Sweatshops Case Study Essay

Sweatshops: Economical v. Ethical As corporate social responsibility is being widely implemented and scrutinized among society, sweatshops have become a controversial topic. Many view sweatshops as an unethical practice of corporations. However, it may not be perceived the same to others. Globalized companies take advantage of the cheaper labor costs when issuing their factories in countries such as: Bangladesh, Malaysia, and Thailand. Though child labor, low worker pay and poor working conditions are part of these sweatshops, economically, they may be helping the country for their future.

So what is the ethical and moral decision for a corporation who maintains factories in other countries? There are two main arguments debated regarding sweatshops: 1) the sweatshops allow a developing country to develop its economy by providing jobs and 2) sweatshops have a negative effect on citizens and dehumanize these workers. While these are two very opposite arguments, it becomes difficult for a corporation to determine the ethical implications of globalizing. Images of corporations such as Nike, Gap, and Disney have become tainted throughout the development of these arguments.

Some members of society believe it is ethical for these companies to adhere to the labor laws developed in the United States while others praise the company for assisting in the development of the third world countries who rely on sweatshops for income thus, making it difficult for these companies to determine ways in which to make their corporate image positive for social responsibility with the conflicting viewpoints. History The United States currently has a national average salary of $47,230 according to the Department of Labor.

Currently, the United States national unemployment rate is 5. 3 percent. Historically, each country witnesses a phase of sweatshops. The United States General Accounting Office defines a sweatshop as “a workplace that violates more than one federal or state labour law governing minimum wage and overtime, child labour, industrial homework, occupational safety and health, workers compensation, or industry regulations” (Wilson, A. , 2009, p. 1). “One of the earliest examples of a sweatshop was in the crude textile mills of Ecuador.

The use of the term is more recently traced to working conditions in England’s emerging manufacturing industries, where women and children sweated in jobs performed under horrid conditions: the work being monotonous, the hours long, and the pay miserably low. The British government established a Select Committee of the House of Lords on the Sweating System in 1889, thus publicly exposing the conditions for the first time. With massive immigration into the United States; especially beginning in the late 1880’s, sweatshops became common in American cities on the east coast” (“Sweatshops,” 2009).

In 1935, the Fair Labor Standards Act was created to set minimum wage, overtime, and child labor laws requirements and restrictions. “To this day, it is still considered the most significant piece of anti-sweatshop legislation in the United States” (Wilson, A. , 2009, p. 2). However, this did not entirely prevent companies from employing workers in harsh conditions. In the 1990’s, New York and Los Angeles still exercised the use of sweatshop factories; though many sweatshops were being relocated to the Caribbean, Latin America, India, and Asia. The ‘American Sweatshop’ that had supposedly been eradicated in the 1930s was being exported around the globe” (Wilson, A. , 2009, p. 3). This was in response to the Free Trade Agreements among countries which made it easier for corporations to globalize. Today, sweatshops are seen in large in China, Malaysia, Bangladesh and many other third world countries. Ethical The developing country of Bangladesh is a prime example of garment sweatshops. The country has a large number of child laborers and exportation of garments.

Eighty percent of Bangladesh exports are garments produce in the country. According to the Central Intelligence Agency, there is almost 4. 5 million children employed, however, the “economy has grown six percent per year since 1996”. Even though the economy has grown since 1996, there are still 31. 5% of Bangladesh citizens living below the poverty line. “The majority of garment workers in Bangladesh earn little more than the minimum wage, set at 3,000 taka a month (approximately ? 5), far below what is considered a living wage, calculated at 5,000 taka a month (approximately ? 45), which would be the minimum required to provide a family with shelter, food and education” (“Sweatshops in Bangladesh”). In US dollars, the minimum wage of Bangladesh is $38. 57 a month. “Sweatshops are attractive to people in places with few employment options, a lack of social services, and impoverished living conditions” (Radin & Calkins, p. 265). Poor working conditions are apparent in sweatshops around the world.

Working standards set in the United States are not adhered to in other countries due to their lenient labor regulations. This provides competition among the countries and forces the developing countries to lower their wages to remain competitive. There have been a number of accidents killing thousands of workers in Bangladesh yet “developed countries… take home the majority of the profits, forcing contractors and suppliers in developing countries to pursue an extremely tight profit margin or risk losing the investment” (Wilson, A. , 2009, p. 4).

Corporations are determined to make the highest profit margin possible and a portion of this means eliminating safety for its workers in third world countries where labor standards and not regulated. “Concerns culminated in the disastrous building collapse at the Rana Plaza factory complex outside Dhaka in April 2013 which killed more than 1,100 people, wounded hundreds of others, and renewed calls for improved safety measures at such facilities and higher salaries for workers” (Ghosh, 2014, p. 2).

Economical However, not all corporations pay low wages to their factory workers overseas. As reprehensible as the pay and conditions workers receive in sweatshops may be, the fact that people choose to work in them indicates they provide a better option or poor people than the existing alternatives… in many cases sweatshop wages are even higher than the country’s national average income” (Gregory, p. 53). If the globalized industries chose one of the ethical options of reducing the amount of productivity in third world countries, these countries could potentially be forced to work in far worse conditions with decreasing pay.

In recent years, a labor law passed that allows Bangladesh employees to form labor unions and there are now 120 registered unions. The labor law for unions is a sign that economically, Bangladesh is improving. Another economical turn for Bangladesh also occurred when the labor unions began, “laborers also saw their minimum wage jump from the equivalent of $38 per month to $73″ (Ghosh, 2014, p. 4). Though the sweatshops may seem unethical, they give women an opportunity that would not be available to them if the sweatshops were nonexistent.

As garment workers, women are now earning salaries, participating in formal sector work, managing personal finances, encouraging their children to pursue higher education, and defying traditional marriage standards by marrying later” (Ghosh, 2014, p. 6). Allowing men and women the opportunity to afford higher education for their children is a huge step in an economic recession. Where the Real Issue May Lie We can see many large corporations that outsource all of their production from the United States, for example, Nike.

Nike was under a large amount of scrutiny after they were exploited for their poor factory conditions. Although their image was tainted from these practices, Nike has initiated many practices and policies to improve their conditions for their employees overseas. The article, “The Myth of the Ethical Shopper” suggests that these corporations are not aware of the specific factory their products are produced. Large corporations, such as Nike, Disney, and Wal-Mart, purchase their products through mega suppliers.

These mega suppliers then sub contract to other factories who in turn sub contract to others. When a factory caught on fire in the Tazreen factory, logos of these corporations appear in the rubble but these companies were not aware this was where their garments were being produced. Therefore, if a large corporation were to ban their products from being produced in a specific factory or location, they could not directly enforce this as they are not directly involved in the subcontracting of their orders.