollars per week. It also said that workers were exposed
to carcinogens that exceeded Vietnamese legal standards by 177
times in parts of the plant and that 77 percent of the employees
suffered from respiratory problems. Nike publicly touts Tae Kwang
Vina as one of its most modern, technologically advanced subcontractors.
Ernst & Young's findings alone put paid to Andrew Young's
conclusion that Nike was generally doing a "good job"
in treating its workers. Amazingly, Ernst & Young concluded
in its confidential report that Nike's code of conduct was being
complied with in the Tae Kwang Vina plant and that most workers
there were happy with the wages and the conditions.
The leaked report was provided by Dara O'Rourke, an environmental
consultant for the United Nations Industrial Development Organization
and a research associate at the San Francisco-based Transnational
Resource and Action Center. O'Rourke has conducted research in
more than 50 Vietnamese factories and investigated the Tae Kwang
Vina plant three times as part of his United Nations duties. The
last time was in October 1997, when he found that conditions were
no better than when Ernst & Young gave its internal report
to Nike the previous January. In November 1997, almost a year
after the accounting firm had presented its findings, Tien Nguyen,
Nike's labor practices manager in Vietnam, admitted to reporter
Steven Greenhouse of The New York Times that Nike still
had done no measurements to determine whether chemical levels
were low enough to meet legal standards.
This series of events underscores Nike's systematic dissembling
and duplicity. Nike employs an accounting firm whose confidential
reports show that conditions in Nike plants are indeed horrendous.
At the same time Nike hires the no less duplicitous Andrew Young
to conduct a whitewash which Nike then spends millions of dollars
to promote. This is the public-relations equivalent of double-bookkeeping.
Moreover, O'Rourke, in a detailed report entitled "Smoke
from a Hired Gun," has shown that the methodology of Ernst
& Young, notwithstanding its withering assessment of the Tae
Kwang Vina plant, ignores most accepted standards of labor and
For example, the Ernst & Young gathered most of its data from
management sources and ignored key issues of concern, including:
physical and verbal abuse of workers, sexual harassment and negative
repercussions for attempts to organize. The reason is because
Ernst & Young did not perform an "independent" audit,
but rather simply followed Nike's orders. As Ernst & Young
stated in its report, "the procedures we have performed were
those that you [Nike] specifically instructed us to perform."
O'Rourke also found that Ernst & Young mistakenly certified
that the Tae Kwang Vina plant was in compliance with Vietnamese
minimum wage laws, when in reality workers were being paid 20
percent below minimum. Finally, O'Rourke found that workers were
scared to speak their mind to Ernst & Young auditors because
they identified them-for obvious reasons-as part of management.
That accounts for Ernst & Young's false determination that
Tae Kwang Vina employees were happy with their wages and working
Nike is one of the most vocal industry members of the Fair Labor
Association. On its web site, Nike claims that "When Nike
leads, others follow. We're the leader -- always have been always
will be." What Nike's leadership on sweatshop monitoring
has proven is that business cannot be trusted and that accounting
firms such as Ernst & Young do not have the necessary independence
or trust of workers, nor do they employ the proper methodology,
to conduct thorough, unbiased audits of working conditions. As
Jay Mazur, a White House task force member who is president of
the Union of Needletrade, Industrial and Textile Employees (UNITE),
said to The New York Times on November 21, 1997:
"The fox cannot watch the chickensif they want the monitoring
to be independent, it can't be controlled by the companies."
GEARING FOR A GLOBAL REVOLUTION IN WORKER RIGHTS
Thanks to the determined work of a widening array of labor
activists and non-governmental organizations, the sweatshop issue
has put a dent in the once seemingly impregnable global marketization
machine. The principal manufacturers of name-brand consumer goods
are spending far more time and resources on reputation management
and damage control than they ever imagined. But on the fundamental
issues of labor rights, wages and independent monitoring of factory
conditions, they will continue to fight tooth-and-nail, employing
every underhanded method they can come up with to avoid being
As for the Asian countries, the reigning globalization model only
encourages them to try to export their way out of the crisis,
again to the detriment of workers. The ever greater emphasis on
low-wage export policies in the wake of currency crises is already
on display in Mexico, as was discussed earlier. As in Mexico,
expect greater use of repression in response to mounting worker
discontent. Jeffrey E. Garten, as always, provides a resonant
quote for the occasion. In The Wall Street Journal on December
8, 1997, he hailed the currency crisis in Asia as "a triumph
of Wall Street," meaning that the pressures of global capital
markets have finally succeeded in prying open closed Asian financial
systems. The downside, or as he used to have it, the "complication,"
"The emerging markets are heading through a long, dark
tunnel. There's a light at the other end, but there is going to
be a lot of social turmoil before they come out of it."
"We are trying to organize the workers, to educate
them on their rights-to make them aware that they could be strong
if they come togetherIt is only through experience that they learn
they must take their destiny in their own hands."
Indera Nababan, leader of Urban Community Mission, an Indonesian,
church-supported social foundation, quoted in William Greider,
One World, Ready or Not: The Manic Logic of Global Capitalism
From the standpoint of the labor rights activists, the situation
calls for a global civic movement of unions and NGOs to hold multinational
corporations accountable for the gross exploitation of workers
and the environment. Multinational corporations now dominate people's
lives worldwide as national governments increasingly have ceded
their authority to exercise control over commerce and finance.
The new global system mocks the assumption of shared political
and social values that supposedly unite people in a nation-state.
The response therefore must be global, too, uniting activists
across borders which corporations now have the power to ignore.
It is noteworthy that in a recently published book, Global
Public Policy: Governing Without Government, a mainstream
analyst has recognized that national responses to economic globalization
are inadequate. The author, Wolfgang H. Reinicke, is a fellow
at the Brookings Institution and the World Economic Forum in Switzerland.
He calls for states, corporations, labor and other NGOs, regional
and international organizations to cooperate in a new form of
For the moment, there is not much reason to believe that either
governments or corporations would be willing to give labor or
other NGOs a true voice in what Reinicke envisions as "networks
of governance." The World Bank already seems intent on throttling
NGOs in the global landscape. In a little known initiative, the
bank has quietly prepared for governments a draft handbook on
laws relating to NGOs. In the introduction, the World Bank appears
to recognize "important NGO contributions," but following
is more than a hundred pages of proposed regulations that threaten
the right of free association, privacy and freedom of speech.
Still, the preparation of this handbook, and the World Bank's
recent concession to engage groups critical of its operations
such as the Washington-based Development GAP, indicate that the
world's dominant institutions grudgingly have begun to acknowledge
that NGOs are a force to be reckoned with. That lends credence
to the idea that Reinicke seems to be pointing toward, namely,
the development of a global civil society. Although Reinicke does
not necessarily frame it this way, a vibrant global civic movement
is what is needed to tame the unfettered rule of markets and secure
the rights of ordinary citizens and workers.
Another notable proposition has been put forth by Douglass Cassel,
executive director of the International Human Rights Law Institute
and a professor at Northwestern University. In an article in the
Fordham International Law Journal, Cassel suggested that
the recent adoption of codes of conduct by some multinational
corporations might herald a "Second Human Rights Revolution."
Governments, he notes, "accepted international human rights
responsibilities in the U.N. Charter and other treaties,"
and some corporations, he believes, now seem ready to assume human
rights responsibilities as well.
Cassel accurately notes that there is a wide range in the current
practice of "corporate social responsibility." He finds
that Royal Dutch Shell, for instance, accepts no responsibility
whatsoever for human rights violations in Nigeria and may actually
have been complicit in the government execution of author Ken
Saro-Wiwa and eight other environmental activists. In contrast,
Cassel points out that The Gap made a unique commitment to allow
truly independent monitoring of one of its factories in El Salvador
by religious, human rights and labor groups. But he notes, too,
that The Gap only relented in the face of a concerted public campaign
by these very same groups cooperating across the borders of North
and Central America.
The ongoing anti-sweatshop effort has clearly begun to resonate
among consumers as well as editors and producers in the mainstream
media. Skeptics may think that all that can be hoped for is the
occasional, isolated victory, as in the case of the Gap. But these
campaigns are a foundation that can be built upon, the type of
civic actions which, if expanded and integrated globally, hold
out the promise of a movement strong enough to actually alter
the disastrous course of the global market machine.
To develop such a movement means expanding efforts already underway,
drawing in new allies and utilizing new strategies and techniques
to be able to fight more effectively. Following is a brief outline
of what can be done.
Making Connections - Expanding Current Efforts
Seek enhanced cooperation with Amnesty International, Human
Rights Watch and make better and greater use of their reports.
These groups are increasingly focused on labor rights and holding
Establish and enhance global NGO links in the anti-sweatshop cause.
For example there should be cooperation between U.S., European
and Indonesian women's organizations, lawyers' associations, legal
assistance groups, and other NGOs involved in rights issues.
Provide the emerging pro-worker rights movement on university
campuses with the analysis and resources necessary to expose and
combat the virtual sale of athletic departments to Nike and other
footwear and apparel companies. Establish or enhance links with
graduate teaching assistants, maintenance and clerical workers
on this issue.
Document the procurement policies of the Smithsonian Institute,
the Pentagon and all other U.S. government agencies or institutions
that buy from companies that may exploit workers. Establish or
enhance links with unionized workers employed in these government
agencies and institutions.
Go after U.S. government departments which are the primary instruments
of commercial diplomacy, especially the Departments of Commerce,
State and Treasury and the office of the U.S. Trade Representative.
Put pressure on human and labor rights officers at U.S. Embassies,
as well as commercial attaches. Commercial sections should be
asked to provide lists of local subcontractors that multinational
corporations source from. In general, demand transparency to expose
the gulf between official rhetoric on labor rights and actual
policy. For example, just as the Freedom of Information Act (FOIA)
can be used to make public CIA and Pentagon documents, it should
be used to get at the cable traffic between U.S. embassies abroad
and Washington, field reports and other documents involving trade
and labor rights. These efforts can be used to pressure the White
House to make U.S. embassies do their mandated jobs on monitoring
and promoting human and labor rights, instead of acting simply
as the "Commercial Action Teams" that they have become.
Apply pressure and demand accountability from the International
Labor Affairs Bureau of the U.S. Department of Labor. Is it working
to enforce U.S. laws on recognizing labor rights abroad, or has
it been undermined by the dominance of commercial diplomacy?
Research and analyze U.S. government grants. For example, what
percentage of USAID funding goes to pro-business programs? Have
U.S. aid programs simply become an arm of U.S. commercial diplomacy?
How much, if any, of the budget for the USAID "Rule of Law"
program is allocated to establishment and enforcement of fair
labor laws? Demand that international, taxpayer-funded agencies
such as the World Bank, the International Monetary Fund and the
United Nations declassify all materials regarding trade, labor
and human rights. Given the paramount influence these agencies
have over people's lives, workers should not be kept in the dark
about statistics, analyses and policy papers which pertain to
Survey and expose the ethics curricula, textbooks and teaching
approaches at business schools in the U.S and abroad-for example,
the Yale School of Management, where Jeffrey E. Garten is currently
the Dean. Are labor and human rights even included? If so, are
they taken seriously, or considered simply "complications."
Survey leading experts on business ethics and pressure them on
labor rights and the behavior of multinational corporations. Establish
cooperative links with those business schools that are carrying
out serious programs on corporate responsibility, for example,
at Erasmus University in Rotterdam.
Help give greater prominence to the few mainstream economists
such as Dani Roderick, author of the recently published Openness
and Has Globalization Gone Too Far? (1996), and Ethan Kapstein
who have begun to question the unfettered market globalization
Combat the plethora of corporate-financed think tanks and academic
programs by a) establishing labor education centers with sustained
outreach capability into schools and communities, and b) finding
greater resources for the small think tanks and NGOs providing
reliable information and analysis on labor issues. The global
economy has advanced to such a degree that the Wharton School
of Business is now offering a full set of courses in Chinese Management
Practices so that tomorrow's business leaders will be better able
to address issues related to workplaces that are quite literally
"foreign" to them. While the international workers'
rights movement struggles to take advantage of the concerns of
consumers for "sweat-free" apparel, there is an urgent
need to match what the business community is doing at Wharton
and other business schools. Being able to see factory work through
the eyes of the workers themselves is a critical preparatory step
for the human rights community as it attempts to monitor corporate
Make better and more concerted public-relations use of visiting
trade unionists from abroad and those who have received labor
or human rights awards. The business media is constantly highlighting
"best corporate managers," "biggest money-makers,"
etc. Labor activists deserve at least the chance to compete for
equal attention. Campus-based activists should be a "natural"
Direct cooperation between U.S. unions and their counterparts
abroad. Some unions are doing this individually in Mexico and
a few other countries, but labor has a long way to go to catch
up with the internationalization of corporate business.
Concerted use of participatory action research, a sociological
approach that thus far has been vastly under-utilized but has
proven effective in raising worker consciousness and spreading
self-organizational skills in both the developed and developing
worlds. This approach can be particularly useful in Asian countries
such as China and Indonesia where labor rights are so greatly
repressed. Practitioners of participatory action research can
be found in a number of countries, but their efforts need to be
enlisted and coordinated in a global way.
Jeff Ballinger is Director of Press for Change, a consumer
information organization monitoring labor rights issues in developing
Post-script: What about Nike's "Global Alliance"?
Our perspective on a report issued February 22 by The Global
Alliance and a 46-page "Remediation Plan" released by
Nike that accompanied the report:
We have the utmost respect for faculty members at Atma Jaya
University and have no reason to doubt the integrity of the scholars
from Atma Jaya that worked with the Global Alliance. We offer
the following critique in the spirit of solidarity with their
sisters and brothers at the factories, as an attempt to work with
Indonesian groups to develop an approach to "remediation"
that has as the main goal empowering workers. These workers have
made courageous efforts to combat the cheating and abuses at Nike
contract factories for over twelve years; those who have organized
the protests often lost their jobs. (See chronology:
Our strategy of making common cause with the workers, unions
and NGOs that are striving to improve conditions for shoe and
apparel workers in Indonesia has a mixed record. While we have
been unable to get the contractors to deal in dignity with representatives
chosen by the workers themselves, the focus on Nike workers' legitimate
wage protests did succeed - at least in embarrassing the
New Order regime. As a result, the minimum wage was increased
by 300% over the period 1989 to 1996. (Nike's statement about
the last minimum wage increase before the 1997 "Crash":
"Indonesians may be pricing themselves out of the market.")
n.1 Assoc. Press, April 27, 1997
For all these years, Nike has characterized this cross-border
solidarity work as misguided altruism:
"It saddens me," says Nike VP for corporate responsibility
Dusty Kidd. "I think one day the students will wake up and
realize they've been used by their mentors in the union movement."
n.2 Newsweek 3/12/01
And mock their efforts to raise awareness.
"[Nike's Vada] Manager says his political polling and
intelligence tell him the students are a "marginal"
group who arouse little sympathy from peers or consumers."
n.3 Newsweek 3/12/01
"A Nike official immediately criticized the [students']
report, and said it points up the shortcomings of the consortium's
monitoring approach, which is based on responding to worker complaints.
"'It's just parachuting into a country, conducting a
few interviews, and writing a report in a few days,' said Vada
O.Manager, director of global issues management for Nike."
n.4 The Chronicle of Higher Education 1/26/01
At the same time, company officials have expressed slanderous
opinions about the brave workers who have led protests.
"But Manager alleged that Sukaesih's dismissal was in
response to a 'disruption in the facility' and did not pertain
to anti-factory complaints."
n.5 Arizona Daily Wildcat 5/4/99
(Sadisah) "had actually been fired, Nike officials contended,
for destroying documents."
n.6. "Just Do It" by Donald Katz (Random House,
NY, NY 1994)
This is really the crux of the problem. Nike has nothing
but scorn for the idea that workers should band together to defend
their rights. Admitting that there is, substantially, nothing
new about abusive practices in the Global Alliance report (n.7),
the remediation plan explains years of Nike inaction by saying
that protests by workers and activists presented the information
"in an adversarial manner." Only through the Global
Alliance, we are told, will the workers' voice be heard:
"These actions [agreeing to survey] reflect a serious
commitment on the part of Nike and its contract-factory managers
to improve workers' lives." --
n.8 Jakarta Post 3/2/01
This is entire monitoring-as-representation enterprise seriously
undermines the key
International Labor Organization principles: Freedom of Association
and Right to Collectively Bargain. The shoe industry lobby (APRISINDO)
has issued dire warnings about increased worker activism (several
examples below @ n.9) in Indonesia and there is evidence that
political leaders are responding to these threats (see n.10,
How should we proceed to map out a plan for meaningful change,
building on the years of cross-border cooperation already behind
us? We feel that is imperative for the Atma Jaya community to
look carefully, first, at Nike's remediation plan. It is most
regrettable that Nike offers no restitution to those workers who
lost their jobs for leading protests against law-breaking contractors.
Scores of workers won cases in the P4D and P4P (Labor Disputes
Panels), yet they were not fairly compensated for lost wages.
Hundreds more workers were similarly dismissed but, having no
faith whatsoever in the system of labor dispute resolution, refused
entreaties by the Indonesian Legal Aid Foundation (LBH) to file
In the most notorious case - which went all the way to the
Indonesian Supreme Court - the tycoon Bob Hasan offered a mere
$400 each to the 23 workers who had lost seven years' pay (while
he was donating $18,000 a month the Indonesian Wrestling Federation).
"Nike shrugs off its Suharto connection [Bob Hasan] as
irrelevant. 'That's the way it works in Indonesia,' said Dusty
Kidd, manager of Nike's labor practices department."
n.11 Oregonian 11/11/97
Most of the courageous worker activists that pursued "illegal
discharge" cases can be found and Nike should be required
to pay $250,000 into an escrow account so that these individuals
may be located and be compensated -- at least for lost wages.
Next, an examination must be carried out into the well-documented
wage cheating that went on for years. Restitution is called for
here, too. Nike contractors paid an illegal "training wage"
to an estimated 160,000 workers over the period 1988-1997. Since
the amount lost by each worker was around $30, it is reasonable
to suggest that Nike contractors establish a fund of about $6.5
million to find and compensate the victims of this cynical lawlessness.
Finally, we find it insulting and grossly inadequate for Nike
to suggest ill-defined partnerships with some Indonesian women's
groups as a means to address the widespread sexual abuse of women
workers. While there may be no adequate compensation for such
egregious mistreatment, it is instructive to look at how such
cases are treated in countries where legal remedies are available.
Mitsubishi, for example, settled a sexual harassment case brought
by 28 U.S. women for $9.5 million. But, this was not the end of
it. The company was later forced to pay a penalty of $34 million
to the U.S. Equal Employment Opportunity Commission; this benefited
hundreds more women.-- n.12 Washington Post 6/27/98
Unfortunately, law in this area is not well-developed in Indonesia,
so managers operate with virtual impunity. At a minimum, Nike
and its contractors should underwrite a series of ten-to-fifteen
visits to Indonesia by fact-finding teams from Korean and Taiwanese
women's and legal-aid groups.
Even with a "corporate responsibility" team of 95!
Can Nike Still Do It?
Business Week, 21/2/00 (n.13) Nike has found itself unable to
extricate itself from the "sweatshop" controversy.
As suggested above, the company has refused to send a clear and
unequivocal message to contractors in Indonesia to sit down with
workers in dignity and bargain about the necessary changes. Indeed,
Nike has concocted all manner of means to avoid doing that. It
is our suspicion that the Global Alliance differs little from
past efforts, which include:
Code of Conduct & "Memorandum of Understanding"
Ernst & Young "social audits" (1994-6)
Report to shareholders by Prof. Jill Ker Conway
White House-backed "Apparel Industry Partnership"
Evaluation by Ambassador Andrew Young (1997)
National Press Club speech by Nike CEO, Phil Knight (1998)
More "social audits" -- PricewaterhouseCoopers
Vietnam and Indonesia wage/purchasing power studies with
Amos Tuck School of
Business (Dartmouth) (1999)
Visits to Asian production sites by U.S. business school
"Transparency 101" -- N. American production facilities
"The Global Alliance" (1999-present) came together
as a joint initiative of Nike and Mattel with some non-profit
partners - none of whom had experience in the fight against sweatshop
working conditions. Mattel has since departed and the GAP apparel
company joined. At first, activities of The Global Alliance (TGA)
were limited to training and micro-enterprise loan programs intended
to benefit workers in Nike factories in Vietnam, Thailand and
While it may be difficult to find fault with these efforts,
some activists argued that Nike was using an NGO-type project
to enhance their corporate image. It was clear to many that Nike
would resist forcing contractors to pay decent wages and address
workers' long-standing demands to bargain over issues like forced
overtime, increased production quotas and abusive supervisors.
In early-2000, TGA began to do worker-survey activities under
the dubious guise of collecting information about workers' "aspirations"
so that the NGO-type projects could be improved.
Questions are raised by the press release included with TGA's
annual report in September (2000): this report represented the
"first chance for workers themselves to have a say"
in the debate on Nike's labor practices and offered the opinion
that workers were basically satisfied with their pay and conditions.
(In fact, the "workers themselves" have frequently
been heard "in the debate on Nike's labor practices."
Press for Change, Community Aid Abroad, Christian Aid [UK], Center
for Development and Peace and several Indonesian groups - and
newspapers -- have published reports directly from Nike-worker
interviews. To suggest that this is the first time workers are
really being heard is a self-serving and contemptible lie.)
After the report on Thai factories, the Clean Clothes Campaign
undertook to evaluate the TGA methodology. The reports' author,
Junya Yimprasert (Lek) of the Thai Labour Campaign, interviewed
workers from the Lian Thai factory, one of TGA's factory partners.
According to Lek, workers were introduced to the Alliance's researchers
by factory personnel and had to write their names on the questionnaire.
As a result, they were afraid that if they spoke honestly about
conditions in the factory they might lose their jobs.
More troubling still, TGA's survey work was immediately put
to use by Nike's "public relations" department to rebut
charges of worker abuse in both Vietnam and Thailand. Workers
felt that they were fairly treated and adequately compensated,
Nike officials said repeatedly - citing TGA "research."
A U.S. press report (Baltimore Sun, 11/30/00) Thai
workers protesting at Bangkok appearance of Tiger Woods: "The
Nike spokesman also noted that a 3,800-person survey conducted
this summer by Global Alliance showed a 'high degree of worker
satisfaction in Thailand and Vietnam factories.'
It was, of course, predictable that Nike would
use TGA to fend off claims that workers were still being mistreated.
In fact, there is ample evidence that TGA's founder, Rick Little
(President of TGA's "parent", the International Youth
Foundation) saw this potential "use" of TGA from the
beginning. At a Harvard University conference on youth employment
(September 1999), Little said there needed to be "more emphasis
on development and working with global companies instead of policing
Later that month, Little introduced Nike "Corporate Responsibility"
chief, Dusty Kidd, to an IYF gathering in the Philippines (from
the IYF web-site):
"Rick further explained the concept of corporate "outsourcing."
Increasingly, global companies have chosen to contract a portion
of their corporate responsibility for children and youth to IYF,
as opposed to devoting the human and financial resources necessary
to building internal capacity in this area. IYF is working to
help such companies invest in youth issues in more strategic ways
to achieve greater impact."
"Outsourcing" of "corporate responsibility"
by two tech giants (Lucent and Nokia) brought $17 million to IYF
last year. While these companies have not been the targets of
anti-sweat campaigners, most Lucent and Nokia production is sourced
from Asia. While $17 million may seem like a lot of money to
struggling non-profits, Rick Little's IYF got nearly five times
that amount from the Kellogg Foundation (set up by the founder
of the company that markets "Frosted Flakes" and "Cocoa
Krispies" to children). Shortly after the Kellogg Foundation
quit funding IYF, the new "outsourcing of corporate responsibility"
funding strategy was developed.
Isn't "outsourcing" what got Nike into
trouble in the first place? Shoe companies like Bata -- which
still control factories where Bata shoes are made -- treat workers
better in Indonesia than Nike contractors do.
(See Press for Change research, published December 1999):
The Bata managers do this without paying $7million to TGA;
they do this because there is a different "corporate culture"
at Bata. This corporate culture explains why there is a 65-page
union contract at the Bata factory (the first one was negotiated
nearly thirty years ago). Workers making Nike shoes and apparel,
on the other hand, are still waiting for Nike contractors to sit
down with them in dignity.
Note 9: "Anton [Supit - director of Aprisindo] warns
of problems over minimum wages" -- headline
"...investing in the country is considered unsafe because
of the rampant violent labor strikes," he said. Jakarta
"Aprisindo seeks fair remuneration system" -- headline
"Labor-intensive footwear companies called on the government
on Wednesday to do away with minimum wages." Jakarta
"Korean investors doubt overall situation in Indonesia"
"South Korean investors will not spend their money in
Indonesia unless the government improves the current condition
of law and order in the country (and) helps settle labor disputes"
-- Anton Supit - he is also Secretary General of Indonesia-Korea
Economic Cooperation Committee (Inkorecom) Jakarta Post,
"Buyers of Indonesian shoes shift orders to China"
"Many importers of Indonesian shoes have shifted their
orders to other
countries such as China and Vietnam due to uncertainty in the
situation in the country, according to the Association of Indonesian
Footwear Producers (Aprisindo)." Jakarta Post,
Note 10: After a meeting with leading US investors yesterday
in NYC -- many
of whom complained about what they perceive as the negative impact
growing labor unrest -- Wahid made a point of stressing that the
government was planning "to crack down on labor strikes instigated
outside the work place" -- which is interpreted as the pretext
repression of organizing activities by labor unions. Wahid gave
impression that any strike the government claims is fomented by
will be stopped by force, if necessary -- report from observer,