Worker rights and low wage industrialization: How to avoid sweatshops

Human Rights Quarterly

Volumn 28, Issue 3, 2006, Pages 676-700

  Arnold, Denis G ^a   Hartman, Laura P ^b  

^a UNIVERSITY OF MINNESOTA DULUTH   (United States)

^b Management Department

Author keywords

[No Author keywords available]

Indexed keywords

DEVELOPING WORLD; HUMAN RIGHTS; MULTINATIONAL ENTERPRISE; WAGE; WORKING CONDITIONS;

EID: 33748748212     PISSN: 02750392     EISSN: None     Source Type: Journal    
DOI: 10.1353/hrq.2006.0029     Document Type: Article

References (114)

1. For the purposes of this paper, we define the term "sweatshop" as any workplace in which workers are typically subject to two or more of the following conditions: income for a 48 hour workweek less than the overall poverty rate for that country (see Table 2 below); systematic forced overtime; systematic health and safety risks due to negligence or the willful disregard of employee welfare; coercion; systematic deception that places workers at risk; and underpayment of earnings. For an historical overview of the development of modern sweatshops, Ellen I. Rosen, Making Sweatshops: The Globalization of the U.S. Apparel Industry (2002).
2. For a overview of the contemporary issues regarding sweatshops see Theodore H. Moran, Beyond Sweatshops: Foreign Direct Investment and Globalization in Developing Nations (2002).
3. For a list of colleges that have signed on to codes of conduct that protect factory workers from unjust exploitation, see the Workers' Rights Consortium, www.workersright.org.
4. "Classical liberalism" is a term many libertarians use to refer to themselves in order to associate themselves with early modern liberal theorists such as John Locke and Adam Smith, while distinguishing themselves from contemporary liberals such as John Rawls, Libertarians typically share the following core beliefs: individualism, the idea that individual persons, rather than the community, should be regarded as the basic unit of social analysis; self-ownership, the view that individuals should be free to decide what is the best for themselves so long as they respect this same freedom in others; free markets, the view that government intervention in markets exchanges should be minimized in the interest of freedom and economic prosperity; and the minimal state, the view that the coercive influence of government should be severely restricted so as to ensure that the self-ownership of the individual persons is maximized. For discussion of contemporary libertarian views regarding business ethics, see Denis G. Arnold, Libertarian Theories of the Corporation and Global Capitalism, 48 J. Bus. Ethics, 155 (2003).
5. Ian Maitland, The Great Non-Debate Over International Sweatshops, reprinted in Ethical Theory and Business 593 (Tom L. Beauchamp & Norman E. Bowie eds., 7th ed. 2004) [first published in British Academy of Management Conference Proceedings 240-65 (1997)];
6. Paul Krugman, The Accidental Theorist and other Dispatches from the Dismal Science 80 (1999);
7. Nicholas D. Kristof, Brutal Drive, in Thunder From thew East: Portrait of a Rising Asiab (Nicholas D. Kristof & Sheryl WuDunn eds., 2000);
8. Academic Consortium on International Trade, Letter to University Presidents, 29 July 2000, available at http://www.fordschool.umich. edu/ rsie/acit/Documents/Anti-SweatshopLetterPage.html;
9. David Henderson,Misguided Virtue: False Notions of Corporate Social Responsibility (2001);
10. Johan Norberg, In Defense of Global Capitalism (2003);
11. Jagdish Bhagwati, In Defense of Globalization (2005).
12. No one in this debate advocates forced labor.
13. Krugman, supra note 4.
14. Kristof, supra note 4, at 129.
15. Maitland, supra note 4, at 587.
16. Krugman, supra note 4, at 85.
17. Academic Consortium, supra note 4.
18. For a reply to this letter from academics with a different stance on sweatshops, see the statement by Scholars Against Sweatshops, Oct. 2001, available at http://www.umass.edu/peri/sasl/.
19. Linda Lim, The Globalization Debate: Issues and Challenges (2001). It is important to note that wages at many MNC factories have risen only in response to critics of low wages. Thus, it may not be reasonable to point to particular MNC factories with fair wages as evidence that the critics of low wages are mistaken. Those wages may have been increased to their current levels mainly because of public criticism.
20. For example, the Academic Consortium on International Trade sent its well-publicized letter defending sweatshops to university presidents in September 2000. In the preamble to that letter it promises to provide policy statements and papers defending sweatshops on its web site. Four years later, the sum total of research presented on the ACIT web site includes four newspapers, opinion page pieces and six working papers on general issues concerning globalization. None are detailed, empirically grounded arguments that focus on the labor markets in specific economies and the practices of specific MNCs or their contractors (the link to a promised paper on living wages is non-functional). The most prominent follow-up work to the ACIT letter by one of its signatories is the recent book, Bhagwati, supra note 4. This article responds in detail to many of his arguments concerning sweatshops below.
21. At least this was true at the early stages of the recent debate over sweatshops. The responses of MNCs such as Nike, adidas, the Gap, Mattel, and many others (some of which are detailed below) that began in the late 1990s and continue to this day, make it difficult for anyone familiar with these changes in corporate policy to hold that the treatment of workers in the factories of MNCs and their suppliers in developing nations is merely a matter of economic forces.
22. Krugman, supra note 4, at 83.
23. The arguments for this view are well established. See Norman E. Bowie, Business Ethics: A Kantian Perspective 138-46 (1999).
24. See also Norman E. Bowie & Patricia H. Werhane, Management Ethics 21 (2005).
25. The classic works here are Immanuel Kant, The Foundations of the Metaphysics of Morals (L.W. Beck trans., 2d ed. 1990);
26. Immanuel Kant, The Metaphysics of Morals (Mary Gregor trans., 1991).
27. For recent defenses of Kantian moral philosophy, see Onora O'Neill, Constructions of Reason: Explorations of Kant's Practical Philosophy (1989);
28. Thomas E. Hill Jr., Dignity and Practical Reason in Kant's Moral Theory (1992);
29. Christine M. Korsgaard, Creating the Kingdom of Ends (1996);
30. Barabara Herman, The Practice of Moral Judgment (1993).
31. For an application of Kantian moral philosophy to business, see Business Ethics, supra note 15.
32. For an application of the Kantian doctrine of respect for persons to sweatshops see Denis G. Arnold & Norman E. Bowie, Sweatshops and Respect for Persons, 13 Bus. Ethics Q. 221 (2003).
33. Hill, supra note 16, at 40-41. 26 Thomas E. Hill Jr., Dignity and Practical Reason in Kant's Moral Theory (1992);
34. Arnold & Bowie, supra note 16, at 223-24.
35. Representative works by Sen of particular relevance to the arguments of this essay include Amartya Sen, Well-being, Agency and Freedom: The Dewey Lectures 1984, 82 J. Phil. 169 (1985);
36. Amartya Sen, On Ethics and Economics (1987);
37. Amartya Sen, Inequality Reexamined (1995);
38. Amartya Sen, Development as Freedom (1999).
39. Martha Nussbaum has developed her own version of the capabilities approach, one that pays particular attention to the unique circumstances of women's lives. See, e.g., Martha Nussbaum, Women and Human Development: The Capabilities Approach (2000).
40. United Nations Development Programme, Human Development Report 2000 (2000) [herein-after UNDP Report].
41. Two of the most important philosophical defenses of basic rights are Alan Gewirth, Reason and Morality (1978);
42. and Henry Shue, Basic Rights (1980).
43. For discussion of the obligations of MNCs with respect to basic rights of employees and other stakeholders, see Thomas Donaldson, The Ethics of International Business (1992).
44. For a discussion of the obligations of MNCs with respect to global labor practices see Denis G. Arnold, Philosophical Foundations: Moral Reasoning, Human Rights, and Global Labor Practices, in Rising Above Sweatshops: Innovative Approaches to Global Labor Practices 77 (Laura P. Hartman, et al. eds., 2003).
45. See, e.g., Vinod Thomas, et al., The Quality of Growth (2000);
46. Deepa Narayan, et al., Voices of the Poor: Crying Out for Change (2000);
47. Deepa Narayan, et al., Voices of the Poor: Can Anyone Hear US? (2000).
48. UNDP Report, supra note 20, at XVII-XVIII.
49. See R.S. Moorthy, et. al, Uncompromising Integrity: Motorola's Global Challenge (1998);
50. Karl Shoenberger, Levi's Children: Coming to Terms with Human Rights in the Global Marker-Place (2000);
51. Tara J. Radin, Levi Strauss & Co.: Implementation of Global Sourcing and Operating Guidelines in Latin America, in Rising Above Sweatshops 249, supra note 20.
52. For a more detailed examination of the ways in which the exercise of moral imagination lead to the transformation of the global apparel and footwear supply chain systems in the apparel and footwear sector, see Denis G. Arnold & Laura P. Hartman, Moral Imagination and the Future of Sweatshops, 108 Bus. & Soc'y Rev. 425 (2003).
53. The Sweatshop Quandary: Corpoate Responsibility on the Global Frontier 95 (Pamela Varley ed., 1998).
54. Michael Santoro has defended a similar view concerning the duty of MNCs to ensure that their business partners respect employees by ensuring that human rights are not violated in the workplace. Santoro argues as follows: [M]ultinational corporations are morally responsible for the way their suppliers and subcontractors treat their workers. The applicable moral standard is similar to the legal doctrine of respondeat superior, according to which a principal is "vicariously liable" or responsible for the acts of its agent conducted in the course of the agency relationship. The classic example of this is the responsibility of employers for the acts of employees. Moreover, ignorance is no excuse. Firms must do whatever is required to become aware of what conditions are like in the factories of their suppliers and subcontractors, and thereby be able to assure themselves and others that their business partners don't mistreat those workers to provide a cheaper source of supply. Michael A. Santoro, Profits and Principles: Global Capitalism and Human Rights in China 161 (2000).
55. Bhagwati, supra note 4, does the best job of separating these issues and taking them on individually.
56. Bhagwati, supra note 4, at 173.
57. Human Rights Watch, A Job or Your Rights: Continued Sex Discrimination in Mexico's Maquiladora Sector (1998), available at http://www.hrw.org/ reports98/women2/;
58. Human Rights Watch, From the Household to the Factory: Sex Discrimination in the Guatemalan Labor Force (2002) available at http:// hrw.org/reports/2002/guat/.
59. The Sweatshop Quandary, supra note 25, at 131.
60. Republic of El Salvador, Ministry of Labor, Monitoring and Labor Relations Analysis Unit, Monitoring Report on Maquilas and Bonded Areas (2000), available at http://www. nlcnet.org/campaigns/archive/elsavador/ 0401/translation.shtml;
61. Human Rights Watch, Deliberate Indifference: El Salvador's Failure to Protect Worker's Rights (2003), available at http://www.hrw.org/reports/ 2003/elsalvador1203/.
62. Fair Labor Association, First Public Report. Towards Improving Workers Lives (2003), available at http://www.fairlabor.org/all/transparency/ charts_2002/PublicReportY1.pdf. FLA is an organization created by NGOs, MNCs, and university administrators in 1999 to work with MNCs to help ensure that the rights of workers in their overseas factories are protected.
63. Gap Inc., Social Responsibility Report 14 (2003), available at http:// ccbn.mobular.net/ccbn/7/645/696/index.html.
64. Deliberate Indifference, supra note 31, ¶ V.
65. Better rule of law is associated with higher per capita income. See World Bank, World Development Report 2000/2001: Attacking Poverty 103 (2000), available at http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/ EXTPOVERTY/0,,contentMDK:20195989~pagePK:148956~piPK:216618~theSitePK: 336992,00.html.
66. See, e.g., The Sweatshop Quandary, supra note 25;
67. Rosen, supra note 1.
68. International Labour Organization, Labour Practices in the Footwear, Leather, Textiles and Clothing Industries (2000), available at http:// www.ilo.org/public/english/dialogue/sector/techmeet/tmlfi00/tmlfir.htm;
69. S. Prakash Sethi, Setting Global Standards: Guidelines For Creating Codes of Conduct in Multinational Corporates ch. 2 (2003).
70. For an excellent overview of Mattel's initiatives see Sethi, supra note 36, at ch. 13.
71. See generally Rising Above Sweatshops, supra note 20.
72. Id.
73. Laura P. Hartman & Richard E. Wokutch, Nike, Inc.: Corporate Social Responsibility and Workplace Standard Initiatives in Vietnam, in Rising Above Sweatshops 145, supra 20.
74. Laura P. Hartman, et al., adidas-Salomon: Child Labor and Health and Safety Initiatives in Vietnam and Brazil, in Rising Above Sweatshops, supra note 20. .
75. Rising Above Sweatshops, supra note 20.
76. Hartman & Wokutch, supra note 40.
77. Id. at 154.
78. Conversation between Laura P. Hartman and Chris Helzer, date unknown.
79. Arnold & Bowie, supra note 16.
80. The issue of defining a living wage is complicated, but it does not present an insurmountable obstacle to MNCs. For discussion of this issue see Moran, supra note 1;
81. Robert Pollin, et al., Global Apparel Production and Sweatshop Labour: Can Raising Retail Prices Finance Living Wages?, 28 Cambridge J. Econ. 153 (2004);
82. John J. McCall, Defending the Right to a Livable Wage, presented at Voluntary Codes of Conduct for Multinational Corporations: Promises and Challenges, Baruch College, (13 May 2004), available at http:// info.worldbank.org/etools/docs/voddocs/625/1228/hi/htm#;
83. adidas-Salomon, A Fair Wage Strategy (2004) available at http:// www.adidas-salomon. com/en/sustainability/transparency /fair_wage_study/fair_wage_study.asp;
84. Chris Manning, Promoting Fair Wages, Productivity, and Jobs in Garments and Footwear in Indonesia, available at http://www.adidas-group.com/en/ sustainability/_downloads/fair_wage_study/ManningPositionPaper.pdf.
85. Klaus Leisinger, Implementability of the Draft UN Norms in the Pharmaceutical Industry: The Case of Novartis, presented at Voluntary Codes of Conduct for Multinational Corporations: Promises and Challenges, Baruch College (2004).
86. Adidas-Salomon, supra note 46.
87. Adidas-Salomon, supra note 46.
88. See also Manning, supra note 46.
89. Radin, supra note 23.
90. For an overview of the issues, see Andrew Weiss, Efficiency Wages: Models of Unemployment, Layoffs, and Wage Dispersion (1990).
91. See also essays collected in George A. Akerlof & Janet L. Yellen, Efficiency Wage Models of the Labor Market (1986).
92. See, e.g., C.J. Bliss & N.H. Stern, Productivity, Wages, and Nutrition, 2: Some Observations, 5 J. Dev. Econ. 363 (1978);
93. Christopher Bliss & Nicholas Stern, Productivity, Wages, and Nutrition, 1: The Theory, 5 J. Dev. Econ. 331 (1978);
94. Partha Dasgupta & Debraj Ray, Inequality as a Determinant of Malnutrition and Unemployment: Theory, 96 Econ. J. 1077 (1986);
95. Partha Dasgupta & Debraj Ray, Inequality as a Determinant of Malnutrition and Unemployment: Policy, 97 Econ. J. 177 (1987);
96. Weiss, supra note 51.
97. Although, it is possible to provide meals and healthcare for the employee at work as part of an overall compensation package.
98. See, e.g., George A. Akerlof, Labor Contracts as Partial Gift Exchange, 47 Q. J. Econ. 543 (1982);
99. Akerlof, Gift Exchange and Efficiency Wage Theory: Four Views, 74 Am. Eco. Rev. 79 (1984);
100. Weiss, supra note 51.
101. Pollin, et al., supra note 46, at 169.
102. Even Bhagwati now acknowledges a role for voluntary codes of conduct. Bhagwati, supra note 4 at 193-94.
103. Deborah Leipziger, The Corporate Responsibility Code Book (2003).
104. Ethics Resource Center, Creating a Workable Company Code of Ethics 3 (2d. ed. 2003), available at http://www.ethics.org/ ercbooks_workablecode.html.
105. Persuasive evidence of impact comes from a sustainability study, Ethos Institute and the International Finance Corporation, Developing Value: The Business Case for Sustainability in Emerging Markets (2002), available at http://www.ifc.org/ifcext/sustainability.nsf/Content/ DevelopingValue.
106. Joel Makower, Beyond The Bottom Line 70-72 (1994).
107. Errol P. Mendes & Jeffrey A. Clark, The Five Generations of Corporate Codes of Conduct and their Impact on Corporate Social Responsibility (1996) available at http://www.cdp-hrc.uottawa.ca/publicat/five.html.
108. Simon Webley & Elise More, Does Business Ethics Pay?, available at www.ibe.org.uk/DBEPpr.htm (2003).
109. Id.
110. A P/E ratio is one of the fundamental means by which to measure a company's stock price in relation to the company's earnings. The P/E ratio is determined by dividing the current stock price by the earnings per share. Investors use the P/E ratio to compare the value of various investments that might have widely different stock prices; higher ratios often indicate higher investor expectations. While a ratio alone does not reflect volatility and two companies of unequal risk could have the exact same P/E ratio, a volatile P/E ratio may represent a riskier investment or one more vulnerable to shifting conditions.
111. Webley & More, supra note 62.
112. Simon Webley, Towards a Business Case for Business Ethics, 3 New Acad. Rev. (2004).
113. Id. at 33.
114. Id.