Nike Shifts Production to Lower-Wage Regions of Indonesia, Raising Labor Concerns

Over the past decade, Nike has increasingly moved its manufacturing operations within Indonesia to regions with significantly lower minimum wages, a trend that is sparking concerns about labor standards and worker well-being. While the company maintains its commitment to ensuring workers earn a living wage, an analysis by ProPublica and The Oregonian/OregonLive reveals a geographic shift in Nike’s supply chain that prioritizes cost savings.

The Geographic Shift in Nike’s Indonesian Supply Chain

Nike’s supplier workforce in Indonesia has grown substantially in areas where the minimum wage falls short of a calculated living wage. Conversely, employment has decreased in regions that pay closer to a living wage. Between 2015 and 2025, Nike’s suppliers shed approximately 36,000 jobs in areas like Jakarta, where the minimum wage is around $300 per month. Simultaneously, the company’s supplier workforce expanded by nearly 112,000 in parts of Central and West Java, where minimum wages range from $136 to $215 per month [1].

This trend reflects a broader pattern of multinational corporations seeking lower labor costs, even within the same country. Nurina Merdikawati, a lecturer at the Indonesia Project at Australian National University, notes that Central Java has become a magnet for manufacturers due to its lower wages [1].

Impact on Workers and Factories

The shift to lower-wage regions has led to job losses and increased precarity for workers in areas with stronger union representation, such as near Jakarta. For example, Victory Chingluh, a long-time Nike supplier, laid off over 2,000 workers in October, and Adis Dimension cut 1,500 jobs in 2024 [1]. Workers fear further layoffs as companies like Victory Chingluh build new factories in lower-wage areas like Cirebon, West Java, where wages are 45% lower [1].

Labor advocates express concern that the move to less-developed regions weakens worker protections. Jakarta has a stronger union presence, which helps ensure better working conditions and wages compared to areas like Central Java [1]. Workers in Central Java often rely on second jobs to make ends meet, and some even engage in informal sales within factories to supplement their income [1].

Nike’s Response and Living Wage Commitments

Nike states that it aims for workers in its supply chain to earn enough to cover living expenses and have discretionary income. The company reports that two-thirds of its key suppliers paid above living wage benchmarks in 2022 [3]. Though, Nike’s definition of a “living wage” has been criticized as flexible and lacking concrete requirements. Jason Judd, executive director of the Global Labor Institute at Cornell University, argues that the company’s focus on “working toward” a living wage allows for indefinite delays [1].

Nike maintains that its expansion into less-developed regions is not solely driven by cost reduction but also by a desire to promote economic growth and opportunity. The company asserts that it expects all suppliers to adhere to its code of conduct and is committed to investing in ways that strengthen labor standards [1]. Nike also states that its data indicates factory workers earn nearly double the minimum wage, though this figure is a global average and varies by location [2]. However, interviews with workers across Indonesia suggest that most earn only the minimum wage or slightly more [1].

Ongoing Concerns and Future Outlook

The shift in Nike’s Indonesian supply chain raises questions about the company’s commitment to fair labor practices and its impact on workers’ lives. While Nike emphasizes its efforts to promote economic growth and improve labor standards, critics argue that the pursuit of lower costs continues to undermine these goals. The WageIndicator Foundation estimates a living wage in Central Java starts around $245 a month, significantly higher than the prevailing minimum wages in the region [1].

The situation highlights the challenges faced by multinational corporations in balancing profitability with ethical labor practices in a globalized supply chain. Continued scrutiny and advocacy from labor rights groups will be crucial to ensuring that workers in Nike’s supply chain receive fair wages and safe working conditions.