In a review of business ethics with reference to global climate change, the material referring to the issue has been minimal. This is in spite of the topic of global climate change being a key subject in ethics for scientists, policy analysts and politicians, because of its adverse effect on the ecosystem, human and nonhuman populations. Ethical analysis has been focused on distribution of the burden among states, in order to reduce emissions.
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With the large corporations focusing more on design and contracting suppliers in developing countries, it may be seen as an issue of chasing cheap labor and transfer of the emissions to third world countries, where the factories are situated. While this paper will not look at the ethics of business with regard to climate change, it was a necessary perspective, as we observe the working conditions provided by these corporations, to their suppliers (Arnold and Bustos 1).
The globalization of production has resulted in international division of labor, whereby companies prefer to focus on product design and marketing, while the production of the items is contracted to suppliers in developing countries. Companies that contract their items to suppliers in developing countries include Nike and Reebok. Labor and human right activists are opposed to this since they view it as exploiting foreign workers, in their chase for cheap labor.
In doing so, these big companies pay the laborers poorly, make use of child labor, ignore human rights and keep their workers from joining labor unions that would help them in addressing the issues of workplace standards. Codes of conduct have been developed by many of these companies, in order to try and meet the concerns raised by the suppliers (Maitland 155).
Campaign against international sweatshops
The main channel through which the issues have been publicized is the television, followed by print media. The media has disclosed information regarding the sweatshops by televising the poor work conditions in the factories. One of the issues raised was by Kernighan in 1996, when he disclosed that the Kathie Lee Gifford’s clothing line was being made by laborers aged between 12 and 15, and that they worked for more than 18 hours a day.
The companies that make use of sweatshops are unable to come up with effective defence strategies when sued for their inhumane contracts, and therefore respond by suing for peace. This is strategic so that they can protect their corporate image. They have also taken up codes of conduct on human and labor rights, in their global practises (Maitland 156).
The companies adhere to the code of conduct so that they can protect their reputation, by not appearing to be unethical, unfair or conducting illegal operations. It is important to identify the appropriate labor standards in the international sweatshops, as well as find out the right wages for the workers. This paper looks at the labor conditions of the plant as reported by other researchers with a view to identifying their compliance to the codes of conduct (Maitland 156).
Ethically appropriate labor standards
There are policies set out to regulate the labor standards in international sweatshops, and they are discussed below.
Most business ethicists and international sweatshops critics argue that home-country standards such as provision of similar wages and labour standards should not be implemented in host-countries as well. The reason for this is that it would eliminate the need for hiring foreign workers if the US earnings were used as bench mark for fairness.
The ethics of multinational corporations cannot be based on wages since if they paid the workers in a manner similar to their home countries, they would interfere with the local labor market, since the wages would not correspond to the local cost of living (Maitland 156).
Living wage standard
It has been suggested that international corporations should have their minimum payment equivalent to the living wage, which allows the laborers to live in dignity. The payment should allow the workers to provide for themselves and their dependents (Maitland 157).
This was the opinion of Thomas Donaldson, who believed that the most significant issue regarding the wages of laborers was whether they complied with the international minimum, without considering the home and host wage requirements. One of the shortcomings of his approach was that it left a few matters unattended, including harms and threats that the workers may face, besides physical injuries. The test also incorporates counterfactuals that may provide scapegoats for managers who act unethically (Maitland 157).
Classical liberal standards
This standard is rejected by most business ethicists since it argues that a labor or wage practice is ethical only if it is chosen by knowledgeable laborers. The right level according to the World Bank is one that balances expenses of the workers with the working conditions and level of risk, as evaluated by informed laborers.
The determination of work safety has been observed to be compromised by the high rate of unemployment, which makes the few people who get employment to overlook safety issues. The reliance on market solutions is also affected by the global debt and Islamic fundamentalism. In addition to this, the absence of institutions to protect the workers or provide bargaining power affects the opinions provided by the informed workers (Maitland 157).
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Characteristics of international sweatshops
Globalization has been viewed as the transfer from regulated economies to unregulated economies, which is basically from domestic to world economies. The large nature of these corporations gives them the power to influence decisions made in host countries, and manoeuvrability, in that they can shift locations with ease.
Because of this, and the high rate of unemployment in developing countries, the governments compromise on various issues in order to attract the large corporations. The developing countries compete against each other by decreasing the wages, in order to encourage the corporations to invest in their countries, which leads to poorer working conditions, as the countries are held below the poverty level, and the gap between the rich and the poor widens (Maitland 158).
Critics demand that workers be paid living wages instead of the slave wages that are insufficient to support their families. The studies on various sweatshops have indicated wages as low as $35 a week in Mexico, and $1 per day in Indonesia, which are below the minimum physical need set by the government, and are obviously insufficient for the employee to feed and provide for other needs of the family (Maitland 158).
Robert Reich suggested that nations should follow up on policies that limit the benefits of trade to a few elite corporations who exercise rationality in their endeavours. The activists believe that these factories push the laborers into poverty by lowering their living standards, especially when the countries bid for the lowest working conditions (Maitland 159).
Widening gap between rich and poor
The globalization of trade by large corporations seeking suppliers in third world countries has resulted in increased inequality within developing countries. It has also led to an increase in the gap between rich and poor. Development is supposed to reduce the gap between the rich and poor, though it does not apply to international sweatshops. Critics argue that the GNP of some countries may appear to be growing, but the gap between rich and poor continues to widen, due to the exploitation of the vulnerable people, by both local and foreign elite (Maitland 159).
Situation presented by sweatshops
The international corporations introduce sweatshops because they need cheap labor, they can produce at lower wages at times going below the country’s poverty level, the working unions are suppressed by country regimes resulting in minimal demands and they take advantage of cheap child labor. Such s=is the situation in Indonesia (Maitland 160).
Wages and conditions
Critics have observed that multinational laborers are paid better than in their local firms. The international labour organization as also acknowledged that the multinational companies comply with standards regarding wages, work conditions and safety. In addition to this, the ILO says that the standards are better in export processing zones as opposed to other areas.
The World Bank has also identified that people in the informal sector make about half of what people in the formal sector earn, and that the working conditions in the factories are more insecure and hazardous when compared to the formal sector (Maitland 161).
Critics have argued that international sweatshops have led to increased poverty and inequality, which is not necessarily true. Some laborers have acquired the skills to make more technical and expensive items which have better pay (Maitland 162).
International sweatshops have been observed to benefit from repression, though the economic development in those countries reduces the impact. The organizations benefit by the assistance of governments, which repress workers unions, while they pay the labourers more than other people in the local factories earn (Maitland 162).
Collusion with repressive regimes
Repression in china and Indonesia has increased due to their government’s bid to encourage foreign investments. These countries have declined to execute the minimal labor laws. In addition to this, they break up any strikes and stifle independent unions as well as political opposition. Nike moved their suppliers from Taiwan and Korea because they encouraged workers unions, to china and Thailand where the regime suppressed unions (Maitland 159).
Standards in international trade-offs
The price for increased wages and better work conditions is reduced foreign investment, since the advantages of cheap labor would no longer apply. Workers in international sweatshops in Indonesia are usually paid about half of what people in the formal sector of developing countries earn, which places them in the top half of income earners in their country.
According to the economists, increased wages in the formal sector translate to reduced employment in the same sector, and reduce the income of the informal sector (Maitland 163).
Raising the minimum wages for the informal sector has been challenged, since increased income is supposed to result in saving and investment, in order to create new job opportunities. The World Bank also supports that minimum wages are capable of helping poor laborers in industrial countries but not in developing countries. Raising the standards of labour is also likely to contribute negatively to investment and employment in third world countries (Maitland 163).
According to a report released by World Bank, increasing safety in the workplace is expensive, and proportional to the safety level desired. The high costs would obviously be imposed on the workers, either by reduced job opportunities or decreased wages.
This implies that high standards for working conditions can result in decreased worker welfare. On the other hand, high standards for working conditions would decelerate the expansion of employment opportunities in the formal sector, which would result in harsh working conditions for people in the informal sector (Maitland 164).
The policies proposed by critics seem to be more advantageous to the better placed workers, as opposed to those who work in poor conditions with poor pay. This can be seen by the number of unions available for the working people in third world countries, while the informal sector remains unheard. Critics have discussed many issues but neglected the debate as to whether it is ethical for workers to compromise on their working conditions in order to create more job opportunities (Maitland 164).
Critics have been observed to attack many corporations for chasing cheap labour in developing countries, but remain silent when the increase in wages and improved working conditions result in reduced employment opportunities.
Their excuse is that the changes do in work conditions and wages do not affect employment rates, but in the real sense, the changes lead to reduced job opportunities in the formal sector, reduced wages in the informal sector, reduced economic growth due to decreased investment, fewer exports and more inequality. As a result, the laborers cannot afford to fight for either higher wages, or better working conditions (Maitland 164).
Arnold, Denis G and Keith Bustos. “Business Ethics and Globbal Change.” Business and Professional Ethics Journal (2005): 24(1/2), 1-17.
Maitland, Ian. “The Great Non-Debate Over International Sweatshops.” Globalization and its Ethical Signficance 2008: 154-166.