Adidas and Nike under fire over ‘cycle of poverty’ in Cambodia
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Singapore: Sportswear giants Adidas and Nike are facing renewed scrutiny over supply chains in Cambodia where workers say they cannot afford necessities and major brands face wage face theft allegations.
More than 700,000 people – the majority of them women – are employed in Cambodia’s garment industry, which represents a key clothing and footwear manufacturing hub in South-East Asia.
Adidas has denied claims of unpaid wages in its supply chain.Credit: AP
A new report by non-government organisation ActionAid and the Centre for Alliance of Labor and Human Rights, a Cambodian labour rights organisation, lays bare the bleak financial realities workers confront in facilities that supply leading international fashion labels.
In a survey, 85 per cent of respondents across Cambodian 15 factories said their salary was not enough to support them. Half said they were turning up to work without eating enough and a quarter were taking home less pay than they did in 2020.
The report finds Adidas, Nike and other brands are accused of owing millions in wages and severance pay to Cambodians affected by mass layoffs and closures of supplier factories during the pandemic. Workers are being pushed into debt by salary reductions and decreasing overtime hours, it says.
“Our research has revealed damning evidence that brands like Nike and Adidas are failing to uphold the rights of workers in Cambodia producing their products,” said Michelle Higelin, the executive director of ActionAid Australia.
Cambodian garment workers have for years sought higher salaries producing goods for major brands.Credit: Jason South
“Footwear companies like Adidas and Nike mark up the retail price of shoes well beyond the manufacturing costs, while the workers making the shoes are paid extremely low wages that leave them unable to afford basic necessities like food and housing.
“The unjust practices of major brands are trapping the workers who make our clothes in a cycle of poverty. We are calling on global brands manufacturing in Cambodia to ensure workers in their supply chains are paid a fair wage.”
While the Cambodian government reported $US10.77 billion ($16.7 billion) in garment and footwear exports last year, workers’ advocates say staff are paid according to the minimum monthly wage for the sector, which is $US200 ($306).
The report, titled Stitched Under Strain, was based on feedback from 308 garment workers across 15 Cambodian factories that supply to Adidas, Nike and other brands including New Balance, Puma, Gap, Levi Strauss and Matalan.
All 51 surveyed workers from Meng Da Footwear, a supplier to Adidas with more than 5000 employees, said they earned less than the minimum wage.
Also interviewed were former employees Violet Apparel, whose more than 1200 laid-off staff have embarked on a high-profile, three-year campaign to retrieve $US1.4 million ($2.2 million) in allegedly unpaid wages and compensation since Nike supplier Ramatex closed the factory abruptly in 2020.
Khun Tharo, program manager for the Centre for Alliance of Labor and Human Rights in Phnom Penh, said data they collected showed at least 20,000 workers had been laid off or suspended between February and July this year as factories cited fewer orders.
“While the number of layoffs has been on the rise since early 2023, it gained pace in the weeks prior to the general election [in July],” he said. “In some of Cambodia’s biggest factories, up to 20 to 30 per cent of the workforce has been laid off and workers say they have lost 25 to 30 per cent of their income.
Nike has also distanced itself from wage theft allegations.Credit: Kyle Johnson/New York Times
“The systematic wage loss across the Cambodian textile, garment, footwear and travel goods manufacturing sector is huge.”
Adidas has denied claims of pandemic-related wage theft directed at it by rights groups, who say the German company owes $US11.7 million ($18.1 million) to Cambodian workers for the period between February 2020 and May 2021 alone.
“Adidas is committed to fair labour practices, fair wages and safe working conditions throughout its global supply chain,” Adidas spokesman Stefan Pursche said.
“Our workplace standards require our suppliers to progressively raise employee living standards through improved wage systems, benefits, welfare programs and other services. Workers employed with our contract suppliers are usually paid considerably higher than the local minimum wage.”
The Reuters news agency reports that investors this month urged Nike to pay workers in Cambodia and Thailand $US2.2 million ($3.4 million) in lost income.
Nike did not reply to a request for comment about the new report, but the company has previously distanced itself from allegations of unpaid wages and said it had not sourced from Violet Apparel since 2006.
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