Yuyun Lusiyani
Nike, the world’s largest athletic apparel brand, has significantly expanded its manufacturing operations in regions of Indonesia where workers earn wages considerably below the estimated cost of living, directly undermining the company’s stated goals of ensuring its more than 1 million global employees can support their families and cover living expenses. An extensive analysis by ProPublica and The Oregonian/OregonLive reveals a strategic decade-long shift in Nike’s Indonesian supply chain, moving production away from higher-wage, unionized areas like Jakarta towards less-developed provinces such as Central and West Java, where labor costs are dramatically lower. This internal geographic realignment within Indonesia reflects a broader corporate strategy to optimize the bottom line, raising critical questions about corporate responsibility, ethical sourcing, and the actual impact on the ground for hundreds of thousands of factory workers.
The Pursuit of Lower Wages: A Decade of Strategic Shift
For over a decade, Nike has publicly committed to ensuring that workers in its supply chain earn enough to meet their basic needs and have discretionary income. The company even suggests that employers should have a plan to bridge any gap between factory wages and a living wage. However, the investigation found a stark contrast between these aspirational statements and Nike’s operational realities in Indonesia, its second-largest production center, employing 280,000 people.
Between 2015 and 2025, Nike’s suppliers shed approximately 36,000 jobs in areas where the monthly minimum wage approached or exceeded a living wage, such as the capital city of Jakarta, where workers typically earned around $300 per month. Concurrently, the company’s supplier workforce in Central and West Java surged by nearly 112,000. In these burgeoning production hubs, the local minimum wage hovers around $165 a month, an amount far from what is considered adequate to live on. Dozens of workers interviewed by the news organizations confirmed that the minimum wage is often all they earn, pushing many into precarious financial situations.
Nurina Merdikawati, a lecturer in the Indonesia Project at Australian National University, succinctly explained the economic rationale behind such moves: "If it’s very labor intensive, then you go where labor is cheapest. In Indonesia, that’s going to be Central Java." This trend illustrates a nuanced evolution in global supply chain management, where the traditional movement of multinational corporations to entirely different, lower-cost countries is, in some instances, being replaced by strategic internal shifts within a single nation to achieve substantial savings and enhance profitability. Other international brands have reportedly followed a similar trajectory, expanding into Indonesia’s low-wage regions.
Echoes of Disruption: Job Losses and Worker Fears in High-Wage Zones
The strategic relocation has had significant ripple effects, particularly in the established industrial zones surrounding Jakarta. Factory workers and union officials in these areas now express a palpable fear that demanding wage increases could lead to further job cuts, as companies like Nike’s suppliers seek more cost-effective production sites.
A vivid illustration of this concern unfolded in October last year, when Victory Chingluh, a long-standing Nike supplier near Jakarta, laid off over 2,000 workers. This was followed by another substantial cut of 1,500 workers by Adis Dimension, another Nike shoe supplier in the vicinity, in early 2024, according to local news reports. These layoffs have fueled anxiety among the remaining workforce. Three employees at Victory Chingluh revealed that the specter of additional job losses looms large over their daily work, especially with news that the company is constructing a new factory in Cirebon, West Java, where the minimum wage is a staggering 45% lower.
Union leaders at Victory Chingluh, speaking anonymously due to fear of reprisal, anticipated another 5,000 layoffs from a factory that once employed approximately 15,000 people. They noted that despite these significant job reductions, the new Cirebon factory, expected to be ready by 2027, is being framed as an "expansion." This narrative further underscores the workers’ precarious position and the perceived lack of transparency regarding the true motivations behind the shifts.
The precarity of factory closures is not unprecedented. In 2018, Kahoindah Citragarment, another Nike supplier near Jakarta, abruptly ceased operations without fully paying workers their due severance after Nike withdrew its orders. An investigation by the Worker Rights Consortium found that the factory’s South Korean parent company, Hojeon, eventually agreed to pay $4.5 million in separation pay following sustained pressure from labor advocates. This incident serves as a grim precedent for workers contemplating severance packages versus the risk of factory closure.
Local business leaders in the Jakarta area have voiced concerns about the growing wage disparity, warning that mandated pay increases could trigger mass layoffs and further incentivize manufacturers to relocate. Herry Rumawatine, head of a local employers association, told the Jakarta Globe in January, "There is a real possibility that many labor-intensive industries will move to other regions."
Nike’s Stated Commitments Versus Ground Realities
Nike asserts that its geographic shifts are not solely driven by cost savings, citing "operational efficiencies" as part of doing business in a competitive environment. The company also suggested that framing the shift primarily as a cost-saving measure "creates an incomplete picture," pointing to "other plausible drivers" like automation or evolving production requirements. Furthermore, Nike emphasized that less-developed regions should not be excluded from economic growth opportunities and expects its suppliers everywhere to adhere to its code of conduct. "Growth and progress go hand in hand," Nike stated, adding a commitment to "investing in ways that expand opportunity while strengthening labor standards and worker protections where we operate worldwide."
However, these corporate assurances are met with skepticism by labor experts. Nike claims that most workers for whom it has data earn nearly double the local minimum wage globally. Yet, in Indonesia, ProPublica and The Oregonian/OregonLive found this claim to be unsubstantiated, with roughly 100 workers across three regions reporting they earned the minimum wage or slightly more. While Nike clarified that its figure represents a global average, the company’s focus, according to one official, is on whether workers earn a living wage and if employers are actively working towards that goal.
Despite stating that 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," Nike does not explicitly mandate that its suppliers pay a living wage. The company reported that two-thirds of its key suppliers paid above living wage benchmarks in 2022, though it did not specify which suppliers. Jason Judd, executive director of the Global Labor Institute at Cornell University, criticized such pledges as "almost meaningless" due to their flexibility. He remarked that merely "asking factories to be working toward living wages…could go on for 20 years, until you’ve found yet another lower-wage province."
The move to Central Java is particularly significant because, while wages are substantially lower, the cost of food and housing is not proportionally cheaper. Estimates from the WageIndicator Foundation, a Dutch nonprofit, indicate that a living wage in Central Java starts around $245 a month, while the local minimum wage in Nike supplier regions ranges from a mere $136 to $215. This disparity forces many workers into second jobs, selling items like fish or gasoline, or even covertly selling snacks within factories to supplement their meager incomes.
Wiranta Ginting, deputy international coordinator for the Asia Floor Wage Alliance, a labor group, unequivocally stated, "At its core, this is about cost reduction and power." While precise savings are difficult to quantify, rough calculations based on Nike’s published supplier addresses, reported employment numbers, and municipal minimum wages suggest that the shift into lower-cost areas could have saved Nike approximately $200 million in labor costs in 2025 alone. This estimate assumes all workers earned the minimum wage and were dedicated solely to Nike production, providing a broad indicator of potential savings, though Nike disputes its reliability due to "oversimplified assumptions" regarding manufacturing realities.
Economic Drivers and Corporate Context
This strategic pivot comes at a time when Nike, a company that reported $46.3 billion in revenue last year, is grappling with declining annual sales and profits. These financial pressures have been compounded by external factors, including uncertainty surrounding past tariffs, which Nike had estimated could cost $1.5 billion annually before a recent Supreme Court decision mitigated some of these concerns. The company’s stock has also experienced a significant decline, dropping over 60% from its 2021 peak. In this challenging economic climate, "Margin expansion is a top priority for me and my leadership team," as CEO Elliott Hill conveyed to Wall Street analysts in a December earnings call, highlighting the intense pressure to cut costs wherever possible.
Officials in Central Java have welcomed the industrial expansion, viewing it as a catalyst for economic growth. In 2022, the then-governor reported that 97 factories had opened in the province, with an additional 10 garment and footwear factories under construction last year and 17 more projected for this year. Nike echoes this sentiment, asserting that increased manufacturing in Central Java "is not an accident and, in many ways, is something to be celebrated." The company credits the Indonesian government’s intentional steps to transform Central Java into an industrial hub, aiming to extend economic growth witnessed in other regions for over 30 years. Nike maintains that "manufacturing growth in regions with lower prevailing wages can lead to raised standards, increased worker skills, and positive contributions to local communities."
The Human Cost: Working Conditions in Emerging Production Hubs
Beyond the wage disparities, the investigation uncovered significant differences in working conditions between Indonesia’s established urban production centers and the newer, less-developed regions where Nike has expanded. Wiranta Ginting of the Asia Floor Wage Alliance noted that Greater Jakarta, as an older industrial region, benefits from a long history of unionization and collective bargaining, which has historically secured higher minimum wages and better working conditions.
Conversely, factories in Central Java often recruit younger workers, exhibit weaker union representation, and face less scrutiny from labor inspectors. Scott Nova, executive director of the Worker Rights Consortium (WRC), an international watchdog group, highlighted a more prevalent incidence of problems on the factory floor in this region. The WRC, which has investigated apparel factories in Central Java for the past five years, found that workers "suffer gender-based violence and other abuses at higher rates than in the country’s older production centers." Nova added that "because unions have a tenuous foothold in the region and face harsh employer resistance, workers often cannot fight back."
A WRC investigation, for instance, revealed that women at a Central Javanese factory producing Nike-licensed goods for Fanatics, a privately owned brand, endured years of sexual harassment. After initial reports in 2022 of unwanted touching and verbal harassment by supervisors, the consortium uncovered even more egregious abuse in 2023 at another Central Java factory owned by the same company, South Korea-based Ontide. This led to a groundbreaking agreement in 2024, the Central Java Agreement for Gender Justice, a binding deal with labor unions mandating harassment training and monitoring. Fanatics reported "excellent progress" in implementing the agreement, which Nova hailed as "a ray of hope."
However, workers interviewed by the news organizations indicate that problems persist at other factories in Central Java. Ten workers at one supplier reported that many women’s toilets had been non-functional for months. Two workers at other factories recounted receiving written reprimands after reporting job-related injuries. Nike, in response to these accounts, affirmed that a "safe and healthy work environment is a fundamental human right" and stated it conducts annual factory audits for code of conduct compliance. The company claimed it had not found a higher incidence of problems at Central Java suppliers compared to other Indonesian regions and works swiftly with suppliers to implement improvement plans.
At Selalu Cinta, a Central Java factory employing 18,000 people and manufacturing various Nike footwear, hundreds of workers signed petitions demanding the removal of a manager accused of repeatedly screaming at and intimidating them. Ten workers confirmed that factory leadership had failed to address the issue. Nike stated it required Selalu Cinta to engage in an independent third-party investigation and is overseeing corrective actions in consultation with unions, with follow-up verification planned. Selalu Cinta officials did not respond to requests for comment. One woman, whose parents depended on her wages, described working under the manager’s frequent tantrums as feeling "like you’re in hell," highlighting the profound human cost of these working conditions.
Methodology Behind the Investigation
The ProPublica and The Oregonian/OregonLive investigation meticulously tracked Nike’s factory footprint and employment trends in Indonesia from 2015 to 2025. Overall employment at Nike suppliers in Indonesia grew by 39% during this period. To pinpoint the geographical distribution of this growth, the analysis utilized factory-level data self-reported by Nike in November 2015 and November 2025. To ensure accuracy and avoid misinterpreting expanded disclosure as actual employment growth, any materials and components factories that appeared on Nike’s 2025 list but not in 2015 were excluded, removing approximately 3,500 workers from the analysis.
Minimum and living wages were assigned to each factory based on their specific locations, with all wage and location data undergoing manual review and verification against Google Maps, factory websites, shipping records, and other public disclosures. Minimum wages were determined at the municipal level using 2025 government decrees, accounting for sectoral variations or specific rates for labor-intensive multinational companies where applicable. Living wage estimates were sourced from the WageIndicator Foundation, an independent Dutch nonprofit, using their lowest estimate for 2025 for a decent standard of living for a typical family. Factories were categorized as "at or above living wage" if the applicable minimum wage reached at least 95% of the WageIndicator Foundation’s lowest provincial living wage estimate. All wages were converted from Indonesian rupiah to U.S. dollars using the mean of monthly average daily exchange rates for 2025 from the Federal Reserve.
For spatial analysis and mapping, factory coordinates were manually reviewed and then grouped into density-based clusters when located within 15 kilometers of another factory, ensuring that factories in different wage classifications were not conflated. Municipalities without a Nike factory were assigned the highest 2025 minimum wage applicable if a Nike factory were located there.
The estimation of potential labor cost savings—approximately $200 million in 2025—was derived by comparing the actual 2025 supplier payroll (based on reported worker numbers and municipal minimum wages) to a hypothetical scenario where employment growth was proportional across all municipalities where Nike had factories in 2015. This calculation reflects what Nike’s suppliers would have paid under each scenario if all workers earned the applicable minimum wage and factory employment was dedicated solely to Nike production. The investigators acknowledge that this serves as a broad indicator of potential savings rather than a precise measure, given that suppliers often produce for multiple brands and some workers earn above the minimum wage.
Broader Implications: A Shifting Global Supply Chain Landscape
The findings of this investigation into Nike’s practices in Indonesia highlight a complex and evolving landscape of global supply chains. The strategic internal relocation within a country for labor cost advantages represents a sophisticated new dimension in multinational corporate sourcing. While companies like Nike emphasize "operational efficiencies" and contributing to economic growth in developing regions, the analysis underscores the potential for these moves to come at a significant human cost.
The erosion of union power in newly industrialized zones, coupled with less rigorous oversight, creates an environment where worker protections can weaken, and abuses, including gender-based violence and unsafe working conditions, may become more prevalent. The ongoing struggle of workers in Central Java to earn a living wage, often resorting to supplementary employment, directly contradicts the spirit of Nike’s public commitments to ethical sourcing and worker well-being.
This investigation serves as a critical examination of how global brands navigate the tension between profit maximization and social responsibility. It prompts deeper scrutiny into the effectiveness and enforceability of corporate pledges regarding living wages and working conditions, particularly when faced with intense competitive pressures and declining financial performance. As the global economy continues to evolve, the choices made by industry giants like Nike will have profound and lasting implications for the lives of millions of workers in their vast supply networks worldwide. The challenge remains for these corporations to demonstrate that "growth and progress" truly go hand in hand with robust labor standards and worker protections, not merely with reduced operational costs.
Joko Widodo
Nila Kartika Wati
Jia Lissa
Eva Lovia
Nana Wu