International Sweatshops – Are they ethical?

[Originally published 6/9/2008]

INTRODUCTION

Wikipedia defines a sweatshop to be:

A sweatshop is a working environment with very difficult or dangerous conditions, usually where the workers have few rights or ways to address their situation. This can include exposure to harmful materials, hazardous situations, extreme temperatures, or abuse from employers.
(Wikipedia 2008)

However, two incidents in 1995 brought sweatshops to the public’s attention. The first was the discovery of a concentration camp style clothing factory in El Monte that employed 80 Thai immigrants. Workers were paid two dollars an hour to make branded garments for major stores like Mervyns.

The second incident involved a factory in Honduras that manufactured clothing for Kathie Lee Gifford’s apparel line that sold at Wal-Mart. The women employed at the factor were aged as young as 13 and were until to attend school due to the long working hours.

More recently, organizations like the Walt Disney Company, The Gap and Nike have been criticized for using sweatshops in third world countries.

The last decade has seen an explosion of offshoring as organizations take advantage of international trade agreement as administered by the World Trade Organization (WTO). The WTO regulates and enforces agreements between nations that include the reduction (or elimination) of tariffs and subsidies.

In Ian Maitland’s The Great Non-Debate over International Sweatshops, an ethical justification is made for the existence of sweatshops and their relatively poor working conditions. The essay will examine Maitland’s arguments and present an opinion on each.

Are wages too low?

Maitland states that critics of sweatshops often complain about the wages and working conditions of workers. However he shows evidence that many factory workers get paid much better that their compatriots that work outside the factory.

Additionally, factory jobs in underdeveloped countries are in high demand. Applicants for factory jobs are plentiful and are willing to accept “low wages” with full knowledge of the working conditions. That is, it is ethical to offer a job with low wages if a reasonable person freely accepts it.

Even though the wages in foreign factory may seem extremely low compared to wages in the United States, I agree with Maitland that it is ethical provided the wages are accepted freely.

Are underdeveloped countries exploited?

Critics of offshore factories claim that large multinational companies are exploiting poor nations. Maitland contends that offshore factories (or “sweatshops”) and the foreign investment associated with the factories actually leads to economic prosperity. He cites Taiwan, Korea, Singapore and Hong Kong as examples of nations that have emerged from a labor-intensive manufacturing economy.

Countries are self-ruling and hence can choose not to accept foreign investment. So, I would disagree that corporations actively “exploit” weaker nations. In fact, some countries actually seek out foreign corporations by offering tax incentives.

In summary, I believe that there is nothing unethical associated with countries establishing factories in foreign nations. A country that accepts foreign investment and manufacturing factories can potentially transform itself into a developed nation. When nations progress, so too do its citizens.

Do companies profit from repression?

It is not surprising that many countries that host sweatshops have repressive governments. This could be because nations that are economically and politically unstable require a repressive government to maintain stability.

As mentioned above, Maitland believes that factories in underdeveloped countries build wealth. That wealth can translate into political freedom.

I concur with Maitland’s theory that foreign investment in countries with repressive regimes is ethical provided the multinational corporations do not use repressive practices inside their factories. For example, it would be unethical if a factory used coercion to force workers to work without pay or for extended hours against their will.

Is a minimum wage bad?

Maitland asserts that a mandated minimum wage is unethical. He contends that most factory workers get paid well above other workers outside the factories. He states that enforcing a minimum wage will reduce the profitability of the factory. A country that implements (and enforces) a minimum wage will become less desirable to multinational companies.

I agree with this finding that the market should decide how much a worker should get paid and that wages should not be imposed by a third party.

However I strongly disagree with his second assertion that companies should be permitted to skimp on worker safety. He argues that it is ethical for companies to refrain from unnecessary expenditure to improve worker safety. Improving safety is costly and will either force wages up or force factories to employ less people.

In my opinion, to advocate reduced worker safety is unethical and inhuman. Whether working in a factory in India or the United States, an employer should guaranteed the same standard of safety. Granted, that a worker in India will have a much cheaper cost of living than a worker in the United States, but both workers value life equally. Both workers need to provide for their families and need some assurance from their employers that there is a low probably of getting injured on the job.

Conclusion

Maitland concludes that the actions of critics to increase wages and improve working conditions in sweatshops in counterproductive. These actions are ultimately detrimental to factory workers and the nation hosting the factories. The sole purpose of offshore factories is to reduce the cost of products. Attempts to change this may result in a country losing factories and the foreign investment associated with them.

Not surprisingly, Maitland states that there should be more sweatshops not less. I am sure that this comment is partially tongue-in-check. But I do agree wholeheartedly that manufacturing factories in underdeveloped countries can lead to economic growth and political stability.

What surprised me is Maitland’s assertion that below subsistence wages is ethically permissible provided that a worker freely and knowingly accepts the position. Again, I agree with this statement provided that workers are not coerced into accepting a job or are mislead as to the work conditions. The justification of permitting subsistence wages is to allow countries to be competitive for foreign investment.

Throughout this essay I have interchanged the term “sweatshop” and “factory”. This was done for aesthetics rather than a distinction of meaning. However the term “sweatshop” does infer a working environment that is unduly harsh. In agreeing with Maitland, my opinion is that “sweatshops” are ethical as they benefit factory workers and the nation that hosts them.

References

• Maitland I. (1997). The Great Non-Debate Over International Sweatshops. In British Academy of Management Annual Conference Proceedings. (pp 240-265).
• Modern day sweatshops. In Sweatshop Watch. Retrieved June 22, 2008 from
  http://www.sweatshopwatch.org/index.php?s=67