discussion
ETHICS 14
Walmart: lower prices at sweatshop conditions
Introduction
Employees in several countries lodged a class action suit against U.S. retail giant Wal-Mart, alleging that company ignores sweatshop conditions at its supply chain from China to Nicaragua. These workers-Bangladeshi, Indonesian, and Nicaraguans and a host of other nationalities-claimed being grossly underpaid, forced to work unpaid overtimes, and at times where physically assaulted by their supervisors. According to the International Labor Rights Fund, the action impacts the conditions being endured by 100,000 to 500,000 laborers. Wal-Mart was able to achieve being a global retail industry leader by sourcing its merchandise from foreign sellers at an extremely low price. Commentators, however, aver that the company wide fixation on low prices has forced managers to exploit non-unionized labor with the company facing several litigations on claims of violations of compensation regulations and laws. In recent years, the company has also had to face legal actions claiming prejudice and bias. For instance, cases of prejudice against women in Wal-Mart claiming bias against female workers in areas of career advancement, compensation, and training. The case has proceeded as one of the largest class-action suits in the United States that affects more than 1.6 million existing and former female Wal-Mart workers. The rising number of legal actions taken against the company has tarnished the company’s reputation; Wal-Mart has responded with a national marketing campaign designed to restore the company’s image (International Labor Rights Forum, 2005).
However, what exactly constitutes a “sweatshop” facility? Rosabal (2019) defines these facilities as workplaces, particularly in the retail fashion industry, where laborers work for very low wages for extremely long shifts and subhuman workplace conditions. The items that are produced by these factories are traded at rock-bottom or at cost prices. Several international brands have been alleged to have purchased their inventories include Wal-Mart, Forever 21, and Nike. Simply put, large retail companies use sweatshops to produce their inventories and trade them at high prices while paying their workers ‘starvation’ rates. Many people in underdeveloped or marginalized countries work in these factories. The workers in these countries place their lives at risk by agreeing to work in these brutal conditions for low wages. Workers can work inordinately long shifts and not be able to make enough to live a comfortable life (Rosabal, 2019).
China is the company’s largest foreign supplier. Even with its “Buy American” campaign in the 1990s, the company increased its imports from the Asian powerhouse to $12 billion from 1997 to 2002. The following year, Wal-Mart set up its international procurement facility in Shenzhen; the facility has personnel and resources to track down the cheapest materials, producers, and trading routes. During that same year, majority of the company’s 6,000 suppliers were located in China. From 2002-2004, Wal-Mart raised its imports from China be half, reaching $18 billion in 2004.
This propensity to search and hunt for the lowest price has impacted other companies in the global market. ‘Attacking’ retailers at all levels of the market has forced the competition to either adopt or fall by the wayside. Wal-Mart compresses the lowest value from its suppliers and then sells the items at cost or at rock-bottom prices. Investigations were carried out at the company’s China supply chain. Managers at these plants admit to imposing six-day work weeks and 11-hour work days. Chinese law provides the employer with the right to expand the workweek if production requirements will mandate such a work frame. However, that extension, will only be limited to one hour and must be done in consultation with the work force. During peak seasons, workers are not allowed to have day-offs and workers must be present even during the weekends, which is not considered as overtime. One facility reports workers having to report for 28 days/month; at peak seasons, workers report for 30 days/month. At Tai Hsing, workers are forced to work at maximum capacity throughout the shift. When the daily output requirement is not complied with, these are forced to work an average of 3 to 4 hours after the end of their shifts. All of the work shifts are mandatory and unpaid. Here, asymmetric, coerced work shifts are deeply ingrained in the management philosophy of the facilities’ managers (Students and Scholars against Corporate Misbehavior, 2007, p. 10-11).
All across China, Wal-Mart workers have risen up in protest, urging local officials to act against these foreign companies. In this action, the Chinese labor force of the world’s biggest retail conglomerate has pushed the ruling Chinese Communist Party into an uncomfortable position, publicly challenging its loyalty to its Marxist bearings and set this challenge against its apprehension of non-state labor militancy. However, the state has been extremely reluctant to clamp down on the American business giant, abandoning the claims Chinese workers of extremely low pay and a workload schedule that has made them poorer and fatigued. WeChat, a popular messaging application, has been deluged by messages coming from Wal-Mart workers complaining of harsh company practices, distribute protest slogans, and talk on plans to launch militant actions. The government has been hesitant in working to address the issue, either on fears of instigating a backlash from the society, or be perceived as working for the interests of a capitalist entity that is abusing Chinese workers in an era where nationalist fervor in the country is rising.
However, by seeming apathetic to the plight of the workers, the government is inadvertently motivating disenchanted workers in other regions, particularly those employed among the expanding number of business chains in the country. Employees in Neutrogena and in China Unicom have also resorted to such tactics and have not been penalized for their actions. The retail industry has evolved into a hornet’s nest for labor militancy. Authorities are looking to shift economic activity from the production to the services sector. However, a large portion of positions in the service sector are low paying or even only part-time in nature.
Though Chinese law mandates that companies establish labor unions, most of these groups are controlled by the state, and companies engage these unions as tools to temper or even eliminate laborer militancy. Though some companies have recognized this instance and offered programs and benefits to their workers, Wal-Mart has acted in the complete opposite. For example, some of the more militant workers have denied wage increases and promotions, reassigned to other departments or jobs, and even were terminated from their positions. At a store in Zhongshan, a labor militant was photographed by her manager as revenge for being involved in worker protests. The worker has since asked not to be identified for fear of further angering her manager. Much of the restlessness is drawn from the implementation of a work shift system that Wal-Mart operated as a means of giving workers a better balance. Laborers argued that the imposition of the policy resulted in a decrease in overtime pay and asymmetrically long work shifts and there were reports that some of the workers were harassed into signing new agreements acquiescing to the scheduling system.
Wal-Mart rejected the accusations, even stating that majority of the workers supported the system and that workers were not being forced to adopt the new system. However, reports from the company’s various stores roundly debunked all of these declarations. Wal-Mart, which has aggressively fought unionization in its army of global stores, was coerced by the Chinese government to set up branches of CCP-controlled All-China Federation of Trade Unions for its 100,000-plus Chinese workers, part of a strategy to unionize expatriate companies. Also, labor militants employed at Wal-Mart have reiterated the ideals of Chinese leader Xi Jinping and the narrative of the CCP in safeguarding the interests of workers. Here, analysts believe that the workers are benefitting from a snowballing movement in the CCP that the economic power of foreign companies operating in the country must be limited.
In essence, if the CCP will work to protect the interest of companies such as Wal-Mart, that will taint the country’s reputation in the global arena. When the retail giant opened in China in 1996, Chinese workers flooded into its office looking to land a job in the company. Now, Chinese workers that once flooded into Wal-Mart recruitment offices are protesting against wages that these claim will not be able to comfortably provide for the family’s needs, with wages starting at $300/month. Though the company has led a campaign geared to raise wages in their home stores, wages in China have remained stagnant. Also, Wal-Mart has claimed it is challenged to cope with the rapid changing demands of the Chinese market and has attempted to reinvigorate its business with the use of online sellers (Hernandez, 2016).
The sweatshop process is not only present in China, but in various Asian countries as well. Laborers in Asian factories supplying companies such as Wal-Mart and Gap are still being abused. According to an Asia Floor Wage Alliance, workers in Cambodia, India and Indonesia are manufacturing items for Wal-Mart under subhuman work conditions. The report was published after a building in Bangladesh collapsed and killed more than 1,000 workers three years ago. That cave-in generated global scrutiny over the conduct of industrialized countries who abuse laborers in abhorrent conditions to be able to lower operating costs and sell cheap fashion. As earlier mentioned in the paper, U.S. sectors have worked to obligated to boycott countries and brands that purportedly were produced in foundries. Interestingly, American businesses have done very little, if anything at all, to address the brutal workplace environment faced by global laborers.
Individual countries have their own issues. For example, Walmart suppliers use extremely underhanded agreements that allow managers to impose hazardous work conditions, rejecting benefits, and cruel penalties for union activities that can also include being terminated from their positions. Imposed overtime shifts resulted in fainting spells that was worsened by insufficient food. Wal-Mart also refused to adopt the Accord on Fire and Building Safety, an accord adopted by several major clothing brands and labor unions to examine factories and manufacturing facilities for fire, structural integrity, and power concerns. Rather than sign the accord, Wal-Mart distanced themselves from the accord and formed another group that was not involved in worker and workplace safety (Johnson, 2016).
Literature Review
“Sweatshop” production facilities abuse their workers by having sub-human workplace environments for ‘starvation wages.’ Their ‘clients,’ the large multinational business conglomerates, by lowering their costs, can extract significantly large profits from the operations of these facilities. This business practice is considered as the notorious side of Corporate America. To counter this malpractice, many well-meaning, but grossly misinformed, workers support organizations have called for embargoes on goods allegedly produced in sweatshops. These have also strongly called on multilateral groups such as the World Trade Organization (WTO) to release labor laws and regulations and have called on individual states to work to raise the conditions of their workers. Nevertheless, despite their noble intentions, these activists are ironically, harming the very people these are looking to help. In the mid-1990s, television host Kathie Lee Gifford was investigated by the National Labor Committee. In the course of the investigation, it was found that Gifford was employing Honduran foundry employees to make her clothing brand being sold at Wal-Mart. Ten percent of the workers were below 13 years old and others were even pregnant. Regardless of their condition, Gifford forced them to render 75-hour work shifts, sometimes being on their feet for 15 hours without sitting down.
When the media released the story, Gifford suddenly became a media outcast, and even though she immediately denied any wrongdoing on the matter and even rejected the foundries, her image was shattered. College students strongly protested the use of foundries to condemn the use of sweatshops for the production of their uniforms and other clothing accessories that bears their school emblems. In early 1999, the Worker’s Rights Consortium (WRC) was formed with the help of jingoist American labor unions. The group sought to call for the enforcement of the codes established by American universities and colleges in calling for embargoes on brands that source their inventory from sweatshops (Brownell, no date).
Method
In assessing the dynamics of Wal-Mart’s illegal labor practices, Ulrich (no date) uses a “Toulminian analysis” process in examining the data on the allegations against Wal-Mart. After the information was collected, Ulrich begins the analysis using the Toulminian method. The founder of the method, Steve Toulmin, challenged reason and contended that reason cannot be engaged to all arguments. Benoit, Hample, and Benoit (1992) as seen in Ulrich (no date), proffer that Toulmin was more interested in “applied augmentation” in the field. Toulmin created an augmentation template that is engaged to examine and assess arguments that people experience on a daily basis. Toulmin calls this template as “field-dependent.” Here, “field-dependent” is defined as the fundamental and critical posit that reasoning cannot be uniform for all issues. Toulmin (1958) averred that the issues that are put forth, and the tiers that transpire within the process, will be diverse. Toulmin’s template is extremely useful in that the template is not addressing an argument according to one individual but rather how one sector views and argues on one issue. Here, the field where the debate occurs or the publics engaged in the debate, influences the parameters of the debate. For example, two professional athletes will be different in their context compared to debates that transpires between two political rivals. Though segments of the debate will be the same, Toulmin argues that each argument will take several steps that are grounded on the extraneous elements attending the discussion-the parties involved in the discussion, the reason behind the argument, the point that these are trying to reveal, and others.
Toulmin’s argument template engages six steps: “claim,” information, “warrant,” support, foundation, “qualifier,” and “rebuttal.” The first “triangle” in the argument is the “claim,” information, and the “warrant.” The second triad involves the “backing,” “qualifier,” and the “rebuttal.” For a “claim” to be valid, it must be reasonable; it is basically the conclusion that is sought. The second element is the information; this is merely the proof being presented to validate the argument being made. “Warrants” are hypothetical assertions that can facilitate the concretion and legitimize the types of steps that directs the parties to the argument being posited. There are times that authentications are not explicitly given; however, the warrant is the factor that either strengthens or weakens the arguments.
In essence, the warrant is the bridge that connects the assertion and the information. The “backing” is the mechanism that acts as the stronghold of the warrant. The backing will seek to propound on the warrant to be able to validate the latter. This is critical particularly in situations when the warrant is being criticized by the audience. Backing strengthens the warrant by providing the needed validity to facilitate the proof of the claim. Withal, backing is not required when the warrant is sufficient. “Qualifiers” is another mechanism that buttresses the claim. However, the primary function is to give applicable data in line with the particular claim being asserted. The qualifier displays the certainty of the quibbler of their assertion. Lastly, the “rebuttal” is the expounding that the claim may be erroneous; the rebuttal explains the stages or the parts of the argument that is flawed (Ulrich, no date, pp. 47-50, 74-76).
Discussion
In the context of Wal-Mart, its critics hold that the retail giant underpays its workers; for its part, the company denies any allegation to the same. Nonetheless, though Wal-Mart seeks to expound on its policy guidelines on the issue of sweatshops, its critics extensively disassembled Wal-Mart’s arguments and convincingly debunked them. Wal-Mart claims that it has a higher inspection rate in comparison to other companies. Though this claim can be verified, data from laborer groups still proffer that the overseas supplier factories where Wal-Mart sources its inventories still operate subhuman workplace conditions and the workers are subjected to brutal labor practices by their managers and supervisors. It is posited that if the retail icon continues to expand, commentators predict the rise in the public funds to aid its employees.
Documents that were obtained by critics of the company averred that the public health care systems in the states where the company’s stores are located are preferred rather than the company’s own. In terms of its “low prices everyday” stance, critics have taken aversion to the propensity of the company for imported items compared to locally produced items. Chinese workers are paid 17 cents/ hour. Workers in other countries sued the company for various workplace and compensation violations, such as lower than minimum wage rates, violence being inflicted on the workers, and non-paid overtime. Also, there are reports that workers were locked in the factories to prevent them from leaving (Ulrich, no date, p. 74).
Conclusion
It is unlikely that the Wal-Mart business philosophy of using sweatshops will be jettisoned in the near future. One of the strongest impediments to that change is the company’s business model anchored on low prices. The scheme significantly limits the possibility of implementing price increases since the company believes that if it reduces its price, it will be forfeiting any competitive advantage it has over its rivals and work to reduce its market dominance. Also, Wal-Mart must create equitable returns on investment to placate the stock market and possible capitalists. In this light, increases in profits must be drawn from corporate expansion in the global market at the soonest feasible time frame. In addition, this growth in profitability must be drawn from sourcing at the lowest possible price.
Wal-Mart asks for quotations from multiple suppliers and takes the one with the lowest price. It challenges other possible suppliers to match the lowest bid to be accepted. In a nutshell, this is the gist of the business philosophy of the retail giant. Given this statement, it is averred that the only distinguishable shift in the issue has been the cultured responses sprinkled with “defensive self-criticism” with regards to the agonies it subjected its workers to and not even touching on accountability or responsibility to the same. The strength of this philosophy is such that even media and worker’s organizations have seemed to have developed a defeatist stance in accepting this situation. In the same manner that other companies face challenges and difficulties, Wal-Mart is faced with outside pressures in the marketplace-customer affinity, best practices of the industry, and regulatory mechanisms.
Moreover, pecuniary expectations of shareholders and increasing government regulatory requirements also place inordinate pressure on Wal-Mart. Nonetheless, even with the extensive media coverage on the seeming misconduct of the company, the demand for the company’s products continues to increase. In the developed world, embargoes against certain products and companies have not lasted long; public outcries and media condemnation will eventually die down. Also, Wal-Mart does not need to be apprehensive about losing its competitive edge to its rivals, given the fact that these use similar facilities and work practices. Even though the company has an extensive corporate ethics statement, the corporate environment is overshadowed by an overarching priority for earnings over the exercise of ethical mores.
There is a growing gap between the high-end and low-end groups in the economy. This translates to the former having little interest in supporting or even involving themselves in any endeavor to call on the relevant parties to address the plight of the poor. Corporate managers form rivalries with other managers and even are tolerant of misconducts to increase their output. Here, the managers are fully confident that their misdeeds will be accommodated by their peers and the senior management given the fact that these are done to increase profitability. The company is also confident of the protections these can harness from their ‘friends’ in government and in various business and civic circles (Sethi, 2013).
Wal-Mart’s business model cannot be sustained; in the holding of Green America’s Wal-Mart Action Campaign director Erin Gorman, the corporate business model that the company employs is even more harmful than the current destructive, environment-exploitative model. Wal-Mart’s insatiable craving for low prices, and to constantly drive prices down annually, has fueled a down spiral effect with regards to wages in the United States as well as abroad, has outsourced American jobs to foreign locations, precipitately hastened the toxic manufacturing practices in countries that do not have or have deficient worker and environmental safety guidelines and oversight mechanisms, and has contributed to a variety of social and economic abnormalities. In simple terms, the practice of the company has triggered a “race to the bottom” mentality among businesses; the company that can offer their products at the lowest prices, regardless of where and how that product was manufactured, will be able to get the largest market share.
Prior to the establishment of Wal-Mart, the movement in the American market are for companies to incorporate business expenses, from paying sufficient wages to health care programs, limiting the work shifts of the employees, and to limiting the environmental effect of the company’s operations. With the arrival of the Wal-Mart business template, this trend was reversed; rather than incorporating the expenses, Wal-Mart projects the costs in a variety of ways-from divesting itself of health care programs and giving that to the local communities and by asking for public funds to finance its expansion. These expenses are passed on to all Americans including the marginalized patrons that are purportedly helped by the low prices given by the company.
Moreover, for people that do not have any other options for their retail requirements, whether to their economic statues or since wholesalers have driven off the small shops, the reality is that the low prices being given by Wal-Mart are not actually low. Concerned buyers must be able to gain an inclusive view of the U.S. retail market and extend initiatives and programs that will allow the development of other options for people who are in situations where these are ‘stuck’ with limited options. Also, consumers can use their market influence to force Wal-Mart to engage their corporate framework for beneficial rather than detrimental ends. At present, Wal-Mart leads the industry in retail sales in a host of sectors-toys, fashion, books, groceries, etc. One can only predict if the system of sourcing the company uses engages workers with good wages and uses processes that safeguard the environment.
The main issue, and where the company can begin in its steps towards change, is where Wal-Mart’s problems start-sweatshops. Organizations-public and private, government and in the media-continue to release reports decrying Wal-Mart’s continued use of sweatshops in its supply chain. For instance, in 2004, the National Labor Committee (NLC) disclosed a Chinese factory where the workers are not paid; managers aver that the wages the workers earn are used to pay off “board and lodging” expenses; the Wall Street Journal reported a Wal-Mart supplier where the wages of the workers were nearly one half lower than the mandated minimum wage bracket. Chinese laborers lodged a suit against the company accusing Wal-Mart of a diverse range of sweatshop exploitations, such as “forced overtime” and no rest days and weekends. As mentioned earlier, the sweatshop problems were not limited to China; other workers from other countries, including the United States, also filed suits against Wal-Mart stating the same allegations-that Wal-Mart abandons its own code of ethics for suppliers and allows the abuse of workers in the various locations along its supply chain.
Given the market position of Wal-Mart, should Wal-Mart even consider changes in its business philosophy? The answer-yes. An increasing number of communities in the United States, aware of the abuses being committed by the retail giant, have opted to reject plans by the company to locate outlets in their areas, and that number is increasing. Aware of their position, then CEO Lee Scott finally recognized the need to bolster the company’s corporate social responsibility (CSR) initiatives. Scott announced “small step” programs such as initializing health care programs and reducing its “carbon footprint.” Nonetheless, though the company has begun its path towards improving its image, the question is how can the company be consistent in its efforts to remain as a good corporate citizen (Korfhage, Borkowski, 2020).
References
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Hernandez, J (2016, November 16) Across China, Wal-Mart faces labor unrest as authorities stand aside, The New York Times, Asia Pacific
International Labor Rights Forum (2005, September 13) Workers sue Wal-Mart over sweatshop conditions. Retrieved from https://laborrights.org/in-the-news/workers-sue-wal-mart-over-sweatshop-conditions
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Korfhage, A., Borkowski, L (2020) Beyond the Wal-Mart economy. Green America, Retrieved from https://www.greenamerica.org/green-living/beyond-walmart-economy
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Sethi, S (2013, May 8) The world of Wal-Mart. Carnegie Council for Ethics in International Affairs, Retrieved from https://www.carnegiecouncil.org/publications/ethics_online/0081
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