Employment Law in Nike Company - Case Study Example

mрlоymеnt Law Саsе Study on Nikе Name Grade Course Tutor’s Name Date Introduction Outsourcing has been a main priority for multinational as well as medium sized firms in the global arena today. This is because of the changing conditions in the economic environment that has forced many business organizations to resort to cutting costs. As a matter of fact, a highly competitive firm today is gauged by how well it is working to cut costs and use the cost savings of expansion and pricing strategy at the benefit of its customers. Owing to this fact, many businesses particularly multinationals have been looking at offshore production in relatively unrestrictive markets to cut on costs of paying workers and sourcing for other materials among many other justifications. However, it has been noted that with increased globalization and hence rapid outsourcing by companies, there is a high likelihood that labour rights violations characterized by poor pay, working conditions and other forms of worker exploitation in poor nations are bound to increase. This paper will focus on one of the multinational giants in the provision of sporting goods and apparel, Nike. Nike has majorly been involved in outsourcing of its production to suppliers in Asian countries like China and Malaysia who have guaranteed cheap costs of production. A good example is in the various agreements the corporation has entered into for the production of sneakers by Asian suppliers. Nevertheless, a major question still beckons on handling of human resources in the region with the death of a worker, Nguyen Thi Thu Phuong, just being a reminder of the harsh conditions workers go through (Rothenberg-Aalami, 2004; 340). As a result, a major concern has been on whether the company has provided the favourable environment for the workers either directly or indirectly in line with its code of conduct and labour policy in the home country. Purpose The analysis will involve the identification of the various legal issues involved in the company’s engagement with such companies. In addition, the paper will point out the social, ethical and cultural implications resulting from such dealings in the Asian region. Legal Dynamics Even though Nike has been a boost to the Asian economies through the provision of job opportunities attained by the contracted firms who have employed many individuals, there is an issue of labour rights violation attached to such contracts that need to be addressed. As a result, a question of legality arises on such contracts by local production firms in the Asian countries. There are various reasons for this assertion according a variety of research carried out on this corporation’s dealings with the said local production companies (Rothenberg-Aalami, 2004; 338). Child Labour First, one of the major concerns has been on the issue of child labour on the part of the local firms the company has contracted to supply some of its popular brand of knickers (Locke, et al., 2007;8). Shoe factories in the Asian countries have been known for using unscrupulous methods of cost cutting by employing under age individuals to work in their plants. This is because they are likely to underpay the children and even overwork them due to their poverty status that will mostly not allow them or their parents to question why this takes place. Definitely, there is a question of responsibility on the part of the contracted firms to ensure that labour violations are avoided at all costs (Stewart, 2013; 4). However, the Nike’s code of conduct prohibits the use of forced labour. In addition, the relationship between Nike and that of the local production firms is that of a principle agent relationship and therefore the company is responsible to some extent to what might be taking place in such factories (Wise, 2013; 434). Poor Working conditions Secondly, it is positive to note that Nike’s involvement with the local firms has resulted in the creation of numerous job opportunities. However, a question arises on the issue of working conditions in such firms locally. In the ploy to blind the citizens of the blatant exploitation by the contracted firms, there has been an improperly constituted program of vocational training in such institutions that has given them the opportunity to compensate the involved ‘trainees’ poorly. It is however evident that the local firms in the first place do not have the basic requirements to meet the goal of any vocational training institutions. The intention of the firms is mainly profit making and not through developing the affairs of the workers. For instance, a worker in the firms who is subjected to harsh and poor working conditions and a meagre compensation is likely to be depressed and therefore detrimental to his or her career growth as opposed to what such companies and Nike would like most people to believe. Nike has a 60 hour work week as outlined in its code of conduct, however, the situation in Vietnam, Malaysia and other countries where there are firms contacted to produce its popular brands may be different (Locke, et al., 2007;9). For instance, it is common to note forced labour in such firms with workers being forced to work overtime. As these companies continue to violate the rights of workers even against Nike’s policy it is only the corporation that is in a position to intervene and bring this situation to a halt. The main argument here is that there is a breach of contract that the company has ignored since it has mostly focused on making profits. In addition to the breach, the company should be a good corporate citizen in the offshore countries not only by provision of employment opportunities as clamoured but by ensuring that its employees, though not directly, are accorded an enabling environment to perform their duty. Sexual Abuse Sexual harassment at the workplace is another challenge for the local Asian companies. According to studies, the managers and supervisors of the local production companies have often taken advantage of the desperate locals by harassing them sexually in return to the employment opportunities they get in such firms. This is against the international labour laws despite it being one of Nike’s policies to ensure that it eliminates such acts on its operations. It is therefore not prudent that the company turns a blind eye on the part of the contracted companies as such acts continue to tarnish the brand name that has been historically built by the multinational corporation. The company as a result of the campaigns by local workers and NGO’s has been working to improve its image by monitoring its contractors. The disparity in pay suggests that the company might have been exploiting its workers while it continued to get major deals in the athletic sector. For example, an average worker in the United States earned about 64 dollars per hour compared to the Asian counterpart earning a dollar or less per hour (Locke, et al., 2007;8). The successful multinational that has built a brand as the leader in the provision of athletic shoe and apparel products is therefore liable on legal ground as well as socially as shall be discussed in the following section. Social, Ethical and Cultural Implications To begin, the company’s outright exploitation by not initially taking charge and evaluating the contracted firms on the reported claims of child labour, forced labour, poor pay and hazardous working environment was socially irresponsible on its part. As a corporate citizen in the Asian nations like China and Vietnam, the corporation should have ensured that it remains committed to giving back to the community by at least taking care of the workers’ welfare. Secondly, the company is known for its commercial adverts that champion for the underprivileged to rise and become heroes. Ethics As a result, an ethical question then arises that if the company is not able to appreciate the heroes at the production firms who have worked extra hours to ensure that its global supply chain is not affected. It is then not possible that, it is motivated by the people’s welfare but rather on ensuring that, it continues to reap maximum benefits on its products. The corporate giants should therefore be considered socially a fraud to the people (Mujtaba et al, 2005: 3). The issue of trust on its products may arise since the underpaid workers might be under motivated and therefore not be competent at their workplace enough to ensure that they work for quality (Locke, R et al., 2007; 9). Culture Culturally, the local communities may tend to associate the company with exploitation of the west as is historically known with Asian countries like Vietnam who have suffered from the hands of western aggression before. One may mention the fact that the company has several contracts within and outside the continent, which means that it has to take care of several workers. However, just like it intends to sell the final product to the global market that is equally enormous, it is ethically right that the company plays its part on ensuring that all the workers are fairly and equally treated. A major concern here is in the preferential treatment of the workers in the United States. Even though there might be weaker regulations in the offshore countries in comparison to those in United States, it is important that the company treat each worker uniformly regardless of country of origin. Conclusion To conclude, it is therefore important that in the process of globalization, multinational companies like Nike recognize their legal, social and ethical obligations to the workers. As brand image is attached to how a company conducts its business which entails the production process and labour conditions, it is to the advantage of multinationals like Nike to provide leadership through legal compliance and the satisfaction of both customer and employee requirements. This is because the mentioned are the two most important stakeholders for the success of any given firm. The firm’s code of conduct should therefore apply across the board according to best practice standards if the company strives to ensure that it remains a giant in the sports shoes and apparel industry. However, there is need for the owners and management of local firms to also recognize the fact that there are responsible to their fellow citizens. Bibliography Locke, R; Qin, F and Brause, A .2007. Does Monitoring Improve Labour Standards? Lessons from Nike. Industrial and Labor Relations Review, Vol. 61, No. 1 pp. 3-3 Mujtaba, B; Cavico, F and Jones, C .2005. Global Labour Practices and Corporate Social Responsibility. International Business & Economics Research Journal, Volume 4, Number 9. P1-10 Rothenberg-Aalami, J., 2004. Coming full circle? Forging missing links along Nike’s integrated production networks. Blackwell Publishing Ltd Stewart, A., 2013. Stewart’s Guide to Employment Law, 4th edition. Sydney: Federation Press. Wise, A., 2013. Pyramid subcontracting and moral detachment: Down-sourcing risk and responsibility in the management of transnational labour in Asia. Economic and Labour Relations Review, 24(3) p433-455 Read More