Football shirts, fitness clothes and running shoes are selling at record speed all over the world.
Sold by a sport industry shaped predominantly by large companies, as for example Nike and Adidas. They decide what is produced, where and by whom, with production moved quickly from one country or region to another; constantly seeking ways to decrease costs and maintain or improve profit margins. Therefore, Third World subcontractors to the big sports brands are common – bringing down costs.
The world’s largest sports brand, Nike, has 1,069,020 workers in 666 subcontractors’ factories in 43 countries, and the second biggest on a world scale, Adidas, has more than 1,000 factories in 61 countries all over the world, according to the two brands’ corporate websites. This effort for ‘The Big Two’ generated 51.4 billion dollars with a 4.6 billion dollars profit in the latest financial year alone (see box, ed.).
However, the workers do not benefit from the astronomical earnings. For an average item of sports clothing only between 0.5 and 3.0 percentage of the cost goes to the workers who made it, according to a study by the United Nation organisation International Labour Organization (ILO).
Fair and honest business
Or, in other words: The international sports brands seek towards countries with low wages, low environmental standards and few labour protection laws. As in the Philippines, Myanmar, Sri Lanka, Bangladesh, Pakistan, Vietnam, China, India and Cambodia.
In Cambodia alone, Adidas has contracts with 26 factories, and Nike with seven. This in a country, where well over 700,000 garment workers produce 70 per cent of the country’s exports – many working at miserable conditions in the subcontractors’ factories, according to the ILO and the international labour union International Trade Union Confederation (ITUC) – among a lot of other critics. In spite of this, both Adidas and Nike feature nice words about social responsibility and workers’ welfare on their websites. Or, as Adidas says in the company’s ‘Labour Rights Charta’:
“The Adidas Group aims to perform successfully and be profitable as a business. But just as fairness and honesty are fundamental to the spirit of sport, so they are central to the way we do business. In short, we strive to be the best, playing by the rules wherever the game takes place. These rules which we apply to measure ourselves, derive from our own corporate values of performance, passion, integrity and diversity and are also defined by what society expects of global business.”
Back to reality
Despite the nice words, reality is something else.
Workers in the garment industry in Cambodia live on starvation wages, while working under standards such as long hours – often without overtime payment, uncomfortable shop floor environments and are exacerbated by physical violence, sexual harassment (well over 70 % are female, ed.) and are denied meal or bathroom breaks, according to the Cambodian garment unions and international non-governmental organisations working in Cambodia.
In order to establish some minimum standards at the factories like securing the right to form unions, getting correctly paid minimum wages, prohibition of discrimination/harassment as well as a number of very basic safety precautions, the ILO has set up the Better Factories programme in Cambodia to which contractors of Adidas are also subject. But far from all factories are connected to the programme and it does not address the minimal wages and otherwise poor working conditions.
Furthermore, union busting is common as the government approved a new trade union law in April 2016 – despite repeated objections by trade unions, the ILO and several global garment brands. The law will among other things impose new limits on the right to strike, facilitate government intervention in internal union affairs and permit third parties to seek the dissolution of trade unions – while at the same time imposing only miniscule penalties on employers for unfair labour practices.
“Cambodia, with the backing of local garment industry, has pushed back against decent working conditions at every opportunity. Major companies must know the risks, to workers and to their corporate brands, of doing business on the back of worker repression,” Sharon Burrow, General Secretary of International Trade Union Confederation – representing 180 million workers, states in a press release.
Living for USD 140
A Cambodian garment worker makes USD 140 a month, and that is the salary for 60 working hours a week. And that is the best scenario for the garment workers of Cambodia. The worst scenario tells another story; every four garment worker gets paid far below (less than 80 percent, ed.) the minimum wage, according to a study by ILO in August 2016.
The salary does not come near what workers’ monthly expenditures are. According to a study by the Cambodian Organization for Research and Development, conducted in September 2015, a regular single garment worker in Phnom Penh spends a median of USD 207.5 to live an ordinary but poor life.
“It’s not a pleasant life to be a garment worker in Cambodia. Most of the workers in the industry are migrant workers from the poor provinces of Cambodia. They have to send money home to the family. So they live in crowded rooms, very hot and often with one toilet,” William Conklin, country director at Solidarity Center in Cambodia, an NGO, has explained to Play the Game.
Or as Salong, a garment worker, tells us about the housing:
“The room is tiny (2m X 3m) and ugly. We only have one mat, one mosquito net and a gas stove for the four of us. But we’re lucky because the landlord installed a bathroom attached to our room.”
The working conditions are not much better:
“They told us the shipment was urgent. We were scared of being insulted and forced. We worked even when we were sick. We worked even when we didn’t have enough sleep or enough food. I’m so broken down,” Sovann says.
No huge improvement
The stories of the migrant workers of Cambodia coming from the poor provinces to earn some money in the Phnom Penh region, where the garment industry is located, for themselves and the family back home, are numerous. They have little hope for the annual determination of a new minimum wage. The Ministry of Labour, Vocational and Training just decided to raise the minimum wage to USD 153 a month by January 1, 2017.
“The USD 13 increase of the minimum wage for 2017 to USD 153, while positive, will not result in a huge improvement of workers’ lives in Cambodia and is yet nowhere near a living wage. Living costs are still relatively high compared to the wages, so workers continue to be malnourished and prone to fainting. Almost 2,000 workers have fainted in various cases of mass fainting yearly over the last three years, and this year is well on track to reach the same number. Workers’ transport will remain the usual trucks where workers stand like cattle. Already more than 40 workers have been killed on the way to or from work in road accidents this year,” Bent Gehrt, field director in Southeast Asia at Worker Rights Consortium, says to Play the Game.
Adidas is no part of this
However, living wages and social responsibility are a major concern in Adidas’ headquarter at Adi-Dassler-Straße 1 in Herzogenaurach, Germany, according to senior manager of sustainability communication, Silvia Raccagni:
“A commonly accepted definition of living wage remains an aspiration in global supply chains. Our Workplace Standards call our suppliers to take appropriate actions to progressively raise employee compensation and living standards through improved wage systems, benefits, welfare applications and other services. The Adidas Group continues to explore the most appropriate strategy to support our direct suppliers to achieve this, for example through our participation in the FLA Fair Compensation Strategy together with other major international buyers,” she says to Play the Game.
The unions in Cambodia demand a minimum wage at USD 180 a month. Does Adidas support this demand from the unions?
“As an overseas brand, we are not a part of Cambodia’s minimum wage-setting process. That is decided through a tripartite committee, comprising government, employers, and unions. (…)
“Wherever new and higher minimum wages are set, Adidas Group requires our suppliers to meet those wages and any other legally mandated allowances and benefits. We will accommodate any wage increase within our normal sourcing activities. Cambodia is an important sourcing country for the Adidas Group and we are committed to it,” Silvia Raccagni answers.
How come Adidas are working with subcontractors with such low standards as in Cambodia?
“Our suppliers meet and exceed international labour standards, as confirmed by the ILO’s Better Work (Better Factories, ed.) program in Cambodia.”
Do you think that Adidas’ subcontractors in Cambodia are acting according to the words about corporate social responsibility stated on your website?
“While we acknowledge there are still challenges and issues to be addressed, we are fully committed to our sustainability strategy and to improving the lives of workers who make our products. Our efforts are widely acknowledged: In September 2016, the Adidas Group was listed in Dow Jones Sustainability Indices for 17th consecutive year,” Silvia Raccagni ends.
We will get back to you
For Nike, the world’s largest sports brand, the answer is as follows:
“Thank you for contacting Nike, Inc.’s Media Relations Department. If you are a member of the media, we will promptly respond to your request.”
Sport Executive got the same answer three years ago…
Play the Game has chosen to hide the names of workers in Cambodia, due to the risk of serious harassment. Play the Game knows their names and working places.
Economy in the sports industry
Economy in the sports industry
(June 1, 2015 to May 31, 2016)
Net income: 3,800
Net income: 810
(financial year ended April 24, 2016)
Net income: 484
According to the World Bank the economic growth in Cambodia is strong. It will in 2016 reach 7 % and in 2017 and 2018 sustain a high growth at 6.9 % – led by solid growth in garment exports. The share of garment exports in total merchandise exports is 70 %.
Cambodia is ranked 128th in World Bank’s Doing Business Ranking 2016.
Cambodia is ranked 168th in Transparency International’s Corruption Perception Index 2016.
Minimum wages for Cambodian garment workers (US$)
USD; salary for a month.