We believe that a skilled, valued and engaged workforce is key for growth and sustainability. NIKE, Inc. works with our suppliers around the world as they seek to develop strategic compensation capabilities (i.e., competitive wage and benefits systems that progressively meet their workforces’ basic needs, including some discretionary income), because every worker has the right to a standard of living that adequately supports them and their families. We define our standards in our Code of Conduct and Code Leadership Standards (CLS), which align to the Fair Labor Association’s (FLA) standards on fair compensation.
We know that having an accurate view of worker take-home pay and supplier compensation structures is a critical first step to assessing compensation. In FY20, we started utilizing the Fair Labor Association’s (FLA) Wage Data Collection Tool, which helps suppliers evaluate their wage data relative to external benchmarks, such as legal minimum wage, national poverty lines and estimates of living wages based on available benchmarks.
We then scaled from 13 of our suppliers’ facilities to 111 strategic supplier facilities which manufacture 80 percent of NIKE, Inc.'s product by volume and employ over 700,000 workers. We’ve been working with the FLA to make wage data collection tool refinements and added key performance indicators that provide a more comprehensive view of worker wages, based on the FLA’s methodology and guidance. We collect this data alongside other human resource key performance indicators to create a more holistic view of workforce metrics in our supply chain.
After we have accurate data, a critical next step to assessing compensation is measuring it against credible third-party benchmarks – including minimum, living and market competitive wages – in key labor markets. In markets where external benchmarks are not available, we support efforts by experts to create them. In FY22, we started working with the Anker Research Institute to help create a Global Living Wage Coalition (GLWC) living wage benchmark for Indonesia.
Now that the Indonesia benchmarks are established, and with the use of GLWC benchmarks in other regions where available, we’re able to evaluate approximately 80 percent of strategic suppliers against a credible third-party benchmark. Where there is not GLWC availability or local applicability, we fill in the gaps with other credible third-party benchmarks.
Based on the FLA’s methodology*, our high-level findings from our FY25 (CY24 data) analysis were:
- Strategic suppliers have an average** gross pay of 1.92 times the minimum wage relevant to their location (excluding overtime).
- 71 percent of strategic suppliers pay at or above the applicable living wage benchmark(s) relevant to their location, on average.
- When comparing product engines, footwear had a larger number of facilities paying at or above the established living wage benchmark, on average, when compared to apparel and accessories.
This data fuels our approach to meaningful internal and external work with strategic suppliers, industry groups and non-profit partners to support suppliers’ progressive realization of a fair wage for their workers.
*FLA’s methodology may be updated in the future.
**Since this is an average, wages in some countries fall closer to the minimum wage while others exceed it.
Beyond analyzing wage data, we continue to work with suppliers to advance their human resource management (HRM) capabilities to attract, retain and develop talent.
In 2015, we started engaging strategic suppliers* to develop new compensation and benefit models. We created a hands-on pilot with one supplier’s facilities in Thailand, synthesized our learnings in relationship with the University of California at Berkeley’s Institute for Research and Employment and began facilitating shared learnings across strategic suppliers.
By creating forums to help facilitate best-practice sharing across strategic suppliers to understand their most common challenges in enabling competitive pay, we help suppliers assess the different capabilities needed to enable mature compensation approaches as part of their overall strategic HRM systems. Examples of best practices include having integrated IT systems, benchmarking with the local labor market, aligning incentives and incorporating worker voice.
Since then, we have transitioned from testing new ideas to exploring opportunities for scale. Over the next few years, our work will focus on identifying mechanisms to understand strategic suppliers’ differing maturity levels when it comes to compensation capabilities and using those learnings to influence targeted programmatic support. In 2024, we piloted a compensation capability assessment that gave us a richer picture of pay structures and compensation capabilities to complement the deeper insight we will have on average wage levels. At the end of FY25, strategic suppliers showed strong capabilities related to the following areas: grievance mechanisms include compensation, compensation training for supervisors, and knowledge of applicable living wage benchmarks.
*Strategic suppliers: strategic finished goods suppliers; suppliers representing approximately 80 percent of total footwear and apparel production.
We also implement a range of proactive worker engagement programs, including NIKE, Inc.'s Engagement and Wellbeing program, an annual survey which provides workers with an opportunity to share their experience on various topics, including concerns for financial security. Virtual platforms are also available for worker-management dialogue through NIKE, Inc.'s Better Work membership and through supplier digital worker voice tools on mobile devices and in-facility tablets.
Once worker feedback is collected, we support suppliers to convert that feedback into actionable improvement plans, embed practices into the suppliers’ systems, and engage in additional programming or further support based on worker needs. NIKE, Inc. then monitors supplier target progress and conducts regular check-ins to encourage continued commitment to targets and provide targeted support to address implementation challenges.
Relatedly, NIKE, Inc.’s broader approach to gender inclusivity within our strategic suppliers will support the advancement of more mature compensation approaches. NIKE, Inc. partnered with the International Center for Research on Women (ICRW) to develop an open, online resource hub that supports textile, clothing, and footwear manufacturing suppliers in understanding and improving gender inclusivity within their organizations. The Hub contains a Self-Diagnostic Tool (SDT) that suppliers can use to understand their current gender inclusivity state as well as an Opportunities Explorer that identifies avenues to further integrate gender inclusivity into facility governance and operations.
NIKE, Inc.'s strategic suppliers use these tools to diagnose current state and identify next steps in creating a more gender-inclusive workplace. Both the Self-Diagnostic Tool and the Opportunities Explorer include sections on Pay, allowing our suppliers to better understand best practices in establishing fair wage systems and enabling wages that align with local cost of living. Since scale of the SDT began in FY21, NIKE, Inc. has seen an improved overall score in the pay & compensation domain by more than 25 percentage points.
For more information, visit our Engagement and Wellbeing Program page.
Enabling strategic compensation for workers through responsible purchasing practices is a key focus area. NIKE, Inc. follows the FLA Principles of Fair Labor and Responsible Sourcing and our social compliance program has been accredited by FLA against these principles. Along with driving compliance based on our CLS, we look internally at how our business practices impact those who make our product.
We work across supply chain teams to align and incorporate key labor insights, such as living wage benchmarks and local labor context, into key business decisions. We also meet with suppliers regularly to discuss current and future business forecasts to enable them to plan and act responsibly when it comes to workforce decisions.
To enable continued feedback on our holistic purchasing practices, we work with Better Buying who provides critical, anonymized input from suppliers on our purchasing practices through their annual Purchasing Practices Index survey. We have been participating in their survey since 2018, and the results of their survey help inform potential opportunities for improvement. The most recent survey results show NIKE, Inc. scoring above the industry average overall, across both footwear and apparel suppliers.