'We Blew It': Nike Admits to Mistakes Over Child Labor

The multi-billion dollar sportswear company Nike admitted yesterday that it "blew it" by employing children in Third World countries but added that ending the practice might be difficult.

Nike attempted to present itself to its shareholders in its first "corporate responsibility report" as a touchy-feely entity established by "skinny runners" and employing young executives who worried about the environment and the level of wages it paid.

The mere fact that Nike has produced such a report was welcomed in some quarters, but its main detractors, including labor groups such as Oxfam's NikeWatch and the Clean Clothes Campaign, said they were not convinced.

Philip Knight, the company chairman, clearly stung by reports of children as young as 10 making shoes, clothing and footballs in Pakistan and Cambodia, attempted to convince Nike's critics that it had only ever employed children accidentally. "Of all the issues facing Nike in workplace standards, child labor is the most vexing," he said in the report. "Our age standards are the highest in the world: 18 for footwear manufacturing, 16 for apparel and equipment, or local standards whenever they are higher. But in some countries (Bangladesh and Pakistan, for example) those standards are next to impossible to verify, when records of birth do not exist or can be easily forged.

"Even when records keeping is more advanced, and hiring is carefully done, one mistake can brand a company like Nike as a purveyor of child labor"

The report said Nike imposed strict conditions on the age of employees taken on by contract factories abroad, but admitted there had been instances when those conditions were ignored or bypassed.

"By far our worst experience and biggest mistake was in Pakistan, where we blew it," the report said. In 1995 Nike said it thought it had tied up with responsible factories in Sialkot, in Pakistan, that would manufacture well-made footballs and provide good conditions for workers. Instead, the work was sub-contracted round local villages, and children were drawn into the production process. Now, it insisted, any factory found to be employing a child must take that worker out of the factory, pay him or her a wage, provide education and re-hire them only when they were old enough.

Mistakes, however, continue to happen. In recent years, Nike has been criticized for its employment of child labor in Cambodia, but the company defended itself by saying fake evidence of age could be bought in Cambodia for as little as $5.

When it was exposed by the BBC as having employed children there, the company claimed it then re-examined the records of all 3,800 employees.

The company's critics remain concerned at the level of wages it pays. Nike claims it pays decent wages, but its detractors claim that only a tiny fraction of the PS70 cost of a pair of its shoes goes to the workers who make them. They want to see wages increased - which they say would have only a negligible effect on retail prices.

Tim Connor of NikeWatch said: "On finishing work in a Nike contract factory, the great majority of Nike workers will go back to rural areas marked by extreme poverty. Their future economic security is very much tied up with what they earn now, in that if they are able to save enough they will be able to start small informal businesses back home.

"If they are unable to save, the work in the Nike factory will make no long-term contribution to their economic well being, and they will simply return to rural poverty.

"If Nike wants to be taken seriously as a company interested in corporate responsibility then it needs to engage honestly with its critics in the human rights community. Unfortunately the company's new corporate responsibility report fails to do this."