Nike's dilemma: Is doing the right thing wrong?

But for as long as there have been soccer balls in Sialkot, the hands of children have stitched them. That is not unusual in Pakistan, where a per capita income of about $2,800 commonly drives children to work. According to UNICEF estimates, more than 3 million boys and girls below age 14 work in Pakistan.

That began changing a decade ago in the soccer-ball industry, when Nike, Puma, and Adidas, among others, worked with the International Labor Organization (ILO) and Sialkot suppliers to eradicate child labor. Today a majority of soccer-ball manufacturers voluntarily participate in IMAC's child-labor monitoring program, but some contest how effective those measures have been.

The case of Saga Sports, in which two children were found working in the home of a subcontractor in May, is not unusual, points out Mr. Dogar of IMAC. Every morning, Dogar's 12 monitors perform unannounced checks on stitching centers randomly selected by computer. Still, children are found from time to time.

"You cannot do 24-hour surveillance. You cannot cover the whole area," he says.

Nonetheless, he and many others question Nike's decision to leave, given how many families may be losing their livelihood.

"They could have found some alternative way with Saga," says Khawaja Zakauddin, who heads the anti-child labor wing of the Sialkot Chamber of Commerce and Industry. "To go away is the worst solution. If Nike moves from here, these people will have no work."

That's certainly a concern of Hussain Naqui, a decade-long employee in Saga's shipping department. "There will be no more jobs without Nike. I'm especially worried about my children, who are studying," he says.

Some say that Nike could have done more. Adidas maintains its own internal monitoring cell in Sialkot; Nike does not, observers say.

"They have to have a transparent monitoring mechanism. It is not just the government or local administration that should be held responsible [for monitoring]. Nike is also responsible," says Kailash Satyarthi, chairman of the Global March Against Child Labor in New Delhi.

Others disagree. "The primary responsibility lies with the government," argues Kaiser Bengali, an economist in Karachi.

Mr. Bengali hopes the incident will prove a wakeup call for the country, resulting in better enforcement of child-labor laws, which remain weak even though Pakistan has ratified ILO and United Nations conventions against child labor.

Many here in Sialkot worry that Saga's fall could chip away at a decade of progress: Low unemployment, stability, and a private sector that pours money into schools, clinics, and roads.

"There is no link to terrorist activity here, because everyone is involved in their work," says Khurram A. Khawaja, Chief Executive of Anwar Khawaja Industries, which produces soccer balls for Select Sports in Denmark. "This will create a void."

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