|
REPORTS |
|
|
Nike, Adidas,
Reebok and New Balance Made in China
By Li Qiang, China
October 25, 2002
Name: Dongguan YueYuen Shoes
Factory (YY)
(Chinese name: YueYuen Shoes Factory)
Products: Nike, Adidas, Reebok and
New Balance
Location:
Dongguan City
Labor force (Peak Season): 50000
Labor Force (Low Season): 40000
Background
This
report covers the period from January 1999 to October 2002. All the information
was gathered by China Labor Watch (CLW) through independent investigations.
Pou Chen Corp(Chinese name: BaoCheng
Group) has 150,000 Chinese workers in its shoe industry. The factories are
located in
The
YueYuen Shoes Factory in Dongguan is a giant shoe manufacturer with 50,000
employees and is a branch of the Pou Chen Corp (Chinese name: BaoCheng
Group),In YueYuen Factory No.1(Labor force:18000), 8000 workers or so produce for Adidas,
3000-4000 workers produce for Reebok. Other factories produce for other brands
(For example: New Balance). After the merger of YueYuen Factory No.2 and No.3 in
Beginning
in 2000, the Pou Chen Corp (Chinese name: BaoCheng Group) has been gradually
relocating shoe production to
Before
leaving
Although
I left
My
initial visits to the YueYuen factory in November 1999 made a deep impression
on me. I entered the factory workshops
and saw the production line. I also
managed to enter the workers' dorms and talk to the workers. On the same day that I first went to the
factory, a female worker committed suicide by jumping off the 8th floor of
"B" building, which housed the production line for Nike
products. The suicide took place at
In
November 1999.a female worker named Liu Xiaoling, who worked in “tailoring/
cutting department” of the Adidas production line, became ill and requested sick
leave from the department manager. The latter refused her request three times
and she had to stay at her post until the shift ended at
According to our information 12 workers have
committed suicide by jumping off high buildings at the plant since 1994.(workers tell CLW) The youngest was only 17 years old.
Meanwhile, other factories belonging to Pou Chen Corp (Chinese name: BaoCheng
Group)
This
report is the first in a series of investigation reports planned by CLW. We
will first examine Nike's Media Policy, which is posted in the security office
at the factory gates. It states:
(1). If someone is found taking pictures
of the factory from outside the grounds, he/she should be "invited"
into the factory and the factory official who is in charge of labor affairs
should deal with him/her. The factory policy should be explained carefully and
politely to the person or persons involved. The incident must be reported to Nike
production managers.
(2). If someone who is not employed by the
factory is found attempting to enter the factory to take pictures, the factory
policy must be carefully and politely explained and Nike production managers notified. If the
person taking pictures refuses to cooperate with factory management, he/she
should be escorted to the local police station.
(3).Only interviews and visits arranged by
Nike Public Relations are permitted.
We
also have information on how Adidas deals with media coverage. The story of
workers being physically punished at the Yongxin Shoes Factory in Dingshan
Management District,
From June 1999 to October, 2002, the following practices were recorded at the YueYuen factory III and YueYuen factory I:
(1)
Nike Media Policy: only coverage arranged by Nike PR permitted.
(2)
When poor working conditions at the suppliers, Adidas responded by
reducing orders on many occasions.
(3)
Intense pressure of work is one of the major reasons behind the deaths
of 12 female workers since 1994.
(4)
The factory paid the workers 33 cents/hour, The workers wage not enough
to support a family.
(5)
Union representatives are appointed by the factory management and do
not represent the workers' interests.
(6)
The workers are asked to work 60
hours each week. According to
(7)
The workers have no insurance and pension system and have no access to
welfare if they become unemployed.
(8)
The factory only employs female workers aged from 18 to 25.
(9)
The factory uses video monitors to spy on workers on the pretext that
it is preventing theft and monitoring production.
(10)
The pace of production is unreasonably high and contributes to
exhaustion, stress and accidents.
(11)
Some workers have been unable to visit their hometowns and villages for
over six years.
(12)
There is evidence of managers sexually harassing female workers.
(13)
The factory has Human Rights Managers and Social workers but they will
often impose rules on workers by deducting their salaries.
(14)
The factory discriminates against female workers.
(15)
The factory still uses toxic glue in certain sections.
Problem
One: Contract.
China Labor Law chapter 3, article 19 which clearly states the employers shall sign a labor contract with their employees.
Article 19
Labor contracts shall be concluded in written form and contain the
following clauses:
(1)
Time limit of the labor contract;
(2)
Content of work;
(3)
Labor protection and labor conditions;
(4)
Labor
remunerations;
(5)
Labor disciplines;
(6)
Conditions for the termination of the labor
contract;
(7)
Liabilities for violations of the labor
contract.
(8)
Apart from the necessary clauses specified
in the preceding clause, the parties involved can include in their labor contracts
other contents agreed upon by them through consultation.
Article 98
The employer that revokes labor contracts or purposely delays the
conclusion of labor contracts in violation of the conditions specified in this
Law shall be ordered by labor administrative departments to make corrections
and assume responsibility over compensation for any losses that may be
sustained by laborers therefrom.
We have learned that there are collective contracts
between the factory and the workers. However, the contracts were signed by
"group leaders" in the name of the workers instead of by the workers
themselves. The workers never see the contract. The factory keeps the contract
but does not issue a copy to the workers. The contract is valid for one year,
but the workers are not aware of this and details of the contract expiration
dates are not made known to employees who are not informed if and when it is
renewed. According to Article 21 of China's Labor Law's an employees probation
period should not exceed six months. Moreover, if a worker accumulates over ten
years service at his or her place of employment the employer is obliged to sign
a long term contract with the employee. At present, many workers have been
working at the factory for over ten years, but remain employed on annual
contracts.
Our goal is for each worker have a copy of the collective contract, and that the factory signs long-term contracts with those qualified.
Problem Two: Discrimination.
According to China's Labor Law chapter 2, Article 12
Laborers shall not be
discriminated against in employment due to their nationality, race, sex, or
religious belief.
Since
1999, the factory has adopted a policy of mainly employing female workers. Male
workers are only employed with the specific approval of section managers. This
has led to a male to female ratio of 1 to 15.
This
situation burdens women workers with tasks generally undertaken by male
workers. There is also evidence of female workers being sexually harassed by
some managers. In
Our goal is for the factory to offer equal opportunities for both male and female workers.
Problem Three: Working
hours.
According to China's
Labor Law chapter 4, Article 36
The State shall practice a working hour system
wherein laborers shall work for no more than eight hours a day and no more than
44 hours a week on the average.
According to
The employer can prolong work hours due to needs of
production or businesses after consultation with its trade union and laborers.
The work hours to be prolonged, in general, shall be no longer than one hour a
day, or no more than three hours a day if such prolonging is called for due to
special reasons and under the condition that the physical health of laborers is
guaranteed. The work time to be prolonged shall not exceed, however, 36 hours a
month.
However, through its private connections, the
factory was granted permission by Dongguan Labor Department to have the workers
work as many as 86 hours of overtime. Although the factory was offered the
privileged policy, the policy itself violates
Saturday is the legal off day, but the factory
forces the workers to work 8 hours and pays them at standard rates of pay in
violation the law which states that work done on rest days must be paid at
overtime rates.
A shoe worker's typical working day:
The workers are kept in the factory for 12
hours 40 minutes per day clocking up 256 hours each month well over the legal
limit of 176 hours.
Following the drop in orders
after the September 11 attacks on
Our goal is that the factory complies with China Labor
Law's regulations; work hours should not exceed 8 hours per day and overtime
working should not exceed 36 hours each month.
Problem Four: Intensity of
Work.
Since the factory introduced Nike code of
conduct of the factory
at the factory, the pace of work has increased. For example, before the
Nike code was applied,
because of Nike’s stipulation on overtime working, now the workers have to
finish a job in 10 hours that used to take 12 hours. This in effect increases
working intensity.
The
95 workers in the formation group were required to finish producing 2400 pairs
of Nike shoes before
Problem Five: Wage Problem.
According to China's
Labor Law chapter 4, Article 49
Standards on minimum wages shall be fixed and readjusted with
comprehensive reference to the following factors:
1) The lowest living costs of
laborers themselves and the number of family members they support;
2) Average wage level of the
society as a whole;
3) Productivity;
4)
Situation of employment;
5) Differences between regions in
their levels of economic development
The workers are paid piece- rates with each worker's
productivity and therefore wage calculated by her team leader. The legal minimum wage in the districts
covered in this report is US 33 Cents per hour.
The
factories pay the workers monthly wage RMB 450($54.8/176hour), but RMB90 is
deducted from the salary for living expenses. Before 2000, the deducted amount
was RMB60. After Dongguan municipal government adjusted the minimum wage
standard from RMB400 to RMB450 in July 2001, YueYuen factories had to increase
the salary to RMB450, but the deducted living expenses increased too.
Therefore, the real wage of workers hasn’t increased. The deducted dorm fee
increased from RMB15 to 45 too. Medical fee RMB15. Other fee RMB5. The total
amount of deducted fees is RMB 155.
Generally
speaking, a modeling group that has 95 workers
produces 550,000 pairs of shoes per month--it reaches 700-800,000 during busy
seasons. On average, a worker's wage is US 33 cents per hour. If the cost for
food and medicine is deducted, the worker actually gets US24.4 Cents per hour.
Using
these figures as a basis, a worker will take home just US$2.44 for a 10-hour
shift. This translates to US$14.65 per
week, US$62.4 per month and US$748.8 per year.
A
skilled worker of stitching group, which has 57 workers and has a yield of 600
pairs of shoes each day, is paid for 30 Cents per hour,
which
means USD $3 one day,
18
USD one week,
76.8
USD one month,
921.6
USD one year.
A worker in the cutting group at least cut 20 pairs
of shoes one day, paid 28 Cents per hour,
one day 2.8 USD,
one week 16.8 USD,
one month 71.68 USD,
861.6USD one year.
According to China's Labor Law
chapter 4, Article 44
The employer shall pay laborers more wage remunerations than those for
normal work according to the following standards in any one of the following
cases:
1)
Wage payments to laborers no less than 150
per cent of their wages if the laborers are asked to work longer hours;
2)
Wage
payments to laborers no less than 200 per cent of their wages if no rest can be
arranged afterwards for the laborers asked to work on days of rest;
3)
Wage
payments to laborers no less than 300 per cent of their wages if the laborers
are asked to work on legal holidays.
To count a minimum salary for a worker according to the local law. RMB450 (that is US $54.8) is the minimum wage for working 176 hours/month (minimum hourly wage is US $33 cents). Overtime working in Saturdays should be paid two times of minimum wage, US$66 cents/hour. The total overtime working hours in Saturdays are 36 hours, which means the workers should be paid US $23.76. Overtime working in weekdays should be paid 1.5 times of minimum wage, US $ 49.5 cents/hour, which means US $24.75 for workers because they overtime work 50 hours in weekdays. Therefore, US $54.8 plus 23.76, plus 24.75, the total minimum income for a worker should be US $103.3/month, but the actual wage a modeling worker gets is US $71.68.
A pair of Nike Jordan TYPE 15 Type shoes retails at US$130
in
For every pair of Nike shoes, the sum of wages
workers from all the three sectors receive is less than 80 cents. Besides these
three sectors, other parts required for a pair of Nike shoes include, big soles, middle soles, leather, and other
half-made products. This work is sometimes contracted out to other
factories. For example, in 1997, YueYuen
Shoes factory's middle sole production was
temporarily subcontracted to Yongxin Shoes Factory, Dingshan Management
District in
Leather were
processed by Weida Leather Factory in Hongmei Town of Dongguan, which is
appointed especially to handle leather for Nike shoes by Nike. Raw material
processing is given to Jiali Shoes Material Factory,
Adidas, reebok and New Balance '
workers from the all processes get paid for
USD$1.
According to Dongguan local authorities, the minimum
salary for a worker is RMB 450 yuan per month (USD$54.8)(US$1: 8.2 yuan) per
month, 33 cents per hour. The factory should take responsibility to purchase
workers' health insurance, unemployment insurance and pensions.
According to China's
Labor Law chapter 9,Article 72
The sources of social insurance
funds shall be determined according to the categories of insurance, and the
practice of unified accumulation of insurance funds shall be introduced. The
employer and individual laborers shall participate in social insurance in
accordance with law and pay social insurance costs.
Although the factory reaches the minimum pay level stipulated by the local authorities, they don't buy any insurance for their workers. The problem is, if the workers buy unemployment insurance or pension, she/he will not be able to support her/himself on current wage levels.
A worker at the state-run water factory gets 76 cents per hour, 176 hours per month, so the monthly wage is 146 dollars. He/she does not work overtime, so his/her total income is 146 dollars. On top of the 146 dollars the worker receives, the water factory offers medical, retirement and unemployment insurance. The YuYuen factory does not have anything to offer in this respect. Only people at management positions get some form of insurance and they only account for 5% of the total workforce.
Workers doing the same job in some joint-ventures
can be paid up to US$146 per month before overtime and with insurance. Workers
at the YueYuen Factory get just US$60. In a state- state-run water
factory, if the cost
for insurance is deducted, the pay can be over US$200 per month going up to
US$230 with over time.
The wages of YueYuen factory
workers are 70% less than the workers in Nestle Coffee Factory (Joint venture
with Chinese and foreign investment) in Dongguan, which located 3000 meters
away.
Our goal is that the factory pays workers wages both legal and sufficient to cover basic needs and to raise their family.
Problem Six: Insurance
Problem.
The factory doesn't buy the workers pension,
unemployment insurance, health insurance, working injury insurance, maternity
insurance and so on.
According to China's
Labor Law chapter 9
Article 70
The State shall promote the
development of the cause of social insurance, establish a social insurance system,
and set up social insurance funds so that laborers can receive help and
compensation when they become old, suffer diseases or work-related injuries,
lose their jobs, and give birth.
Article 72
The sources of social insurance
funds shall be determined according to the categories of insurance, and the
practice of unified accumulation of insurance funds shall be introduced. The
employer and individual laborers shall participate in social insurance in
accordance with law and pay social insurance costs.
Article 73
Laborers shall be entitled to social insurance treatment in any one of
the following cases:
1)
Retire;
2)
Suffer diseases or injuries;
3) Become disabled during work or suffer occupational diseases;
4) Become jobless;
5) Give births.
The dependents of the laborer who dies shall enjoy, in accordance with
law, subsidies provided to these dependents. The conditions and standards on
the eligibility of laborers for social insurance treatment shall be stipulated
by laws and regulations. The social insurance funds for laborers shall be paid
in due time and in full.
However, the factory only buys partial
insurance for the management team. After leaving the factory, even managers
only get a very small amount of compensation.
Medical treatment: the factory has a clinic
to handle minor illnesses. If workers get seriously sick, he/she has to take
unpaid leave from work and go home and the factory takes no responsibility for
the cost of medical treatment. In
Unemployment insurance and pensions. Most
workers are from 18 to 25 years old as the factory doesn't employ workers over
25 years old. Generally speaking, because of the high labor intensity and
psychological problems caused by work,
employee turnover is high. Because other factories don't hire workers
over 25 either, it is extremely difficult for a worker to find alternative
work. Many are forced to to return home and either start a small business or do
odd jobs. As the factories do not pay into pension insurance funds and regular
work is scarce in their home towns and villages, planning for a secure
retirement is simply not on the agenda.
At the same time,
Our goal is
that the factory should buy the workers pension, unemployment insurance, health
insurance.
Problem Seven: Food.
There are three lunch times:
Different
standards of food is prepared for general workers, line supervisors and
managers. For example, the food for a low-level manager costs 13 yuan per day
and just 7 yuan for a worker. The
meal fees of 90 Yuan will be deducted from every worker's income. The food is partly subsidized by the factory, and
the rest is deducted from the monthly salary. Our goal is that the factory
increases the number of dining rooms and allows workers enough time to finish
their meals.
We also hope the standard of food for workers is equal to the food prepared for managers.
Problem Eight: Workers cannot get legal vacation time
According to China's Labor Law
chapter 4,Article 45
The State follows the system of annual leaves with pay.
Laborers shall be entitled to annual leaves with pay after working for
more than one year continuously. Specific rules on this shall be worked out by
the State Council.
According to the Regulations on Employee’s Rights to Reunion with Families, which is
officially recognized a labor and administrative law, employees working for the
government, organizations, companies and factories for over one year, but not
living with their husbands or wives and unable to visit them on weekends or
off-days, are entitled vacation to visit their families once a year, for 30
days. The time spent on the travel can be added in certain circumstances.
YueYuen factory is a foreign-invested factory and
subject to the above regulation. Law Moreover, the Regulations on Labor Issues in Foreign-Invested Companies also
states clearly, that workers working in foreign-invested factories have the
right to take holidays, weekends and vacations to visit family, get married, or
for maternity leave.
However, during
Our goal is that the factory grants 30 days vacation
for married workers to visit home, 15 days vacation for single workers, so they
can have enough time to visit families.
Problem Nine: Labor Unions
There is a labor union in the factory
although most workers are unaware of its existence. The chairperson of the
union is a senior manager (name : Huo CanYu) in charge of general affairs at
the factory.
The daily routine of the official union are
managed by general affair managers in each branch of the factory respectively.
Committee members of the union are group leaders of workshops. All union
members are at least group-level managers. Ordinary workers don't know if they
are members of the union.
We ask that the union officials be elected
by workers and represent the interests of the workers. Union representatives
should sign the collective contracts with the factory, and negotiate with the
factory on issues of wage, welfare and working hours.
Problem Ten: Human Rights.
The
factory has a Taiwanese in charge of labor and human rights issues named Lin
Shunian. However he frequently resorts to heavy demerits to workers when they
fail to meet targets and lays off workers for violating regulations a
punishment which itself violates Chinese labor law. If a group fails to
complete its quota on time, he will record the group leader a heavy demerit.
This forces the group leader to increase labor intensity to meet the production
quota without working going over time. Up to date, there are over 20 incidents
of punishing workers and dismissing workers for these reasons each month. There
is also a system of fine. Warning-10
yuan, recording minor demerit, 30 yuan; recording heavy demerit, 90 yuan.
Before
2001, the person taking charge of human rights in YueYuen Factory was Lin
Shunian. Now it’s Miss Lin Xiangqu.
We hope Nike will set up direct communication
channels with workers, and protect workers from being threatened or laid off
from the factory if they fight for their rights.
There are many human rights and labor organizations
coming to the factory to monitor the situation but the workers are afraid of
losing their jobs, so they are reluctant to tell the truth.
At present, the workers are still paid below the
minimum wage stipulated by local authorities. Female workers suffer from sexual
harassment. Mandatory overtime is a regular part of factory life. Obligations
to arrange Pensions, unemployment insurance and health insurance, all which
required by
Our requests are: when disputes arise between workers and factory management, all
parties including Nike, Adidas, Reebok and New Balance workers' representatives and factory
management should negotiate solutions
satisfactory to all parties. It is our
hope that Nike, Adidas, Reebok and New
Balance will assist in concrete improvements to working
conditions including increasing the wage to at least the legal minimum, shortening work time and reducing the pace of
production. We also ask that the factory
fulfils its insurance and welfare obligations to the workforce.
Problem Eleven: Video
Monitors.
The factory installed monitors in workshops in order
to prevent workers from stealing shoes and monitor production. When the workers
leave the workshops, sometimes security guards rummages
them.
We ask the factory to stop using these monitors.
Problem Twelve: H chemicals.
The factory uses dangerous detergents to
clean machinery. toxic glue is still used
in some processes such as marking for the stitching machines and in final
shoe-head cleaning procedures. In general, cleaning the shoe heads is
undertaken by group leaders. Although they are aware that use of tolueneis
dangerous to their health they dare not slow production by using less harmful
substitutes. We ask the factory to
reduce the use of toxic glue to reduce health risks.
Problem Thirteen: Voluntary
Resignation and Dismissal.
According to China's Labor Law
chapter 3,Article 28
The employer shall make economic compensations in accordance with
relevant State regulations if it revokes labor contracts according to
stipulations in Article 24, Article 26 and Article 27 of this Law.
Article 24
Labor contracts can be revoked with agreement reached between the
parties involved through consultation.
Article 27
In case it becomes a must for the employer to cut down the number of
workforce during the period of legal consolidation when it comes to the brink
of bankruptcy or when it runs deep into difficulties in business, the employer
shall explain the situation to its trade union or all of its employees 30 days
in advance, solicit opinions from its trade union or the employees, and report
to the labor administrative department before it makes such cuts.
If the employer cuts its staff according to stipulations in this
Article and then seeks recruits within six months, it shall first recruit those
that have been cut.
In the months before and after Chinese New Year,
over 2 percent of the workers quit their jobs. According to the labor law, when
a worker leaves his/her job, he/she should be awarded a bonus calculated on
years' service at the rate of one month salary for one year’s working. Some
workers worked for six years before leaving but did not receive this
bonus. Moreover, management often
refuses to issue employees' final
month's salary.
The
factories do not buy any unemployment and medical insurance, or pension for
workers. They do not pay workers basic wage in the dull season, which forces
the workers to quit their jobs, and the workers don’t get any compensation
after leaving the factories. See above.
We
request the factory compensate the workers, according to Chinese law, when they
leave the factory. The factory also should compensate those workers without
medical/unemployment insurance and pension, according to Chinese law.
We
request that management fulfil all their legal obligations to workers who leave
the factory, including years of service bonus and various labor insurance obligations.
Problem Fourteen: Dormitory
Accommodation.
Security staff are stationed at the
entrances to all the dormitories. Whenever the workers enter the dorm, they
have to show their IDs. For low level
managers, four persons live in one room; for group leaders, six in one room;
for ordinary workers, twelve or fifteen in one room. The room for workers is 25
square meters with one restroom.
We ask the factory to provide ordinary
workers with the same level of accommodations given to group leaders - six
people to one room. Rooms with 12 to 15 people are over-crowded.
IX: Conclusion
It is obvious that Nike, Adidas and Reebok suppliers are in constant violation of Chinese law and Nike, Adidas and Reebok Code of Conduct.
Dear
friends,
We
hope Nike, Adidas, Reebok and New Balance will improve Chinese workers living and
working conditions so that the workers can have a decent and secure life. Our demand is:
these suppliers abide by Chinese laws. Please support our requests to Nike, Adidas, Reebok
and New Balance.
Please
a send or fax the following letter to Nike, Adidas,
Reebok and New Balance.
Sincerely,
Li
Qiang
Executive
Director,