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Some organizations, especially those in areas exempted from the minimum wage laws and dominated by consistent denial of freedom to unionize workers, employees are often subjected to poor working conditions (risk, overcrowding, and poor ventilation) and low pay. In such organizations, child labor is also high (Blackburn, 2001).
Currently, in the US, labor laws prohibit manufacturing organizations from employing minors coupled with placing legal requirements that improve the rights of workers such as setting minimum wage and the number of working hours per work shift through intensive struggles of labor movements against sweatshops that appeared during the industrial revolution.
The concept of sweatshop emerged in 1830s and it became popularized in 1850s (Blackburn, 2001). In the US, the economic depression of 1900s rendered many families poor. Children and women resorted to seeking employment on garment manufacturing organizations to boost household incomes. Such children and women worked under poor working conditions for very little pay per day or sometime denied the pay.
According to Powell (2012), sweatshops were “crowded, poorly ventilated, and prone to fires and rat infestations: in many cases there were many workers crowded into small tenement rooms” (p.449). In England, Australia, and the US, various movements campaigning against sweatshops emerged in the late 1890s and early 1900s.
For instance, ‘The National Anti-Sweating League’ successfully led to the embracement of the concept of minimum wage in Melbourne, Australia, through campaigns and street demonstrations against poor pay in the garment sweatshops.
In the UK, similar campaigns led to the establishment of the Trade Board Act of 1909. When criticism against garment factories were extended to manufacturing organizations in other sectors, the term sweatshop, was adopted to refer to all organizations perpetrating poor working conditions, exploiting employees, and pursuing child labor.
According to Powell (2012), “trade unions, minimum wage laws, fire safety laws, and labor laws have made sweatshops rarer in the developed world” (p.452).
Nevertheless, the author notes that such achievements have not eliminated sweatshops completely in the US, although the term is more related to manufacturing organizations based in developing nations. This assertion is reinforced by the 1994 report released by the office for government accountability in the US.
The report noted that many organizations in the US defined sweatshops as “any employer that violates more than one federal or state labor law governing minimum wage and overtime, child labor, industrial homework , occupational safety and health, workers’ compensation, or industry registration” (Blackburn, 2001, p.47). This definition focuses on the standards required in a factory operating in the developed world.
While in the US the working conditions have incredibly improved, manufacturing organization are criticized for failing to monitor operations in overseas manufacturing contracting organizations to curb child labor, overworking of employees, exposure of employees to dangerous chemicals, and poor pay (Blackburn, 2001).
These aspects have led to the emergence of a scholarly debate on the relevance and irreverence of sweatshops especially in the developing nations where the US and other developed nations have established or outsource their manufacturing. Nike is one of the companies, which have been caught up in this tussle within its Indonesia and other Asian-based manufacturing factories.
Pros and cons of the debate
One of the noble roles of human resource within an organization is to ensure the provision of good working for the employees. The HR also enhances employees’ motivations and commitment to their organizational roles in the attempt to ensure that they collectively engage in activities that align with the organizational goals and objectives.
Scholarly evidence revels that provisions of safe working environment is correlated positively with motivation of employees (Pfeiffer & Gellar, 2003). Considering the characteristics of sweatshops, the HR does not play its primary role for campaigning for safe and good working conditions coupled with addressing issues of remuneration and rewards systems.
Drawing from this argument, one of the disadvantages of sweatshops is that they fail to take advantage of effectively utilizing people as sources of organizational success. Indeed, depriving employees their rights in the name of reducing costs is an ethical practice, which violates labor laws established in the US and other nations across the globe.
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Research findings on the roles of HR in organizations show a positive correlation between the work of human resource such as motivation, setting remuneration schemes, enhancing safe working environment, and job satisfaction with increased employees’ productivity. Avoiding sweatshops has positive ramification to an organization.
Employees who are treated poorly produce goods that fail to pass the quality test (Pfeiffer & Gellar, 2003). Crook et al. (2011) emphasize, “Desirable employees want to work for companies which they can share their values, just as consumers want to buy from companies that put values into practice” (p.446).
Unfortunately, such conditions do not prevail in sweatshops. For example, in China and other upcoming nations, it is normal to find garment factories in which workers execute their daily routines in an environment with fiber dust-enriched air with meager earnings.
The term underpaid means employees in sweatshops are paid salaries and wages that make it impossible for them to afford their basic needs. Powell (2012) points out that sweatshop “workers often do not earn enough money to buy the products that they make, even though such items are often commonplace goods such as t-shirts, shoes, and toys” (p.460).
This argument comes out clearly in the case of Honduran garment manufacturing factory. In 2003, employees at the factory were paid only 0.24 US dollars for every Sweatshirt made and 0.15 US dollars for a t-shirt that is long sleeved (Miers, 2003).
Sweatshirts went for 50 US dollars in the retail market, which implies that even if a worker would make 100 sweatshirts in a day, s/he would still not afford a single sweatshirt that s/he makes, other daily needs notwithstanding. This augment highlights another con of sweatshops, which is exploitation of employees.
In the debates of sweatshops, employees’ exploitation is a phenomenal issue. In the 19th century, abolitionists who sought to eliminate all forms of forced and exploitative labor identified sweatshops, slavery, and essential production concepts that violated the rights of workers. However, economic theorists support costs reduction strategies that enhance the profitability of organizations.
Therefore, production function in an organization is subject to two types of costs, viz. direct and indirect cost, which could be either variable or fixed cost (Crook et al., 2011). Labor costs are one of such costs that organizations endeavor to reduce in a bid to increase profitability.
Seeking such a strategic initiative has seen many organizations in the developed world, where labor costs are higher relocate their manufacturing operations in developing nations, where labor costs are low coupled with availability of the labor force that is not mindful of the nature of working conditions through the concept of globalization.
Anti-globalists interpret the process of globalization as a subtle tool for enabling organizations to run away from nations, where conformance to labor laws is required to nations where violation of labor laws such as child labor and minimum wage are violated without much intervention from watchdog groups.
From the perspective of pros of sweatshops, people supporting the necessity of creation of sweatshops in developing nations argue that such firms provide an alterative source of income compared to tiring jobs such as farming. In such nations, budget constraints hinder parents’ capacity to ensure equalization of expenditure on education to all their children (Brown, 2002).
Rather than compelling such children to engage in unethical jobs such as prostitution coupled with physically draining jobs including stone crushing, sweatshops present a better option. According to Bellamy (1997), UNICEF‘s findings noted that such jobs are more “hazardous and exploitative than garment production” (p.5).
Supporters of sweatshops also argue that in case people do not find such jobs as important in raising their standards of living, they cannot take them up when they appear. This assertion suggests that even if sweatshops may look unattractive when analyzed in the context of the living standards of the developed world, in other places they are attractive.
Brown (2012) laments that in some families in the developing countries, the “level of spending on the first child and last born is higher than family average” (p.6). This disparity is explained by the relationship between constraints of family liquidity and investments on children.
Where families are liquidity constrained, they cannot utilize returns earned on investments in bettering the life of their children until they enter into the labor force (Brown, 2002). On the other hand, upon entry into the labor force of the oldest child, in a family constrained by budgets liquidity, the family budget is relieved. Consequently, it becomes feasible and possible to invest in the other siblings.
Therefore, it is more likely that firstborns in a family that is liquidity constrained would venture into child labor since a direct correlation exists between child labor and educational attainment among children, with child labor also being in direct correlation with budget liquidity constraints (Brown, 2002).
This aspect suggests that child labor, as one of dominant unethical behaviors for manufacturing organizations when relocating in the developing nations, is not created by the organizations. Rather, it is one of the characteristics of the populations living within the developing nations.
Arguably, this ideology is misplaced. It cannot explain why some organizations continue to pursue child labor and other forms of workforce exploitation policies.
Events on the debate question/court cases
Several events involving accusations of organizations in engagement in policies that encourage violation of workers’ rights have been recorded in the recent past. For instance, in the past, Nike has been accused that it employs children in its Cambodia-based plants. However, the organization argues, “Fake evidence of age could be bought in Cambodia for as little as $5” (Boggan, 2001, Para. 8).
While the stalemate of the company’s accusation for employment of children remains unresolved, according to Boggan (2001), there are immense concerns that the company makes use of a minimal portion of the cost of production of its pair of shoes (70 pounds) in payment of labor.
Amid high calls for Nike to ensure that workers within its Asian production plants are remunerated accordingly, the company “treated sweatshop allegations as an issue of public relations rather than an issue of human rights” (Boggan, 2001, Para. 21). Measures to provide good working conditions at the Nike plants in Asian countries face challenges both emanating from the managers and employees.
For instance, Boggan (2001) claims that managers bribe auditors so that they can report on lesser working hours and higher pay rates. Surprisingly, workers, particularly the immigrants, are normally willing to work longer hours so that they can maximize their savings and return home.
Apart from the incident at Nike, organizations such as The Gap and Target have experienced law suits filed against practices of sweatshop in their factories in Saipan. In the cases of Does I v. The Gap, Inc., United Redlands v. The Gap, and Does I v. Advanced Textile Corp, a district judge in 2002 granted the claims of the workers against abuse of their labor right in Saipan.
According to Geiger (2004), “the plaintiffs, suing anonymously, named popular clothing companies, including The Gap, J. Crew, Tommy Hilfiger, and Target, as defendants and alleged labor violations, including indentured servitude, peonage, and numerous acts of racketeering activity” (p.46).
On granting the case, the judge ordered the defendants to pay $20 million in settlement. The exemption of Saipan from laws on minimum wage coupled with immigration laws made the Island attractive for garment industries to establish sweatshops. Hence, granting of the three cases was a major victory for the workers.
Critical thinking questions
The policies banning the importation of goods made with child labor are attributed to the need of preventing children from being worked under dehumanizing conditions for low incomes. B
rown (2002) appreciates that children have been worked throughout history, but asserts that the fact of “children working and the difficult conditions under which children work occasionally become more evident…because of increasing the number of children producing goods for export” (p.3).
From this perspective, two questions arise, viz. why do children work? Why do companies such as Nike claim that they have shunned from employing children in Pakistan, Bangladesh, and Cambodia and other nations, yet they are caught up in the accusation for employing children in violation of labor laws?
Criticisms for violations of labor laws governing the operations of manufacturing organization in the US have come up in factories such as Nike and Adidas. Among the major concerns in these organizations are low wages and poor conditions of working in their Asian-based production plants.
Bad working conditions pose major threats to the safety or occupational health of employees. Consequently, they comprise one of the issues that may affect the performance of an organization.
Many organizations seeking to ensure that they are successful in the long-term through the strategic initiative of focusing on the employees as their most important resource for gaining competitive advantage endeavor to ensure that occupational hazards are reduced coupled with ensuring that man power loss is minimized (Pfeiffer & Gellar, 2003).
Sweatshops attempt to reduce costs by establishing factories in regions where there are minimal laws prohibiting exploitation of employees. Then, can the HR department in such organization use HR functions as effective strategies for gaining success as opposed to exploitation of employees as a cost reduction strategy?
Bellamy, C.(1997). An Agreement In Bangladish. New York, NY: United Nations Children’s Fund.
Blackburn, S. (2001). Ideology and Social Policy: The Origins of the Trade Boards Act. The Historical Journal, 34(1), 43–64.
Boggan, S. (2001). Nike Admits to Mistakes Over Child Labor. Web.
Brown, K. (2002). The determinants of child labor: Theoryandevidence. Web.
Crook, T., Todd, S., Combs, G., Woehr, D., & Ketchen, J. (2011). Does human capital matter? A meta-analysis of the relationship between human capital and firm performance. Journal of Applied Psychology, 96(3), 443-456.
Geiger, S. (2004). Case Study: Does I V. The Gap, Inc.: Can a Sweatshop Suit Settlement Save Saipan? Review of litigation, 23(3), 45-51.
Miers, S. (2003). Slavery in the Twentieth Century: The Evolution of a Global Problem. Walnut Creek, CA: Alta Mira Press.
Pfeiffer, E., & Gellar, S. (2003). Scared safe: How to use fear to motivate safety involvement. Occupational Health and Safety, 6(1), 6-10.
Powell, B. (2012). The Ethics and Economic Case Aganist Sweatshop Labour. Journal of Busness Ethics, 107(4), 449-472.