Contents

To understand the benefits of sweatshops

How it all started
To understand the ethical questions that

sweatshops present to us today

Statistics
Examples
Workers Point of View
Conclusion

WHAT ARE SWEATSHOPS

ANYWAY?
Theyre low-wage (by advanced standards),labor-intensive
manufacturing facilities, they have existed throughout the
world in different places and at different times, although
now they tend to be concentrated in developing nations
with large populations of low-skilled workers.

History of Sweatshops
The idea of sweatshops came around between 1830 and 1850
Before this tailors made expensive custom clothing
As the industrial revolution made its way sweatshop production of

inexpensive clothing replaced tailors

From 1850 to 1900 sweatshops attracted rural poor to rapidly

growing cities in London and NewYork

Why Sweatshops ?
Workers dont actually have any good alternative
Subsistence farming
Scavenging for trash
Prostitution
Invariably the next best alternative to working in developing

countries is something much worse -lower wages, harsher

environment

Similarly the choice of children often is not between labor and

school

Instead it can be between child labor and starving - working in

sweatshops is their best alternative to eat and improve their lives

Examples
According to the CIA World Factbook, the projected unemployment

rates for Nicaragua, Haiti, Bangladesh, Honduras and the

Commonwealth of Dominica were 7.4 percent, 40.6 percent, 5
percent, 4.5 percent and 23 percent, respectively.
These gaping holes in the populations workforce mean that
factories will employ hundreds of workers in a safer-than-thealternative setting.
This eliminates the public perception that people are coerced to
work there against their will, even if the benefits they provide are
not as good as they could or should be.
According to Suffolk University economics professor Benjamin
Powell agrees that even if a salary from working 12-hour shifts in the
hot sun is higher than doing menial labour indoors, workers usually
prefer the sweatshop option where lunch breaks, bathrooms and
safer work environments are available.

Examples
Many of the workers who moved to cities or towns to work in

sweatshops previously were labourers on tiny farms with even

longer hours for lower wages

In 1993 senator tom Harkin proposed banning imports from

countries that had child labour in sweatshops .In response a factory

in Bangladesh laid off 50,000 workers, many of whom became
prostitutes.

Workers Point of View

Workers voluntarily choose to work at sweatshops. They do so to

maximize their welfare given the choices available to them

The fact remains that these firms improve the quality of life for their
employees just as much as they reap the benefits of the dirt-cheap
labour.
Felipe Romero, a sweatshop employee, Rio Garment S. de R.L., a fullservice apparel manufacturer. Romero said that securing a job with
this company, changed the way I live, Romero said. Granted, there
are an innumerable amount of things I would like to see changed, but
the moment Americans shut us down, I may have to resort to things
Ive done in the past that Im not proud of.
Nhep Chanda is a 17-year-old girl who is one of hundreds of
Cambodians averages $ 1.50 a day for her efforts. For her, the idea of
being working in a garment factory -- working only six days a week,
inside instead of in the broiling sun, for up to $2 a day -- is a dream.

Workers Point of View

v The maximum each worker is paid is his productivity
v The minimum each worker is paid is his next best alternative

Walt<W<P
<W<Pg*
*MP
MPg
Walt best alternative wage
W sweatshop wage
Pg sweatshop good price
MPg marginal product

Drawbacks of Anti-sweatshops
movement and wage rise
Wages are low in the third world because productivity is low so,

Insisting on wages above makes workers unemployable.

Some of anti-sweatshop groups want to prohibit imports from

sweatshops. While their intentions may be good, anti-sweatshop

activists do not understand basic economics.

Boycotts and import bans reduce demand for the product, which

reduces demand for workers. This also cuts wages by lowering the
product price

Boycotting sweatshop goods thus hurts the exploited workers.

Someone who intentionally gets you fired is not your friend.

- David Henderson

Defendants of sweatshops
Defenders of sweatshops similarly to those who criticize sweatshop

labor practices refer to ethical theories to support their argument.

They draw its support from the utilitarian theory which states that
the most reasonable and ethically justified decision is the decision
that results in the best consequences for the greatest number of
people and which consequences are better than other available
options (Hartman and Desjardins 2008)

Shutting down sweatshops is not the best way to lift workers out of

poverty. The best way to lift sweatshop workers out of poverty is for
countries to fix their institutions to respect private property and the
rule of law.

Good institutions encourage entrepreneurs to invest in more

factories. More sweatshops and other opportunities will bid up

wages. Experience increases workers productivity

Ethical Labour Standards

Home Country Standards
Living wage Standards
Classical Liberal Standards

Pro Sweatshops

Financial Advantages to foreign workers

Economies of third world countries improve

Improves health conditions

Better wages than alternate jobs

A normal stage in economic development

Note :Not only are sweatshops better than current worker alternatives, but they are also
part of the process of development that ultimately raises living standards.
That process took about 150 years in Britain and the United States but closer to 30 years in
the Japan, South Korea, Hong Kong, and Taiwan.

Pro Sweatshops
When companies open sweatshops they bring technology and

physical capital with them. Better technology and more capital raise
worker productivity. Over time this raises their wages. As more
sweatshops open, more alternatives are available to workers raising
the amount a firm must bid to hire them.

Wages in the apparel industry are higher than average wages in all of the countries
in this chart

Source: http://www.econlib.org/library/Columns/y2008/Powellsweatshops.html

In 9 of 11 countries checked, sweatshop waged exceeded average income.In Cambodia,

Haiti, Nicaragua, and Honduras, wages paid by sweatshops are greater than double the
average income

Source: http://www.econlib.org/library/Columns/y2008/Powellsweatshops.html

References
Sweatshops In Bangladesh Improve The Lives Of Their Workers,

And Boost Growth- Article in Forbes (02/05/2013) By Benjamin

Powell
The Virtues of Sweatshops- Article MARCH 01, 2002 by Stefan
Spath.
Sweatshops best alternative for workers in many countriesEconomics Article (9/04/2010)
http://www.encyclopedia.com/topic/Sweatshops.aspx
http://en.wikipedia.org/wiki/Sweatshop
http://www.globalethicsnetwork.org/profiles/blogs/two-faces-ofeconomic-development-the-ethical-controversy
http://www.benjaminwpowell.com/scholarly-publications/journalarticles/sweatshops-and-third-world-living-standards.pdf

THANK YOU