Short term contracts and job security: Response from Nike

Summary: Nike has defined excessive use of short-term contracts in its code of conduct with suppliers, and requires suppliers to take remedial action if this is exceeded. But, Nike still needs to improve its business practices and the systems monitoring excessive use of short-term contracting.

Excessive use of short-term contracts or temporary workers by suppliers is defined by Nike as being over 15% of workers on the production line. According to the company, new suppliers are held to these standards, and existing suppliers must develop action plans to reduce casual labour where necessary. For Indonesia, Nikes states that it has a policy of no casual labour, due to ambiguities regarding relevant laws. Nike Inc contracted apparel/equipment factories plan to have 100% permanent employees by the end of 2011. To monitor the use of short-term contracts, Nike’s audit programme includes off-site interviews with workers and unions when present.

Play Fair’s view:

Play Fair recognises that setting a limit on contracting & casual labour, and requiring Nike suppliers to take remedial action when this is exceeded is positive. However, the abuse of short-term contracting and casual labour was found to be a serious problem in sportswear supply chains, including those supplying Nike, by the ITGLWF (2010). On average, 25% of the workforce were employed on short-term contracts in Indonesia, and in one factory, this was 80%. In the Philippines, 85% of workers in one factory were employed on 5-month contracts. When this contract finished they could apply to be an ‘emergency’ worker for 15 days, and then reapply for another 5-month contract. In some cases, workers’ contracts were not renewed if they joined a trade union. The ITGLWF’s findings indicate that current methods of monitoring the use of short-term contracts and casual labour is not adequate and a more robust approach is needed which involves trade unions.

The use of short-term contracts and casual labour is inextricably linked to Nike’s business practices and planning with suppliers. The FLA’s pilot should help improve these; unions should be able to play a central role in communicating workers’ concerns to employers and Nike, and issues raised should be included in negotiations with employers to improve conditions.