business ethics in-class activity week 5
Cooper2021
5-2.pptxBusiness Ethics Summer 2022 (1) Week 5, Lecture 2
Chaeyoung Paek
Exploitation & Sweatshop
Sweatshop: Workplace in which workers are employed at low wages and under unhealthy or oppressive conditions.
Many sweatshops are in the clothing industry; most of them are in Asia and Central and South America.
Many of the products for fast-fashion retailers (e.g., ASOS, H&M) come from sweatshops; other popular brands, such as Nike, Adidas, and Disney also gets their products from sweatshops in Asian countries.
- NYT “Who Made Your Clothes?”
In today’s class…
Many people argue for the needs to regulate the international sweatshop; we’ll see what Ian Maitland says in opposition to this quite common position.
There will be no in-class activity.
For Regulations re: Sweatshops
Many critics argue that multi-national companies(MNCs) have moral obligations to offer better wages and better working conditions for the workers in international sweatshops.
Many sweatshop workers are paid below minimum wage; many of them report that their wage cannot cover the living costs of their family.
(ex) “Made for Next to Nothing. Worn by You?”
Many sweatshop workers are also working under the dangerous conditions.
(ex) “Nightmare conditions at Chinese factories where Disney and Hasbro toys are made”
Against Regulations re: Sweatshops
Maitland, on the other hand, argues that the current international sweatshops are being run with appropriate labor standards.
He argues that international sweatshops are not exploiting the workers & offering higher wage and better labor standards may harm the workers.
What are ethically permissible labor standards?
1. Home-country standard
International corporations have ethical duty to pay the same wages & provide the same labor standard regardless where they operate.
2. “Living wage” standard
International corporations have ethical duty to pay, at a minimum, a “living wage.”
Classical liberal standard
The labor standard (wage or labor practice) of international corporations is ethically acceptable if it is freely chosen by informed workers.
What are ethically permissible labor standards?
Most business ethicists reject the home-country standard and the classical liberal standard.
The reason why they reject these standards is practical; employing these standards will erase the benefit of running international sweatshops.
Most critics of international sweatshops also accept that the “living wage” standard is the most appropriate.
But the issue is exactly how to pin down the living cost & whether workers could really benefit from earing the living wage.
Against International Sweatshops
Maitland introduces some of the most important criticism against international sweatshops.
Unconscionable wages
Most workers work long hours, which prevents them from working two jobs; but in many cases, their wage is lower than the minimum living cost for their own country.
(ex) Nike in 1992 paid workers in Indonesian factories $1.03 per day, which was less than the Indonesian government’s figure for “minimum physical need.”
Against International Sweatshops
2. Immiserization thesis
Some critics argue that low-wage workers in sweatshops often experience decline in living standards.
This may happen due to the “bidding war” between countries that host sweatshops; the governments intentionally lower the minimum living cost so their countries could be more hospitable for MNCs.
This may lead to another problem: promoting further inequality.
Against International Sweatshops
3. Widening the gap between the rich and the poor
The GNP (Gross National Product) of a country that hosts sweatshops may increase; but the workers in sweatshops may not benefit from it.
The critics argue that this shows how MNCs contribute to inequality in developing countries by running sweatshops.
By allowing MNCs to run sweatshops in their countries, elites in developing countries benefit; MNCs benefit from running sweatshops; and the workers remain poor.
Against International Sweatshops
4. Collusion with repressive regimes
Since MNCs prefer countries with lax labor laws, to host sweatshops, repressive regimes in developing countries may suppress workers harder.
The critics point out that therefore, MNCs profit from political repression.
(ex) In 2016, Bangladesh workers protested for raising minimum wage; the government fire rubber bullets and arrested several protesters; Bangladesh hosts sweatshops for Gap, Zara, and H&M.
Evaluating the Charges
Maitland concedes that the critics are right about many things. For instance…
It is true that MNCs are chasing cheap labors.
The wages they pay for their workers are often shockingly low, partly because some developing countries have minimum wage that is below poverty line.
The governments of developing countries often repress workers in various aspects (and MNCs may benefit from it).
Some suppliers do employ children.
Evaluating the Charges
Nevertheless, Maitland points out that many of the charges against sweatshops are often inaccurate & fail to further address what truly benefits workers.
Wages and conditions
MNCs pay higher or comparable wages to their workers; the critics also acknowledge this.
In many cases, sweatshop workers learn much more money than other people in their community, many of whom are farmers.
(ex) In 1996, young women working in the plant of a Nike supplier in Serang, Indonesia, were earning the Indonesian legal minimum wage of 5,200 rupiahs (about $2.28 each day); half of adults are farmers, who earn 2,000 rupiahs each day.
Evaluating the Charges
Maitland also points out that many workers take the job at sweatshops voluntarily & consider themselves lucky to work there.
(ex) From NYT, “Who Made Your Clothes?”:
“Most of my co-workers and I are all old-timers,” said Ms. Rumsinah, who has been working at the same factory for 26 years. “It’s a good factory, so no one really quits. There’s seldom any job openings — only if someone retires.”
He argues that the critics dismiss the workers’ experiences based on their own standards.
Evaluating the Charges
2. Immiseration and Inequality
Maitland claims that many countries that used to host sweatshops have not only increased GNP/GDP but also increased living standards for all people.
They could do so by attracting foreign investors for cheap labor and gradually moving onto developing their own industrial base.
And in many of these countries, inequality has become less severe.
(https:// worldpopulationreview.com /country-rankings/wealth-inequality-by-country)
Evaluating the Charges
Since they could not have made such developments without hosting sweatshops and gathering enough money, Maitland argues that hosting sweatshops can actually help developing countries to mend the gap between the rich and the poor.
Evaluating the Charges
3. Profitting from Repression?
Maitland claims that although it is true that many developing countries politically oppress workers, economic growth may help relaxing the oppression.
For instance, what repressive regimes should fear most is a high unemployment rate; it could “aggravate” citizens and motivate protests against their government.
But if they can keep the unemployment rate low by hosting sweatshops, they do not need to take extremely oppressive stance towards people.
Labor Standards or Painful Trade-offs?
After fighting off the charges against sweatshops, Maitland claims that what the critics are asking from MNCs may harm sweatshop workers.
The critics claim that MNCs must pay higher wages for their workers; but imposing higher wages may drive MNCs away from developing countries.
Paying their workers “living wage” may broaden the wealth gap between factory workers and farmers, which could widen the economic disparity in developing countries.
Labor Standards or Painful Trade-offs?
3) MNCs may pay higher wages and keep their sweatshops running; but then they cannot provide more job opportunities for poorer workers.
This may lead to several other serious issues, such as widening the wealth gap or keeping the unemployment rate high, which could make the governments employ more oppressive stance towards the citizens.
Conclusion
Maitland concludes that while the critics make good points about some of the problems of sweatshops, they are wrong that MNCs have moral obligations to pay more wages for sweatshop workers.
He does concede that there is one objection that he has not considered in his article: the objection based on human rights.
We’ll see what Dennis Arnold & Laura Hartman say about sweatshop labor based on human rights.
Some remaining thoughts
Q1. Maitland seems to believe that hosting sweatshops may naturally lead to some positive consequences, e.g., repressive regimes relaxing their oppression. But what if these positive consequences do not really happen? Do MNCs then have moral obligations to actively try and make these changes in the community?
Some remaining thoughts
Q2. It seems true that some critics do not take the sweatshop workers’ experiences seriously; but it is also true that sometimes, we shouldn’t take the report of someone’s experience at its face value.
For instance, domestic violence survivors often report that they acted as if they were fine in their abusive relationship & sometimes actually believed that they were doing fine.
Maybe what they experienced at that particular moment was a genuine happiness, but it is objectively bad to be treated without dignity; and maybe the critics can say similar things about certain cases of sweatshop labor.
For the next class…
Read Denis Arnold and Laura Hartman, excerpt from "Beyond sweatshops: Positive deviancy and global labour practices."
ONLY the section "Basic Human Rights" (pp. 210-212) and from "Positive Deviance in the Apparel and Footwear Sector" (p. 215) to the end. The rest is not required reading.
