The Darker Side of Nike & Adidas World Cup sponsorships: Poverty Wages

With the football World Cup set to kick off this week, sportswear giants Nike and Adidas gear up to go head for the title of the World’s biggest football-apparel brand. Sponsoring a total of 22 out of the 32 football teams competing for the title, the World Cup is the main stage for Nike and Adidas growing competition for sponsorship and branding. However, while millions of people around the globe are getting ready to cheer on their favourite team during the event, a new report from Éthique sur l’étiquette and Clean Clothes Campaign, ‘Foul Play’, reveal that while Nike and Adidas pay record-break amounts to footballers, they do not pay living wages to the female garment workers making their shirts.

Over the past few decades, Nike and Adidas budgets for marketing and sponsorships have doubled in value. In a record-breaking new contract, the German football team is set to receive 65 million euros (76.7 million USD) per year from Adidas until the next World Cup, which is three times as much they previously received under the previous contract which expires this year. The French national football team negotiated a deal for a 50.5 million euro sponsorship with sports giant Nike. However, although Nike and Adidas spend millions of euros on marketing and sponsorships as major supporters of the World Cup, they pay minimum wages to the thousands of female garment workers who sew the football shirts and make the shoes of the players and supporters.

Nike and Adidas spend millions on World Cup sponsorships but do not pay garment workers living wages

In the new ‘Foul Play’ report, which was published two years after the initial report, the organisations' highlight that although Nike and Adidas are spending more money than ever on sponsorships and marketing, working conditions for the individuals that make their products remain as precarious as ever. For example, comparing the current production costs of Nike and Adidas sports shoes with those from 25 years ago, the worker’s share of the price of each pair shoes sold has dropped by 30 percent from 1995. In addition, as labor costs continue to increase in China, a move which sees workers just earning enough to live, sportswear brands like Nike and Adidas continue to withdraw and move to cheaper labor production hubs.

Many sportswear brands have shifted their production hubs to Indonesia, Cambodia and Vietnam, where labor and production costs are lower. However, these countries are reporting an increase in human rights violations and garment workers’ average salaries are between 45 percent and 65 percent below the living wage, leaving workers with largely insufficient funds to provide for their families’ basic needs, thereby trapping them in extreme poverty. For example in Indonesia, where 80 percent of garment workers are women, most workers earn between 82 euros and 200 euros (95 US dollars and 235 US dollars) a month. This does not even cover the basic needs to live a decent life according to calculations from the Asia Floor Wage, who estimates a living wage to amount to 363 euros (427 US dollars). A number of these garments workers do not even earn the legal minimum wage.

Now unions and civil society are calling on both Adidas and Nike to ensure living wages are paid throughout their supply chain. The report reveals that if Nike and Adidas would have kept their sponsor contracts at the 2012 levels instead of increasing them to unprecedented levels, both sportswear companies would have saved enough money to be able to pay living wages for the workers in their main production countries China, Vietnam, Indonesia and Cambodia for one year. Both Nike and Adidas have succeeded in developing very efficient business models which have continued to yield impressive growth for more than a decade. While this model generates increasingly substantial profits which are enjoyed by company shareholders, these profits do not “trickle down” to the workers in the garment factories, despite the promises of sportswear brands.

The report highlights that both Nike and Adidas generate sufficient revenue to be able to pay living wages across their supply chains, but chose to prioritise other areas, such as marketing and sponsorships. The Clean Clothes Campaign and Éthique sur l’étiquette are calling on Nike and Adidas, as well as all sportswear brands, to create a time-bound roadmap with targets to guarantee the payment of a living wage, earned in a standard working week, adopt more responsible purchasing practices to enable the payment of living wages and publish the actual monthly wages of the workers in its supplier factories as well as the results of their supplies social audits.

Adidas has responded to the claims made in the report, issuing the following statement to FashionUnited: “Adherence to fair and safe working conditions and fair wages in factories throughout the supply chain are an integral part of Adidas' business policy and part of the contractual agreements with our suppliers. Although we do not determine the wages suppliers pay their employees, Adidas requires employers to pay at least the remuneration required by law or negotiated in a collective bargaining process."

“In addition to the general economic conditions and cost of living of a country, however, national laws, the number and availability of the workforce in the country, the skills and competences of an employee, the nature of the sector or industry and the competitiveness of the employer also influence the determination of wages,” added a spokesperson for Adidas.

Nevertheless, the unions are urging Nike and Adidas begin with settling the Indonesian Freedom of Association Protocol covering workers’ trade union rights signed in 2011 by Adidas, Nike and 4 other sportswear brands, suppliers and trade unions. The signatures agreed to start negotiations on workers’ trade union rights and two other labor rights, wages, and precarious employment, but in the ten years since the sportswear brands have refused to continue the process. "We demand a new protocol on wages,” said Raja, an Indonesian trade unionist in a statement.

“Brands should change their buying practices because they affect the working conditions. Knowing that the labor cost of a t-shirt produced in Indonesia is hardly 1 percent of the price, it seems logical to me that the labor cost can be increased a bit, right? But the sportswear brands until now refuse to engage." Adidas has countered this assesment, adding: “The average monthly take-home wage of production workers in the facilities Adidas works with in Indonesia is currently well above the current minimum wage. Take-home wage consists of the monthly wage plus benefits.”

FashionUnited has contacted Nike for additional commentary.

Photo 1: Clean Clothes Campaign

Photo 2 + 3: Nike, World Cup 2018