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Sweatshop Concept in Human Resource Management Report

Historical perspective

Historically speaking, the emergence of the term ‘sweatshop’ can be traced back to the 19th century’s Britain and the US, which at the time were undergoing the process of rapid industrialization. The fact that the process in question has always been ‘fueled’ by the abundance of low-skilled laborers, on the one hand, the possibility to turn these laborers into an economic asset (due to the rapid progress in the field of manufacturing technologies), on the other, created objective preconditions for the concerned term to attain a discursive legitimacy.

It was specifically in the earlier mentioned historical period that the term ‘sweatshop’ has gained its classical definition of a workplace, where employees are being exploited rather mercilessly, while severely underpaid and denied an opportunity to enjoy even the most basic social benefits.

Nevertheless, during the course of the 20th century’s second half, the economic realities in Western countries have effectively ceased being related to the paradigm of a sweatshop-labor. Initially, such an eventual development was triggered by the rise of the union-movement in these countries, which in turn was made possible by the fact that, at the time, the very existence of the USSR was posing an acute threat to the practice of Western workers being continually subjected to the different forms of a capitalist exploitation.

To address the situation, capitalists did not have any other choice but to allow the proliferation of unions, as the mean ensuring their overall control over the economy’s functioning. However, it did not take too long for the sweatshop concept to become thoroughly legitimate once again – this time on a global scale.

What established prerequisites for this to happen, was the fact that in 1971, President Nixon terminated the gold/dollar free convertibility – hence, turning the trillions of the US dollars into essentially the tons of a devalued green paper. In order to prevent its economic system from collapsing, America had to ‘invest’ this green paper abroad. In this respect, the economically underdeveloped countries in South-East Asia (particularly China) came in particularly handy.

While featuring utterly dense rural populations, consisting of hardworking people, and striving to be set on the path of industrialization, these countries did welcome the financial investments, on the part of the US and its Western allies, as the mean of becoming economically competitive with the rest of the world.

Consequently, ever since the early seventies, sweatshops began to spread throughout the region in the exponential progression to the flow of time. As of today, the process attained the subtleties of a truly global phenomenon – nowadays, sweatshops operate in just about every part of the world, although in Western countries they function on a rather semi-legal basis.

The main cause of the sweatshops’ continual proliferation is thoroughly objective – by adjusting their modus operandi to be consistent with the paradigm of a sweatshop-labor, Western manufacturers are able to substantially reduce the affiliated operational costs, which in turn allows them to increase the extent of their commercial competitiveness.

As Tadelis pointed out, “If a company learns that the cost of labor in India or Pakistan is a fraction of the costs currently incurred by the use of local labor, then the information about labor costs in different international markets will affect the decision of whether or not to outsource that activity” (2007, p. 265).

At the same time, however, there are a number of shortcomings to the practice of Western companies setting up sweatshops in the Second and Third World countries – the main of them is the fact that the concerned practice is utterly unethical. The subsequent part of this paper, I will outline what can be considered the main pros and cons of the sweatshop concept at length, while promoting the idea that the latter point out to the concept’s overall illegitimacy.

Pros and cons

Probably the most important benefit of the sweatshop concept is that, as it was mentioned earlier, it presupposes the substantial reduction of operating costs, on the part of the affiliated commercial enterprise.

After all, from the economical point of view, it does make so much more sense paying a non-unionized foreign-based employee as little as $5 per day, as opposed to allowing a unionized worker addressing the same set of professional duties locally, in exchange to being paid as much as $20 per hour or more. Therefore, from the economic point of view, the concerned practice is thoroughly justified, as it is being thoroughly consistent with the fundamental principles of the free-market economy’s functioning.

Another important pro of the sweatshop concept is that, by moving their production lines to the Third World countries that feature an abundance of cheap laborers, Western companies indirectly contribute to the improvement of living standards among these countries’ citizens.

The reason for this is apparent – the practice of establishing sweatshops in the world’s regions, the populations of which suffer from poverty, provide locals with the opportunity to become employed. It is understood, of course, that by Western standards, the salary of $5 per day, commonly paid to the sweatshop-workers in ‘developing’ countries, can hardly be considered adequate. Yet, while receiving such a salary, these workers are nevertheless being able to take care of their basic physiological needs.

Finally, among the practice’s apparent pros can be well mentioned the fact that it is being potentially capable of slowing down the process of Western countries growing increasingly ‘bureaucratized’.

After all, it does represent much of a secret that, as of today, just about every sphere of a public life in the West (including the one concerned with manufacturing), is becoming progressively subjected to a number of often mutually contradicting rules and regulations, the enactment of which is supposed to provide the armies of governmental bureaucrats with employment.

Therefore, there is indeed a certain rationale in the suggestion that, by setting sweatshops abroad, Western companies contribute to undermining the appeal of a number of socially parasitic professional careers in the eyes of people.

However, as compared to what are being usually deemed the pros of the sweatshop concept, the scope of its cons is much more expansive. The concept’s foremost detrimental effect is that it refers to the unethical treatment of employees, as being thoroughly justified. After all, as we are being well aware of, it is not only that the paradigm of a sweatshop-labor presupposes the employees’ willingness to work for ‘peanuts’, but it also denies their right to be entitled to even the most basic social benefits.

This simply could not be otherwise, because it is namely the employers’ practice of treating sweatshop workers in terms of a soulless commodity, which makes sweatshops economically feasible, in the first place. According to Zwolinski, “They (sweatshop operating companies) are guilty of exploitation because they are taking advantage of workers’ vulnerability – their lack of better available options” (2007, p. 706).

For example, it became a commonplace practice among the owners of sweatshops, to require employees to work overtime, without compensating the latter monetarily. Given the fact that in the Third World countries, the practice of operating sweatshops is essentially regulation-free, it naturally results in creating the situation when the concerned employers do not experience even a slight motivation to invest in ensuring the workplace safety.

This is exactly the reason why one’s willingness to work in sweatshops has traditionally been considered reflective of the concerned individual’s tendency to disregard the value of his or her very life.

Another con of the sweatshop concept, related to the notion of ethics, is the fact that, as the relevant statistical data indicates, at least 20% of the workforce, employed by the sweatshop-operating companies globally, accounts for underage children (Arnold & Hartman, 2006). The reason for this simple – as compared to adults, children are even more legally vulnerable, which allows sweatshop owners to subject them to even harsher forms of exploitation.

As a result, it is not utterly uncommon for children that work in sweatshops to sustain a great damage to their health. Therefore, it will be fully appropriate to suggest that the sheer affordability of the products, manufactured in sweatshops, is largely achieved at the expense of destroying children’s lives – in the literal sense of this word. This situation, of course, can hardly be considered tolerable.

Among the sweatshop concept’s apparent cons, can be well mentioned the fact that as compared to the products manufactured by the unionized employees in the legally regulated work settings, the products that come from sweatshops lack in quality. In its turn, this can be explained by the fact that the very philosophy of a sweatshop-labor prioritizes quantity over quality.

For example, it represents a commonplace practice among managers, in charge of running sweatshops, to provide every particular worker with a certain quota, as to the number of items that he or she is supposed to produce within the limited amount of time. If the concerned worker fails, in this respect, he or she ends up being fired on the spot.

Therefore, it is namely trying to meet the production-quota, at the expense of paying very little attention to the manufactured products’ actual quality, which represents the foremost agenda of those people that work in sweatshops.

Finally, the practice of operating sweatshops is closely associated with copyright violations – especially in the apparel industry. After all, even though that there are many sweatshops in the Third world countries that are being legally owned by such companies as Nike or Adidas, the overwhelming majority of the apparel-producing sweatshops in these countries have nothing to do with the earlier mentioned companies – contrary to the fact that the clothing-items, manufactured by them, do bear brand-name logos.

Such a state of affairs is being objectively predetermined by the fact that, as it was mentioned earlier; rules and regulations do not apply to the sweatshop industry, especially within the framework of the Third world’s ‘legal’ settings.

The provided outline of the sweatshop concept’s main disadvantages leaves only a few doubts that they in fact overweigh the affiliated pros rather considerably. Moreover, it suggests that, despite being commercially profitable, the practice of operating sweatshops is utterly inconsistent with the discursive realities of the 21st century’s living. After all, the era of a ‘wild capitalism’, which would have justified the practice at stake, has ended a long time ago.

Important court cases/events

Because the practice of operating sweatshops remains highly controversial, in the ethical sense of this word, it is fully explainable why recent decades saw a number of court-hearings, which had dealt with the issue of this practice’s moral dubiousness. Among the most well-known of them, can be mentioned:

  1. The 1992 lawsuit by the US Department of Labor against Guess. Inc., which ended up with the defender agreeing to compensate $573,000 in wages to the employees abroad.
  2. The 1999 lawsuit by the G.A.P’s workers (the residents of the Saipan Island) against their employer, in the aftermath of which the company agreed to a settlement of $20 million.
  3. The 2003 lawsuit by the Fair Labor Association (FLA) against Nike. Inc., on the account of the latter’s failure to provide tolerable working conditions to the company’s employees in South-East Asia. The ensued court hearing resulted in the defendant’s agreement to pay the fine of $1.5 million.

Because media made a deliberate point in providing a close coverage of the above-mentioned court hearings, the public debate of whether commercial organizations should be allowed to operate sweatshops attained a qualitatively new level. During the course of recent years, however, this debate had lost much of its acuteness – all due to the financial crisis of 2008-2009, which resulted in the rate of unemployment, throughout the world, having been dramatically increased. In its turn, this created preconditions for more and more people to grow increasingly preoccupied with how to meet ends – even by the mean of agreeing to work in sweatshops.

Four critical thinking questions

In light of what has been said earlier, we can well come up with four critical thinking questions, in regards to the discussed practice’s pros and cons. These questions can be formulated as follows:


  1. Because the ongoing process of economic Globalization presupposes the eventual removal of the nationally imposed rules and regulations, as being inconsistent with the process’s very philosophy, does it mean that we are to witness the sweatshop industry’s continual expansion? (This question presupposes a positive answer).
  2. Is there much of an objective rationale in believing that the considerations of ethics should affect the competitive strategy, adopted by a particular commercial operator – even if this strategy is concerned with operating sweatshops? (This question presupposes a negative answer).


  1. Can the situation, when underage children are being forced to slave in sweatshops, be considered morally appropriate? (This question presupposes a negative answer).
  2. Due to the fact that, as time goes on, more and more people in Western countries grow increasingly aware of what accounts for the actual working conditions in sweatshops, will such their awareness begin to affect their purchasing choices in the future? (This question presupposes a positive answer).

The above-questions are supposed to prompt people to assess the legitimacy of the sweatshop concept from either a positive or a negative perspective. Nevertheless, even when reflecting upon what are being deemed the concept’s pros, one will inevitably come to the conclusion that they do not undermine the soundness of the idea that, due to being highly immoral, the practice of operating sweatshops should be outlawed – just as it was implied at the end of report’s part one.


Arnold, D. & Hartman, L. (2006). Worker rights and low wage industrialization: How to avoid sweatshops. Human Rights Quarterly, 28 (3), 676-700.

Tadelis, S. (2007). The innovative organization: Creating value through outsourcing. California Management Review, 50 (1), 261-277.

Zwolinski, M. (2007). Sweatshops, choice and exploitation. Business Ethics Quarterly, 17 (4), 689-727.

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1. IvyPanda. "Sweatshop Concept in Human Resource Management." November 18, 2019. https://ivypanda.com/essays/sweatshop-concept-in-human-resource-management/.


IvyPanda. "Sweatshop Concept in Human Resource Management." November 18, 2019. https://ivypanda.com/essays/sweatshop-concept-in-human-resource-management/.


IvyPanda. 2019. "Sweatshop Concept in Human Resource Management." November 18, 2019. https://ivypanda.com/essays/sweatshop-concept-in-human-resource-management/.


IvyPanda. (2019) 'Sweatshop Concept in Human Resource Management'. 18 November.

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