Nike's Indonesian Expansion Favors Low-Wage Regions, Undermining Living Wage Goals

Nike's operations in Indonesia have seen a significant shift over the past decade, with the company's supply chain expanding into areas where factory workers earn below a living wage, according to an analysis by ProPublica and The Oregonian/OregonLive. While Nike publicly states a commitment to ensuring its global workforce can support their families, the company's employment footprint in Indonesia has grown by nearly 112,000 jobs in Central and West Java, where the monthly minimum wage is approximately $165. This figure stands in stark contrast to the estimated $300 monthly minimum wage in higher-wage areas like Jakarta, which is considered closer to a living wage.

Simultaneously, Nike's supplier workforce in these higher-wage regions has shrunk by about 36,000 jobs since 2015. This internal migration within Indonesia allows multinational corporations like Nike to achieve substantial cost savings, as noted by experts. Indonesia serves as Nike's second-largest production hub, employing 280,000 individuals. The move to lower-wage areas, particularly Central Java, is driven by the search for cheaper labor for intensive manufacturing processes, a trend also observed with other brands.

Labor advocates express concern over this geographic shift, highlighting that regions like Jakarta possess stronger union representation, which typically leads to better working conditions and wages. Recent layoffs affecting thousands of workers at Nike suppliers near Jakarta, coupled with reports of new factory construction in areas with significantly lower minimum wages, underscore the potential for further job displacement and a decline in overall worker welfare. This strategic relocation within Indonesia raises questions about the practical application of Nike's stated commitment to living wages for its extensive global workforce.