Nike Wants Factory Workers to Earn a Decent Living. In Indonesia, It’s Moved Into Areas Where Workers Don’t.

If you’re among the more than 1 million people who make Nike’s sneakers and apparel around the world, the company says you should be able to support your family. You should earn enough to pay your living expenses and have some discretionary money left over. If your factory wages don’t cut it, your employer should have a plan to get you there. But Nike’s expansion in Indonesia over the last decade has directly undermined these goals, an analysis by ProPublica and The Oregonian/OregonLive found. Over the last decade, employment at factories supplying the world’s largest athletic apparel brand expanded dramatically in regions of Indonesia where, according to one leading estimate, the minimum wage is less than the amount workers need to live on. Meanwhile, Nike’s supply chain shrank overall in places that pay this estimated living wage, our analysis found. The trend shows how the movement of multinational corporations to countries with ever-lower labor costs is being replaced, in some cases, by movements within a country that can achieve major savings and improve the bottom line. Nike’s suppliers employ 280,000 people in Indonesia, the company’s second-largest production center. From 2015 through last year, these suppliers shed around 36,000 jobs in places where the monthly minimum wage exceeds or comes close to a living wage. In these high-wage areas, which include the capital of Jakarta, the minimum typically equates to about $300 a month. By contrast, the company’s supplier workforce grew by nearly 112,000 in parts of Central and West Java with local minimum wages that are typically about $165 a month — far from what’s considered enough to live on. Dozens of workers employed by Nike suppliers in Indonesia told the news organizations the minimum is about all they make . “If it’s very labor intensive, then you go where labor is cheapest,” said Nurina Merdikawati, a lecturer in the Indonesia Project at Australian National University. In Indonesia, she said, “that’s going to be Central Java.” Other brands have also moved to Central Java and other low-wage regions of Indonesia in recent years and continue expanding there, local news organizations have reported. For Nike, the trend threatens the jobs of the existing factory workforce elsewhere in the country. Last October, more than 2,000 workers were laid off by Victory Chingluh, one of Nike’s longtime suppliers near Jakarta. In 2024, another 1,500 workers were cut by a Nike shoe supplier nearby, Adis Dimension, according to local news reports. Labor advocates say the geographic shift is concerning because the Jakarta area has a stronger union presence that ensures working conditions and wages get closer attention than in less-developed places like Central Java. At Victory Chingluh, three employees told the news organizations that the fear of more job cuts hangs over their work. They said the company is building a new factory in Cirebon, in West Java, where the minimum wage is 45% lower. Over the Past Decade, Nike’s Workforce Ballooned in Areas Where Workers Do Not Make a Living Wage Factory employment shrank in the areas near Jakarta where the minimum wage is considered enough to meet basic needs. Lucas Waldron/ProPublica Employees said when they were offered a choice between keeping their jobs and accepting severance packages during layoffs last year, workers were willing to take the buyout, fearing that they wouldn’t get anything if the factory closed altogether. That happened in 2018 when one Nike supplier near Jakarta, Kahoindah Citragarment, shut down without paying workers their full severance after Nike pulled its orders, an investigation by the Worker Rights Consortium found. The factory’s South Korean parent company, Hojeon, eventually agreed to pay workers $4.5 million after labor advocates argued they were legally owed separation pay. Hojeon did not respond to requests for comment. At Victory Chingluh, two union leaders said in December that they anticipated another 5,000 layoffs at a company that once employed about 15,000. “Almost all employees here are worried about that,” one of them said, speaking on the condition of anonymity because they feared repercussions from talking to reporters. The leaders said they’ve been told the factory being built in Cirebon could be ready by 2027. They said they’ve been told it’s for an expansion — even though their factory recently lost thousands of jobs. Victory Chingluh did not respond to questions. Nike said in a statement that it works closely with suppliers during layoffs to minimize disruptions. “We mandate that suppliers pay all statutory severance, social security, and other separation benefits required by local law and often assemble working groups — which may include civil society, unions, and local governments — to aid in proper execution,” the company said. Business leaders near Jakarta have voiced concern about the wage disparity between their region and Central Java, more than 150 miles away, saying that mandated pay increases around Jakarta could lead to mass layoffs and cause manufacturers to shift production. “There is a real possibility that many labor-intensive industries will move to other regions,” Herry Rumawatine, the head of a local employers association, told the Jakarta Globe in January. Asked whether the geographic shifts in Nike’s Indonesian supply chain were aimed at improving the bottom line, the company said that creating “operational efficiencies” is part of doing business in a competitive environment. However, the company said treating Nike’s geographic shift primarily as a move to save money “creates an incomplete picture” and cited “other plausible drivers” such as automation or changing production needs. Less-developed regions shouldn’t be excluded from opportunities for economic growth, Nike said, and it expects its suppliers everywhere to meet its code of conduct. “Growth and progress go hand in hand,” Nike wrote, “and we remain committed to investing in ways that expand opportunity while strengthening labor standards and worker protections where we operate worldwide.” Nike suggests that people who work for its foreign suppliers are well paid. In particular, the company says workers at its strategic suppliers earn an average of nearly double the local minimum wage. As The Oregonian/OregonLive reported in partnership with ProPublica in January, Nike does not pay workers anywhere close to this amount in Indonesia. In interviews across three regions of the country, roughly 100 workers said they made the minimum wage or a little bit more. Nike told the news organizations that its figure is a global average and variations naturally exist. But the company also told the news organizations that it’s important not just to compare what its suppliers pay relative to the minimum wage. Nike’s focus, one company official said, is on whether workers make a living wage and, if not, whether their employers are trying to get there. Although Nike does not explicitly require its suppliers to pay this amount, it says every worker “has a right to compensation for a regular work week that is sufficient to meet workers’ basic needs and provide some discretionary income.” The company reported that two-thirds of its key suppliers — it did not say which ones — paid above living wage benchmarks in 2022. Jason Judd, executive director of the Global Labor Institute at Cornell University, said living wage pledges from companies like Nike are so flexible that they’re almost meaningless. Only asking factories to be working toward living wages, as Nike does, “could go on for 20 years,” Judd said, “until you’ve found yet another lower-wage province.” Nike’s recent move to Central Java is notable because while wages are far lower there than in urban Jakarta, food and housing are not dramatically cheaper, according to estimates from the WageIndicator Foundation, a Dutch nonprofit. The foundation says a living wage in Central Java starts around $245 a month; in the parts of the province that are home to Nike suppliers, the local minimum wage ranges from only $136 to $215. Workers in Central Java said second jobs are common, including selling fish and gasoline. One said workers covertly sold snacks inside the factory, out of sight of managers who might fire them if caught. “At its core, this is about cost reduction and power,” Wiranta Ginting, deputy international coordinator for the Asia Floor Wage Alliance, a labor group, said in an email. It isn’t clear exactly how much Nike may have saved on labor by growing aggressively in low-wage regions. But some rough calculations are possible, based on addresses Nike has published for its suppliers, the numbers it says they employ and the minimum wage they must pay in each municipality. If each factory worker made exactly the minimum wage and worked only on Nike products, then the company’s shift into lower-cost areas would have saved about $200 million on labor in 2025 alone. The estimate is based on what Nike’s suppliers paid last year versus what they would have paid in labor costs had the company expanded uniformly across regions where it had factories in 2015. It’s only a broad indicator of potential savings. Nike said the analysis “rests on a series of oversimplified assumptions that limit the reliability of its conclusions.” For example, the company said that to assume the workforce could have grown where suppliers were located in 2015 “does not reflect the realities of manufacturing operations, which are constrained by factors such as facility capacity, workforce availability, skills, technology, and changes in product mix.” The geographic shift into lower-wage regions of Indonesia shows one way Nike can try to wring more profit from its vast supply chain. 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