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RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN1

BEHINDTHESWOOSH:
NikeandChildLaborinPakistan

UniversityofTexasatDallas
CaseGroup5:
MohamedJaroun,CesarMenoscal,JiaHan,HiviHurori,TammieThai,ZacharyDay
ProfessorHubertZydorek
IMS3310.005InternationalBusiness
22March2016

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN2

ChildLaborAroundtheWorld

Childlaborisapracticethatisseeninmanyareasaroundtheworld,especiallyin

developingorpoorcountries.Unfortunately,manytimesachildwillbecompletelyrobbedof
theirchildhoodwhentheyhavetoworkatsuchayoungage.Additionally,theyusuallydonot
earnverywell,workverylonghours,andaresubjecttopoorandevencrueltreatmentinthe
workplace.Inthesportsindustry,NikeisknownforitsuseofchildlaborinPakistanandIndia
wherechildrenarepayedbetween33and49centspersoccerballthattheystitchtogether
(Siegmann).Furthermore,Parkerstatesthatchildrenwhoworkinthestreetsareespeciallyprone
toabuse.Thesestreetchildrenhavejobssuchasshoeshiners,andscraportrashcollectorsin
countrieslikeIndonesia,Guatemala,Bangladesh,andMexico.Thereisalsothejermalworkers,
orchildrenwhoworkonfishingplatformsincountrieslikeIndonesia.Parkerstatesthatthese
childrensuffertheworstformsofexploitationaswellasworklonghoursthroughsomebad
weatherconditions(2070).Whileitisclearthatchildlaborisnotapracticethatisreceivedwell,
itcontinuestoexistandhasevenproventobenecessaryinsomecases,atleastfromthe
perspectiveofthefamilyofthechild.
AccordingtoAhmed,therearefivereasonswhyfamiliesdependontheirchildren
workingandearningwagesinordertosurvive.Thefirstandmostobviousofthesereasonsis
poverty,alsoconsideredtheprincipalcauseofchildlaborincountrieslikePakistanamong
others(262).Here,about70%ofparentsfindthatitisimpossibletoprovidebasicfacilitiesand
opportunitiesfortheirfamilies.Additionally,alargemajorityofthepopulationlivesonthe
vergeofstarvation,whileaverysmallportionofthepopulationenjoyriches.

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN3

Thesecondcauseofchildlaborisilliteracy,oralackofeducation.Countriesaroundthe
worldthatfaceveryhighilliteracyratesand/orschooldropoutratestendtohavechildrenwith
noyearningforeducationthatmakeupsomeportionofthelaborforce.Tomakemattersworse,
thelackofjobopportunitiesinsomeofthesecountriesmakesanykindofgovernment
promotionofeducationnearuseless(Ahmed,262).

Thethirdcauseofchildlaborcanbelinkedtolargefamilieswithinadequatesourcesof
income.Inthesecases,parentsmayusetheirchildrenasresourcesandhavethemworktobring
homemoremoney.Incountrieswheremuchofthepopulationlivesinvillagesorawayfromthe
cities,parentswillsometimessendtheirkidstothecitiestoworkinfactoriesorevenmoveto
thecityasafamilytofindjobs.Thisisknownasruralurbanmigrationandisthefourthcause
andanoriginalsourceofchildlabor(Ahmed,262).
ThefinalcauseofchildlaboriscalledlabortroublewhichaccordingtoAhmed,isan
importantinducementforparentstohavetheirchildrenworking.Thisconceptstatesthat
childrenarelesslikelytocauselaborunrestbecauseitisnotdifficulttocontroltheiractions
(Ahmed,262).Inotherwordsthismeansthatbecausechildrenareeasiertocontrol,aswellas
generallyonlybeingcapableofearningaminimumwage,theyaremuchlesslikelytooppose
theirsuperiors.
NikesHistoryofChildLaborinPakistan
Globaloutsourcinghasimmensesocioeconomicbenefitswhichcannotbedenied.
However,theharshworkingconditionsinsomeofthefactoriesarerarelybroughttothe
forefrontofourattention.OutsourcingtoPakistaniscosteffectiveandvaluabletoNike.For
decades,themajorityoftheworldssoccerballshavebeenmanufacturedinPakistanbyglobal

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN4

brandslikeNikeandAdidas.BeginningwithitsbackgroundinPakistan,Nikechoosetosetup
operationsinSialkotasitisoneoftheworldsmostessentialareasformanufacturingsporting
goods.Sialkothasbrought$385millionUSdollarsintothePakistanieconomy.Nikewent
throughalongtermstrategicplanningbeforeitenteredintothePakistanimarketsandwentinto
Pakistanhavingcompletelyunderstoodthesurroundingsprevailingintermsofchildlabor,
althoughitclaimsotherwise.Thisargumentcanfurtherbebackedbythefactthatchildlabor
practicesinPakistanareageoldpractices.ThearticlebyBoggan(2001)WeBlewIt:Nike
AdmitstoMistakesOverChildLaborfurtherprovesthatNikeadmittedthatitblewitby
employingchildrenintheThirdWorldcountriesbutaddedthatendingthepracticemightbe
difficult.Furthermore,Nikeadmitsthatbyfartheirworstexperienceandbiggestmistakewas
inPakistan.Atthispointintime,ifNikewasconcernedwithcorporateresponsibility,ithadto
makesureitwasengaginginhonestoperations.
OutcomeofNikeinPakistan
Nikerealizeditwasindeeptroublewhenthe1996issueof
LifeMagazine
wasproduced.
ActivistsallaroundtheworldhelduppicturesofTariqtheyoungmaninthephotoswho
workedfor60centsadaystitchingNikesoccerballsinbadworkingconditions.Theoutcomeof
thisincidentinPakistanhasforcedNiketoimplementcompanywideglobalstandardswhenit
comestochildlabor.Nikealsoestablishedaprogramwhichhandlesclaimsofunjustpractices.
Asaresult,onsitevisitsarenowconductedonamonthlybasiswithinthesubcontractfactories.
AnotherkeyoutcomeofthisissuewasthatNikeanditsPakistanimanufacturerdecidedto
eliminatethemainproblemwhichwasthestitchingofthesoccerballs.Theycametoan
agreementtogetridofoutsourcingthisprocessandtakingittoothergeographicareaswhere

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN5

theycouldeasilymonitortheprocess.However,NikespresenceinPakistanhasalsohadsome
positiveeffects.Forexample,whenNikeentersacountrylikePakistan,wagesincreaseaswell
asstandardofliving.Additionally,theissuepublishedby
LifeMagazine
hasbenefitedthesepoor
workersinPakistanbybringinglighttotheageoldpractice.Thishashelpedwagesincrease,
imposedcapsonhoursworkerscanwork,andhasdecreasedpovertylevelsforgenerationsto
come.
NikebroughtbackthisreturnoffactorywhichhadbeenlostfromPakistanforawhile.
However,noteventenyearslaterNikeisonceagaininthehotseatonlythistimeitwasSaga
Sportsconductingthework.Nikestates
inthearticleSagaSportswashavingsoccerballsmade
insideprivatehomesinSialkot,Pakistan,wherethecompanyisbased(Wu2006)
.Thiswasnot
onlyamistakeonSagasfrontbutitalsoaffectedNikesincetheworkwasbeingdoneinNikes
name.Bythistime,Nikeheldarecordofchildlaborincidentsanditbecameapartofits
reputation.Nikestates
itheldrepeatedmeetingswithSagaexecutivestocorrecttheproblems,
butSagadidnotmakeneededchanges.
AsaresultofSagaconstantlybetrayingNikestrust
andbreakingitscommitments,NikenotonlyendeditsordersfromPakistan,buttheyalsoended
itsrelationshipwithSagaSports.However,Nikestatestheyare
workingwith"governmental,
nongovernmentalandindustrystakeholders"tohelpprotecttherightsofSagaworkers.The
questionofwhethertheseworkerswillgetthepayandtreatmenttheydeserveafterthisupheaval
remainstobeanswered.SaganotonlybetrayedNikewithhowithandledthecontractandits
workersinPakistan,butitalsobetrayedtheemployeescausingNiketotakeyetanotherhitin
PakistanbecauseofSagascarelessworkethics.

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ParentsConsentvs.CompaniesResponsibility
Manypeopleareindebateofwhetherthenecessitytohavechildlaborinthefamily
householdisbasedonthedecisionoftheparents.However,peoplefailtorealizethattheincome
neededfromanotherchildtosustainahouseholdwouldnotbeneededifthedesignated
breadwinners,typicallyinsocietythefatherandmother,weremakingasufficientwagefrom
prospectivecompanies.Parentsinthirdworldcountriesthatareinhighdemandforlabor
manufacturing,suchasPakistanandIndonesia,oftenpressuretheirchildtoseekawagein
factoriesdespitethedangers.Becauseofthismatter,itisacorporationsoutsourcing
responsibilitytocloselyregulatelaborenvironmentsofallmanufacturingsitesforadultsand
children.
Parentsshouldnothaveaneedofanadditionalincomeiftheirwagewasfair.Itis
understoodthatparentswillturntodesperateneedstoallowtheirfamilytosurvive,suchaschild
labor.Childlaborisaninternationalissuethatcanbeagreedtobeinhumanebecauseofits
slavelikeconditionsandviolationofhumanrights.AccordingtoresearchfoundinSharon
Bessells
ThePoliticsofChildLabourinIndonesia
,childrenwillworkastheyseeanecessity
foritandsolongastheyaresurroundedbypoverty(Bessell1999).Companiesshouldnotcreate
asituationwherechildrenareaneededtobeincomeproviders.Itisthecompanysresponsibility
toregulateareasonablepay,withhoursandbenefits,suitableforafamilyintheirperspective
environment.
ObservedinthesituationwithSaga,whenNikedecidedtoeliminatebusinesswithSaga
andendedallproductionwiththefactoryanestimateof20,000jobswasloss,becausetherewas
evidencethatchildlaborcontinuallyinuseaftermassamountofinvestigation.Ratherthan

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN7

cuttingtieswithSagaandelimination70percentofSagasproductionbusiness,Nikeshould
haveworkedfurtherwithSagatonavigatepositionsheldbychildrentofittedadults.The
childrenshouldbeputinschooltofurthertheireducationandattaincareersthatadvancetheir
standardofliving.Ifmanufacturingcompaniesandbrandingcompaniescooperatedtoabolish
childlabor,regardlessoftheparentsdecision,thechildrenwouldhaveanopportunitytobetter
theirfutures.
FairnessofEliminatingContracts

Thepracticeofchildlabordoesnothaveafavorableworldwideview.Weseeitprimarily

invulnerableeconomicdisadvantagedareasthatareaprimetargetforotherpracticessuchas
humantraffickingandslavery.However,woulditbefairforamultinationalorganizationtopull
theircontractwithasubcontractorbecausethesubcontractorisengaginginchildlabor?Totake
adeeperlookatthisquandary,wewillassessthepositiveandnegativeimplicationspullinga
contractwillhaveonboththemultinationalorganizationandthecommunity,asawhole.

Mostmultinationalsseektodobusinessintheseeconomicallydisadvantagedareas

becausethereareneedsthatcouldbemetonbothsides.Themultinationalcouldproducethe
materialsatacompetitivecostandforthecommunitythatitisseekingtodobusinesswith,their
contractisamajorstapleintheirinfrastructure.Thereisonegoalinmindandthatistobe
economicallyprosperousonbothsides.Ifoneofthepartiesengagesinsomethingthatwould
affecttheothersidesabilitytoattainthisgoal,thenthereisabreachofduty.Theworldwide
backlashthatNikesustainedfromtheirpartnershipwithSagasportsstillhasramificationstoday.
TherearestillboycottsandnegativepressstemmingfromthespeculationthatNikewillfully
engagedinbusinesswithSagaSportsknowingthattheyengagedinchildlabor.Thepositive

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN8

outcomeforNikewasthattheywereabletowithdrawtheircontractandenterintoanew
agreementwithSilverStarGroupthatgaveNikemorecontroloverthetreatmentofworkers.

ThepositiveimpactfromtheterminationofthecontractbetweenNikeandSagaSportsis

stilltobefeltbythecommunity.Itissaidthatthe[w]ithdrawlofNikefromSagaSportshas
meantunemploymentformostoftheir8,000workers(Siegmann2008).Thosemostaffected
werewomenwhom,duetocustomsandreligiousbeliefs,couldnottraveltoanotherfacilityor
leavetheirhomefactories.Thiswouldresultinthelossoftwostreamsofincomebothfrom
themotherandthechildrenwhoworkedinthesefactories.TheintroductionofSilverStarasthe
mainsupplierforNikesoccerballswasduetoincludetwothirdsofthosewholosttheirjobs
fromthedissolutionofSagaSportsbutrealestimatesputthatclosertotenpercent.However,the
silverliningtothisstoryisthatnowthechildrenemployedthroughSagaSportsnowhavemore
timetopursueaneducation.Learninganewskillsetwouldmakethesechildrenableto
participateinalargereconomyandthusliftingthelivingstandardsofSialkot.Thoughitwasa
difficulttimeforbothNikeandthecommunityofSialkot,itwasfairforNiketoeliminatethe
contractwithSagaSportsandcondemnthepracticeofchildlabor.

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN9

TheCorporationsObligationtoEliminateChildLabor
CompanieslikeNikeshouldcontributetotheabolitionofchildlaborandtakeimmediate
andeffectivemeasureswithintheirownknowledgetosecuretheprohibitionandeliminationof
theworstformsofchildlabor,includingforcedlabororslaverylikepractices,childtrafficking,
childsoldiersandtheuseofchildreninsexualexploitationorinillicitactivities.However,the
completeremovalofchildlaborinacountrylikePakistanwouldbenoeasytask.Onestepa
companycouldtakeistoabidebyminimumageprovisionsofnationallaborlawsand
regulations.Ifaparticularcountryhasinsufficientnationalchildlaborlaws,thenacompany
shouldabidebyinternationalstandards.CompanieslikeNikeshouldalsomaintainaccurateand
uptodaterecordsofallemployees.Itispossibleinsomedevelopingcountries,birthcertificates
maybeeitherunavailableorfalsified,andifthatsthecasethencompaniesmayhavetofind
alternativemethodsforageverification.Thesemethodsmayincludeamedicalexaminationprior
toemploymentthatcouldhelpindicateapersonsrealageandphysicalcapabilitytoperformthe
workaskedofthem.Afirmshouldalsolooktocrosscheckmultiplewrittendocumentsto
identifyfalsedocumentation.Facetofaceinterviewsbetweentheemployerandpotential
employeecanalsodetectunderageworksbasedofphysicalappearance.Ifacompanyfindsout
oneofitsemployeesisnotoflegalworkingage,saidcompanyshouldremovethatchildfrom
theworkplace,butnotwithouthelpingthatchildsfamilyaccessadequatewelfareservices.
Companiesshouldalsolooktoinfluencetheirsuppliersandotherpartnerstocombatchildlabor
andtheyshouldalsoraisethewagelevelsofadultemployeessothattheycansupportstheir
familieswithoutdependingontheirchildrensincome.

RunningHead:BEHINDTHESWOOSH:NIKEANDCHILDLABORINPAKISTAN10

Anumberofdirectmethodstocombatchildlaborwereaddressedintheprevious
paragraph,however,acompanycanalsoimpactthefightagainstchildlaborindirectlyoroutside
oftheactualworkplace.Forexample,companiesintheregionshouldworktogethertoformand
industrywideapproachtoaddresschildlaborandbuildstrongrelationshipswithworker
organizations,locallawenforcementagenciesandlaborinspectors.Firmsshouldalsoimplement
programsforformerchildlaborersthatincludeprovidingeducationandskilldevelopment.A
largecorporationlikeNikecouldalsobenefitthecommunitybysupportingthedevelopmentofa
NationalActionPlanagainstchildlabor.

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WorksCited
Ahmed,M.A.(1991).ChildLaborinPakistan:AStudyoftheLahoreArea.
ChildWelfare,
70
(2),261267
Parker,D.L.(2002).Streetchildrenandchildlabouraroundtheworld.
Lancet,360
(9350),2067.
Siegmann,K.A.(2008).SoccerBallProductionforNikeinPakistan.
EconomicandPolitical
Weekly
,
43
(22),5764

'WeBlewIt':NikeAdmitstoMistakesOverChildLabor.(2001,October20).

NikeCutsoffSagaforLaborViolation,
TaipeiTimes,
November22,2006,p.10.JohnsWu

Q&Asonbusinessandchildlabour.(n.d.).

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