Nike moves jobs to Indonesia’s low-wage regions

If you’re one of the million people who make Nike sneakers and clothing around the world, the company says you should be able to support your family. You should earn enough to pay for your living expenses and have some discretionary money. If your factory salary isn’t enough, your employer should have a plan to get you there.

But Nike’s expansion in Indonesia over the past decade has directly undermined those goals, according to an analysis by ProPublica and The Oregonian/OregonLive.

Over the past decade, employment at factories supplying the world’s biggest sportswear brand has grown dramatically in areas of Indonesia where, according to one advanced estimate, the minimum wage is lower than the amount workers need to live. At the same time, Nike’s supply chain has shrunk overall in places that pay this estimated living wage, according to our analysis.

This trend shows how moves by multinational companies to countries with increasingly lower labor costs are being replaced, in some cases, by moves within a country that can deliver significant cost savings and improve financial results.

Nike suppliers employ 280,000 people in Indonesia, the company’s second largest manufacturing hub.

From 2015 to last year, these suppliers cut about 36,000 jobs in places where the monthly minimum wage exceeds or approaches the living wage. In these high-wage areas, which include the capital Jakarta, the minimum generally equates to around $300 per month.

In contrast, the company’s supplier workforce has increased by nearly 112,000 people in parts of Central and West Java, with the local minimum wage typically around $165 a month, far short of what is considered enough to live on. Dozens of workers employed by Nike suppliers in Indonesia told news agencies: the minimum is about all they earn.

“If it’s labor intensive, then you go where the labor is cheapest,” said Nurina Merdikawati, a lecturer with the Indonesia project at the Australian National University. In Indonesia, she said, “it will be Central Java.”

Other brands have also moved into Central Java and other low-wage areas of Indonesia in recent years and continue to expand there, local news agencies reported.

For Nike, this trend threatens the jobs of the existing workforce in factories elsewhere in the country. Last October, more than 2,000 workers were laid off by Victory Chingluh, one of Nike’s long-time suppliers near Jakarta. In 2024, another 1,500 workers were laid off by a neighboring Nike shoe supplier, Adis Dimension, according to local media.

Labor advocates say the geographic shift is concerning because the Jakarta region has a stronger union presence that ensures working conditions and wages receive greater attention than in less developed places like Central Java.

At Victory Chingluh, three employees told news agencies that fear of further job cuts was weighing on their work. They said the company was building a new factory in Cirebon, West Java, where the minimum wage is 45 percent lower.

Employees said that when offered a choice between keeping their jobs and accepting severance packages during layoffs last year, workers were willing to accept the buyout, fearing they would get nothing if the plant closed completely.

This happened in 2018 when a Nike supplier near Jakarta, Kahoindah Citragarment, closed its doors without paying workers full severance pay after Nike withdrew its orders, an investigation by the Workers’ Rights Consortium found. The factory’s South Korean parent company, Hojeon, ultimately agreed to pay workers $4.5 million after labor rights advocates argued they were legally owed severance pay. Hojeon did not respond to requests for comment.

At Victory Chingluh, two union leaders said in December they anticipated 5,000 more layoffs at a company that once employed about 15,000 people.

“Almost every employee here is worried about this,” said one, speaking on condition of anonymity because they feared repercussions from their discussions with reporters.

Executives said they were told the factory under construction in Cirebon could be ready by 2027. They were told it was 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 was working closely with suppliers during layoffs to minimize disruption. “We require suppliers to pay all statutory, social security and other severance payments required by local law and often establish working groups – which may include civil society, unions and local governments – to facilitate proper execution,” the company said.

Business leaders near Jakarta have expressed concern about the wage disparity between their region and Central Java, located more than 240 kilometers away, saying mandatory wage increases around Jakarta could lead to mass layoffs and prompt manufacturers to shift production.

“There is a real possibility that many labor-intensive industries will move to other regions,” Herry Rumawatine, president of a local employers association, said at the news conference. Jakarta Globe in January.

When asked if the geographic changes in Nike’s Indonesian supply chain were aimed at improving financial results, the company said creating “operational efficiencies” was part of doing business in a competitive environment.

However, the company said treating Nike’s geographic shift primarily as a money-saving move “creates an incomplete picture” and cited “other plausible factors” such as automation or changing production needs.

Less developed regions should not be excluded from opportunities for economic growth, Nike said, and the company expects its suppliers everywhere to follow 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 around the world. »

Nike suggests that people who work for its foreign suppliers are well paid. The company claims in particular that workers at its strategic suppliers earn on average nearly double the local minimum wage.

As The Oregonian/OregonLive reported in partnership with ProPublica in January, Nike does not pay its nearby employees to this amount in Indonesia. In interviews in three regions of the country, about 100 workers reported earning minimum wage or slightly more.

Nike told news agencies that this figure is a global average and that variations naturally exist. But the company also told news organizations that it’s important to not just compare what its suppliers pay versus the minimum wage. Nike’s goal, a company official said, is whether workers are earning a living wage and, if not, whether their employers are trying to make it happen.

Although Nike does not explicitly require its suppliers to pay this amount, the company says that each worker “is entitled to compensation for a regular work week that is sufficient to meet workers’ basic needs and provide them with some discretionary income.” The company said two-thirds of its main suppliers – without specifying which ones – were paying wages above the living wage in 2022.

Jason Judd, executive director of the Global Labor Institute at Cornell University, said promises of living wages from companies like Nike are so flexible that they are almost meaningless. Simply asking factories to work to achieve living wages, as Nike does, “could continue for 20 years,” Judd said, “until you find another province with lower wages.”

Nike’s recent move to Central Java is notable because although wages there are much lower than in the city of Jakarta, food and housing are not significantly cheaper, according to estimates by the WageIndicator Foundation, a Dutch nonprofit. The foundation says a living wage in Central Java starts at around $245 per month; In areas of the province that are home to Nike suppliers, the local minimum wage ranges from just $136 to $215.

Workers in Central Java said second jobs are common, particularly in selling fish and gasoline. One said workers were secretly selling snacks inside the factory, out of sight of managers who could fire them if caught.

“It’s basically about cost reduction and energy,” Wiranta Ginting, deputy international coordinator of the Asia Floor Wage Alliance, a labor group, said in an email.

It’s unclear how much Nike was able to save on labor by aggressively expanding into low-wage areas. But some rough calculations are possible, based on the addresses published by Nik e for its suppliers, the number of employees it claims and the minimum wage they must pay in each municipality.

If every factory worker earned exactly minimum wage and worked only on Nike products, then moving the company to lower-cost areas would have saved about $200 million in labor in 2025 alone. The estimate is based on what Nike’s suppliers paid last year compared to what they would have paid in labor costs if the company had expanded evenly in the regions where it had factories in 2015.

This is only a general indicator of potential savings.

Nike said the analysis “relies on a series of overly simplistic assumptions that limit the reliability of its conclusions.”

For example, the company said that assuming that labor might have increased where suppliers were located in 2015 “does not reflect the realities of manufacturing operations, which are limited by factors such as facility capacity, labor availability, skills, technology and changes in product mix.”

The geographic shift to lower-wage Indonesian regions shows one way Nike can attempt to squeeze more profit from its vast supply chain. The company, which reported $46.3 billion in revenue last year, is facing declining annual sales and profits, problems compounded by uncertainty over President Donald Trump’s tariffs, which Nike had estimated would cost $1.5 billion a year before a recent Supreme Court ruling struck them down. Its stock has fallen more than 60% from its 2021 high.

“Margin expansion is a top priority for me and my management team,” CEO Elliott Hill told Wall Street analysts during a December earnings conference call.

Officials in Central Java, where wages are low, have welcomed the industrial expansion. The then provincial governor said in 2022, 97 factories had opened there. Ten more clothing and shoe factories were under construction last year, according to local media, and 17 more are expected to be built this year.

Nike’s explanation for moving into the region was consistent with co-founder Phil Knight’s assertions decades ago that Nike’s arrival was a positive force for local economies and workers in developing countries.

“The increase in production in Central Java is not an accident and, in many ways, it is something worth celebrating,” Nike told The Oregonian/OregonLive and ProPublica. “The Indonesian government has taken significant and intentional steps to transform Central Java into an industrial hub, with a view to expanding the economic growth that other parts of the country have enjoyed for more than 30 years.

The company added that “growth of the manufacturing sector in regions where wages are lower can lead to higher standards, increased worker skills and positive contributions to local communities.”

Nike’s decision has repercussions in the relatively high-wage Jakarta region, Indonesia’s largest city, where the company has been sourcing sneakers since 1988. Workers and union officials there said they were reluctant to demand wage increases.

They said they feared that better pay would mean fewer jobs.

“It is clear that every company will expand where it is cheaper,” said a union official at a Nike supplier near Jakarta.

The differences between Indonesia’s well-established urban production centers and the less developed areas where Nike has expanded employment go beyond wages.

“Greater Jakarta is an older industrial region with a long history of unionization and collective bargaining, which is reflected in higher minimum wages achieved through years of worker organizing and mass mobilization,” Ginting, the Asia Floor Wage Alliance representative, said in his email.

In contrast, he said, factories in Central Java’s new garment hotspots often hire younger workers, have less union representation and are less monitored by labor inspectors.

Scott Nova, executive director of the Worker Rights Consortium, said problems in factories are more widespread in this region. Nova’s international monitoring group has conducted investigations into garment factories in the region over the past five years.

Despite some recent progress, Nova said by email, workers at many factories “experience gender-based violence and other abuses at higher rates than in older production centers across the country.”

“Because unions have a tenuous foothold in the region and face strong resistance from employers,” he added, “workers often cannot fight back.”

An investigation by Nova’s group found that women at a factory in Central Java producing Nike-licensed products for Fanatics, a private label, had been sexually harassed for years. The labor rights group told Fanatics in 2022 that it had heard from women that they had to endure unwanted touching and verbal harassment from their supervisors.

After the factory owner pledged to fix the problems, the consortium discovered even more egregious abuses in 2023 at another factory in Central Java owned by the same company, South Korea-based Ontide. The company entered into a binding agreement with unions in 2024, called the Central Java Gender Justice Agreement, which mandates harassment training and monitoring.

Ontide did not respond to a request for comment. However, Ontide sustainability director John Yoon said in a press release announcing the gender justice deal that it would protect workers. “As part of our commitment to the safety and well-being of our workers, we are pleased to see the initial results,” the statement said.

Fanatics said in a statement to The Oregonian/OregonLive and ProPublica that there has been “excellent progress” in implementing the deal. “We are proud of this work, recognized by the signatories of the Agreement, and which will continue until 2026,” the company said.

Nova, of the Worker Rights Consortium, called the Ontide result a “ray of hope.”

But workers told news agencies that problems persisted at other factories in Central Java. Ten workers at one supplier said many women’s toilets had not worked for months. Two workers at other factories said they received written reprimands after informing their employers that they had been injured on the job.

Asked about these workers’ testimonies, Nike said that “a safe and healthy working environment is a basic human right” and that it audits factories annually for compliance with its code of conduct. He said he had not encountered more problems among suppliers in Central Java than in other parts of Indonesia. The company added that it works quickly with its suppliers when necessary to put improvement plans in place.

At Selalu Cinta, a factory in Central Java that employs 18,000 people and makes Nike Burrow slippers, Blazer Mid ’77 sneakers and other shoes, hundreds of workers signed petitions asking the factory to fire a manager who they said had repeatedly shouted and intimidated workers.

Factory managers failed to fire him, 10 workers told news agencies.

Nike said it had asked Selalu Cinta to engage in an independent investigation and oversee corrective measures in consultation with unions. Nike said it plans a follow-up audit. Selalu Cinta officials did not respond to requests for comment.

A woman who worked for the manager said in an interview last summer that her parents were dependent on her salary, forcing her to keep her job despite what she described as her boss’s frequent tantrums.

“Working like this,” she said, “is like being in hell. »

How we tracked Nike factories

Overall employment among Nike suppliers in Indonesia grew by 39% between 2015 and 2025. To see where in Indonesia this growth occurred, we used factory-level data. self-reported by Nike in November 2015 and November 2025.

Because Nike said it began working to increase disclosure of materials and component factories in 2021, we excluded all such factories that were on Nike’s list in 2025 but not in 2015, to avoid counting Nike’s expanded disclosure as employment growth. This eliminated 12 materials plants starting in 2025, removing about 3,500 workers from the analysis.

ProPublica and The Oregonian/OregonLive assigned a minimum wage and a living wage to each factory based on their location. Salary and location data were reviewed manually and when information was incomplete or inconsistent, classification was based on the data that appeared most reliable.

The city or regency of each factory was identified using factory addresses and verified against Google Maps, factory websites, shipping records, and other public information.

We have set a minimum wage at the municipal level based on government decrees from 2025. Some municipalities specify a single minimum wage for all sectors. Others specify wages by sector (in which case we used the sectoral wage that best matched what each factory produced) and/or by nature of work and employer (in which case we used the rate for labor-intensive multinational companies).

Unlike the minimum wage, which is set by law, living wage estimates can vary. We used estimates from the WageIndicator Foundation, an independent Dutch non-profit organization. While the group calculates the living wage as a range, we used the group’s lowest estimate for 2025 of what a worker would need to provide a decent standard of living for a typical family.

Factories were classified as “at or above the living wage” if the applicable minimum wage was at least 95% of the WageIndicator Foundation’s lowest living wage estimate for the province.

Salaries were converted from Indonesian rupiah to US dollars using monthly average exchange rates q average daily lives USD/IDR for 2025 from Federal Reserve.

For the chart, factory coordinates were manually examined and then grouped together when multiple factories were close to each other. Factories were grouped when they were located within 15 kilometers of at least one other factory, forming groups based on density which were represented on the map as the geometric center of those points. We verified that factories belonging to different wage classifications were not grouped together. For municipalities without a Nike factory, we assigned the highest 2025 minimum wage that could apply if a Nike factory were located there.

To estimate potential savings based on where Nike increased production between 2015 and 2025, we compared actual supplier payrolls for 2025 (based on the reported number of factory workers and the municipal minimum wage) to a counterfactual scenario in which employment increased proportionally in the same municipalities where Nike had factories in 2015. The calculation reflects what Nike’s suppliers would have paid in labor costs in each scenario if all workers had earned the applicable minimum wage and factory jobs were devoted to Nike production. Because suppliers may produce for multiple brands and some workers earn above minimum wage, the estimate merely provides a general idea of ​​potential savings rather than a precise measure of how much the company and its suppliers actually save in labor costs.