Modern Slavery in Global Value Chains: Case Study Case Study

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The fight against forced labor remains one of the world’s most complex problems. Most employers and factory owners are not held accountable because brand supply chains are so complex and lengthy that it is impossible to control every stage of production. Representatives of fashion brands sometimes do not even know where they get the raw materials to manufacture goods. Fashion product factories around the world subject women and children to forced labor. According to the U.S. Department of State’s Trafficking in Persons Report (2020), approximately 25 million people are still enslaved. The International Trafficking in Persons Report notes that of the total number of victims of slavery, 79 percent are women and children. In the fashion industry, the use of child labor, which is illegal in most countries, is common. Over 170 million minors are working in the fields and factories of the world. The exploitation of children for the needs of the textile industry has gained an enormous scale in seven countries – Egypt, Uzbekistan, Pakistan, India, Bangladesh, Thailand, and China.

Forced labor, including child labor, begins with the cultivation of the material. In India, for example, the world’s largest cotton producer, more than 400,000 children work in the fields every day (Caspersz et al., 2022). Underage girls and boys work in extreme heat for 12 hours, are exposed to harmful pesticides, and carry heavy sacks. At the same time, they are paid less than a living wage and hardly attend school. The problem of forced labor does not end with growing materials and producing fabrics. In the sewing industry, most of the operations are performed by children, not adults. Juvenile employees often dye fittings on clothing, sew on buttons, cut threads, fold and pack finished goods. Nike has repeatedly been implicated in scandals alleging the use of forced child labor in its production facilities. This paper will discuss the reasons for the accusation as well as the company’s response to them.

There are various reasons for the use of forced child labor in the fashion industry. The frequent renewal of a brand’s assortment – several times a season – forces the manufacturer to look for cheaper labor. Children are considered reliable employees: due to their age, they are obedient and easy to manage. The main reason for accusations of forced labor is that most of the factories Nike owns are in Vietnam, and they provide the lowest possible wages. Although Nike does not want to disclose the wages of its workers, it has been estimated that they are about $73.94 a month, equivalent to $2.6 a day, which is less than the minimum wage (Caspersz et al., 2022). Community activists also noted that the firm is moving most of its factories to China because labor is much cheaper there. In addition, child labor in factories in China is considered commonplace, and the law prohibiting such labor is much easier to circumvent. Nike could justify the use of cheap labor by lowering the price of its products.

However, the price for cheaper goods is too high in the context of human resources. Nearly half of factory workers are underage illegals; they have worse working conditions. Many of these workers are abused while working at Nike, which uses sweatshops for its laborers. In response to criticism and accusations, Nike published a list of 700 factories and plants where its products are made (Caspersz et al., 2022). The company employs more than a quarter of a million people worldwide. Most of them are women under the age of 25. The company agrees that the factories that carry out its orders often pay too little, workdays are too long, and there is not enough union presence (Hsieh et al., 2019). In five cases, the use of child labor, which is often not forbidden in Asian countries but angered the company’s critics, was seen. One-third of the factories had sexual harassment, physical punishment of workers, use of illegal subcontractors, and lack of proper safety measures. The list published by the company includes not only the names of factories but their addresses. None of Nike’s competitors have provided such information so far.

According to the head of the company, this is an attempt to achieve maximum openness, honesty, and accuracy as far as production is concerned. Thus, the firm chose the most diplomatic way of solving the problem – admitting its existence and taking concrete measures to eliminate it. For now, the situation with the abolition of child labor around the world is beginning to improve, which gives hope for eradicating the problem in the future. Nike promises to set up a special commission that will at least improve working conditions in the most troubled factories. So far, companies like Nike have brushed off criticism by saying that they are not interested in what is going on at their contractors on the other side of the planet. Now other companies can hardly avoid following Nike’s example.

References

Caspersz, D., Cullen, H., Davis, M. C., Jog, D., McGaughey, F., Singhal, D., Sumner, M., & Voss, H. (2022). Modern slavery in global value chains: A global factory and governance perspective. Journal of industrial relations, 1(4), 57-69.

Hsieh, N., Toffel, M. W., & Hul., O. (2019). Global sourcing at Nike. Harvard business school.

US Department of State. (2020). US Department of State. Web.

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