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Definition and Criticism of Sweatshops

Why do companies use sweatshops, and what are the impacts of that for business and for society?

Debates on the ethics and morality on the use of sweatshops have been going on for a long time. According to Snyder  (2010, p. 192)  sweatshop refers to a production facility where the local laws governing a workplace are usually broken and are characterized by long working hours, low wedges, poor working conditions or other factors such as humiliations at the workplace. The employers exploit the employees. Critics have argued that the use of sweatshop is impermissible while others argue that third party should not interfere as it is the choice of the worker involved to take up the jobs (Golodner 2016, 497). There have been protests on the use of sweatshops workers to work indirectly or directly to companies such as Nike, GAP or Wal-Mart. Some indicate that employees have a choice in taking up the jobs and if it is not conducive, they should not take up the sweatshop jobs. Many critics argue that sweatshops are an important part of the development of economies and laws made to restrict the use of sweatshop are set to harm the very people they are intended to help (Kates 2015, p. 191). Workers have basic rights that cannot be violated no matter the circumstances and human rights are respected while taking full advantage of the economic benefits of the workforce. This paper analyses reasons why companies use sweatshops.

Most brands in the retail or fashion industry do not own factories and use the sweatshops usually in the third world countries to manufacture their products and pay low prices. The retail industries are characterized by a subcontracting system where companies that sell clothing line such as Wal-Mart contract other companies to manufacture products with specific brand names for selling at their retail shops. The contractor companies assemble the products and deliver to the retail brands. Fierce competition in the industry forces the contractors to accept low prices, and this drags the factories down making some of them not to afford to pay legal wages to their workers or comply with safety laws of labor. It forces most of the contractors to ‘sweat’ the profits from the workers and to ignore the working conditions of the workplace. It leads to the exploitation of workers commonly working in the sweatshop workplaces. Companies use the sweatshop to increase profit margins in the retail shops (Coakley & Kates 2013, p. 556).

Reasons for Companies to Use Sweatshops


Companies also use sweatshops to reduce the liability of the companies and increase the flexibility of buying (Sethi & Rovenpor 2016, p. 22. The manufacturing companies subject their workers to long working hours producing a large number of products at ago and supplying the retailers such as Wal-Mart. Also when something goes wrong in the factory, they are not legally responsible.

The global economy characterized by the free trade system enables the profits to be high. The free trade agreements enable access to larger markets and elimination of trade barriers such as tariffs or taxes (Zwolinski 2010,p 691). The agreements do not protect the workers leading to exploitation by brands importing cheap products from manufacturing countries in order to maximize on profits. The laborers are underpaid and working conditions are poor (Bressán & Arcos, A 2017, p. 440) The brand companies claim not to be involved in the manufacturing of the products hence do not have a say on the working conditions of the factories manufacturing the products (Harrison & Scorse 2010, p.256)

Wal-Mart source most of their products from sweatshops in foreign countries. Over 6000 of its suppliers’ factories are based in China or Bangladesh. Wal-Mart made profits as they sourced goods from overseas at cheaper rates than goods made in USA. The founder of Wal-Mart in the 1980s insisted that their goods were made in America and launched a campaign ‘Made in America’ where they advocated for purchasing goods from US. Though in 1992, a report released by NBC- TV’s Dateline showed that Wal-Mart was purchasing products from wholesale distributors in Bangladesh that operates sweatshops using child laborers. The child labors were used in manufacturing companies and paid minimum wages. According to Fishman and Charles (2010, p. 103) not only were the products sold in Wal-Mart stores produced in sweatshops in Bangladesh, they were sold in their retail shops with the sign of ‘Made in America’. Wal-Mart extensively imports low-cost products from countries such as China and Bangladesh and sells in the retail shops in the US to maintain the low prices to the customers. Wal-Mart the employees low and in the countries, such China Wal-Mart resorted to foreign products as the workers in these countries were paid much lower than the minimum wages required and no social security and poor working conditions (Williams 2016, p. 278)


Wal-Mart founder promoted the campaign ‘Buy America’ and at the same time hired Pacific Resources Export Limited as a purchasing agency for Wal-Mart in order to increase the purchases of cheap products from Asia without being traced to Wal-Mart. The suppliers of these products decreases their cost of production of goods by using sweatshops in order to meet the demands of the buyer shop such as Wal-Mart. Wal-Mart tends to purchase the goods from the lowest bidders and always put their suppliers under pressure to provide goods at low prices. They do not care about quality of the products offered. The cost of purchasing and selling the products is the main focus. Practicing their slogan of “save money and live better.”  The manufacturers tend to cut cost on the safety of workers to meet the demand of low prices from the buyer (Sollars & Englander 2018, p. 24). There is also competition between these countries and in case they do not lower the price of their products, Wal-Mart moves to other countries with lower rates for their supplies (Cahill, Gutiérrez & Quijada 2016, p. 132).

Wal-Mart and the Controversy Surrounding Sweatshops

According to a research conducted by SACOM, some of the factories identified to be supplying toys to Wal-Mart have imposed a six days’ workweek and a minimum of 11 working hours a day for its workers, making it past 60 working hours recommended by Wal-Mart to its suppliers. These hours are pure exploitation on the health and human rights of the workers. The limited business time to deliver most of the products and lack enough money to pay workers hence workers are exploited and forced to work more hours to meet the demand for the products (Man-Cheong 2013, p. 252).


Wal-Mart has denied involvement in the use of products produced in sweatshop condition in their store.  Speaking against a report released by The National Labour Committee in the USA claiming ornaments sold by Wal-Mart Stores Inc., Bentonville were made in sweatshop factories. Richard J. Coyle, director of international corporate affairs for Wal-Mart, stated that "As soon as Wal-Mart learned about the Christmas tree ornament report, we contacted the National Labor Committee, and they have not returned our call. Now that we have a copy of their report, we have launched an immediate investigation. Wal-Mart aggressively deals with any allegations of improper conditions at our suppliers' factories. Wal-Mart maintains a very strict Supplier's Code of Conduct, and employs over 200 people to monitor our suppliers and their designated factories' adherence.”

There are different ethical issues associated with Wal-Mart importing their products from the inexpensive merchandisers in Asia. Even though they encourage people from all over the country to save money and live better by supplying low price products, quality is also important to consumers (Preiss 2014, p. 62). Wal-Mart has moved most of its suppliers to the Republic of China where they offer low priced products produced using sweatshops labors. Wal-Mart also pay their workers low in order to keep up with the low profit margins in the market. In the quest of Wal-Mart to search for cheaper products all over the world between the year 200 to 2010, over 11% percent of manufacturing jobs were lost in the U.S.A. To compete with Wal-Mart’s low prices, most companies resorted to purchasing products from foreign countries that operate their factories with sweatshop labors. The manufacturing jobs lost were as a result of Wal-Mart use of sweatshop products. The local suppliers could not match the low prices of the offshore suppliers used by Wal-Mart leading to layoffs by local manufacturing companies in the U.S.A. It also leads to closure of production unit for most businesses as they cannot keep up with supplying low cost products (Powell & Zwolinski 2012, p. 471). The low prices reduce the margins of profit for local jobs forcing the companies to cut down on cost and things such as research and innovations for new products cannot be funded. No investments can be made on the innovation of products hence the recycling use of the old products. On the other hand retail companies such as Wal-Mart grow.

The Impact of Sweatshops on the Economy and Employment Rate in Third World Countries

There are different perspectives on the impact of the use of sweatshops. There have been protests on the use of sweatshops, and different opinions have been made. For third world countries, it is viewed that anti-sweatshop activities could reduce the investments and employment rate in these countries. It would lead to workers being worse off than when they are working in the sweatshops (Snyder 2010, p. 192). The factors discussed below are some of the impacts of the society. To the third world countries, the low pay and long working hours are an opportunity to make a living and at the same time provide for their families. On the positive side, some of the countries hosting the sweatshops have low GDP per Capita, and the factories cause the GDP to grow. Also, the minimum wages these labors earn are argued to be more than what 50% of other workers in the countries earn. Sweatshops are also beneficial to these nations economy as they allow them to grow. For example, Bangladesh has grown 6% due to the sweatshops and the industrialization caused by these sweatshops.


It is also argued that consumers are always looking for low price products and most of the consumers do not care how the products are made. Wal-Mart imports most of its products from foreign countries with low prices to achieve the low price demands of its customers.

Wal-Mart use of sweatshop products has led to forced overtime labor or workers lose their jobs, physical and verbal abuse by the managers to the workers, the climate fear and inescapable of poverty caused by workers working long hours with less pay and no sick off pay.

Conclusion

In conclusion, in developed countries like the US, sweatshops have led to the collapse of the production of goods by local factories due to inability to compete with low price products manufactured in foreign countries and sold in retail stores such as Wal-Mart shops. This has led to the loss of jobs in the manufacturing companies. On the other hand, despite the low wages, long working hours, unsafe working conditions, the third world countries factories using the sweatshops have benefited. The importation of these products has led to the creation of jobs, improved lifestyles, and the industrialization of the countries.

There is need to improve the working conditions and the safety tools to be used by the workers to work in a safe environment.

List of References

Bressán, J, & Arcos, A 2017, 'How do Migrant Workers Respond to Labour Abuses in 'Local Sweatshops'?', Antipode, 49, 2, pp. 437-454, Academic Search Premier, EBSCOhost, viewed 3 June 2018.

Cahill, C, Alvarez Gutiérrez, L, & Quijada Cerecer, DA 2016, 'A dialectic of dreams and dispossession: the school-to-sweatshop pipeline', Cultural Geographies, vol. 23, no. 1, pp. 121-137. Available from: 10.1177/1474474015597431. [3 June 2018].

Coakley, M., & Kates, M. 2013. The ethical and economic case for sweatshop regulation. Journal of Business Ethics, 117: 553 – 558.

Fishman & Charles. 2010. The Wal-Mart Effect, p.102-103.

Golodner, L 2016, 'Consuming with a Conscience', Journal of Consumer Affairs, vol. 50, no. 3, pp. 492-504. Available from: 10.1111/joca.12130. [3 June 2018]

Harrison, A, & Scorse, J 2010, 'Multinationals and Anti-Sweatshop Activism', American Economic Review, vol. 100, no. 1, pp. 247-273. Available from: 10.1257/aer.100.1.247. [3 June 2018].

Kates, M 2015, 'The Ethics of Sweatshops and the Limits of Choice', Business Ethics Quarterly, vol. 25, no. 2, pp. 191-212. Available from: 10.1017/beq.2015.9. [3 June 2018].

Man-Cheong, I 2013, 'Sweatshops at Sea: Merchant Seamen in the World's First Globalized Industry, from 1812 to the Present', Social History, vol. 38, no. 2, pp. 253-255. Available from: 10.1080/03071022.2013.786232. [3 June 2018].

Powell, B, & Zwolinski, M 2012, 'The Ethical and Economic Case Against Sweatshop Labor: A Critical Assessment', Journal of Business Ethics, vol. 107, no. 4, pp. 449-472. Available from: 10.1007/s10551-011-1058-8. [3 June 2018].

Preiss , J . 2014 . Global labor justice and the limits of economic analysis . Business Ethics Quarterly , 24 : 55 – 83 .

Sethi, SP, & Rovenpor, JL 2016, 'The Role of NGOs in Ameliorating Sweatshop-like Conditions in the Global Supply Chain: The Case of Fair Labor Association (FLA), and Social Accountability International (SAI)', Business & Society Review (00453609), vol. 121, no. 1, pp. 5-36. Available from: 10.1111/basr.12079. [3 June 2018].

Snyder, J 2010, 'Exploitation and Sweatshop Labor: Perspectives and Issues', Business Ethics Quarterly, vol. 20, no. 2, pp. 187-213.

Sollars, GG, & Englander, F 2018, 'Sweatshops: Economic Analysis and Exploitation as Unfairness', Journal of Business Ethics, vol. 149, no. 1, pp. 15-29. Available from: 10.1007/s10551-016-3091-0. [3 June 2018].

Williams, MS 2016, 'Strategic innovation in US anti-sweatshop movement', Social Movement Studies, vol. 15, no. 3, pp. 277-289. Available from: 10.1080/14742837.2015.1082466. [3 June 2018].

Zwolinski , M . 2010 . Sweatshops, choice, and exploitation . Business Ethics Quarterly , 17 : 689 – 727 .

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