IS IT ETHICAL TO BUY GOODS

PRODUCED IN SWEATSHOPS?

Business Ethics Paper

Submitted By –
Rishab Mahnot
0376/56

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 TABLE OF CONTENTS

PAGE NUMBER DESCRIPTION

2 INTRODUCTION
3 SWEATSHOPS: THE UGLY FACE OF INDUSTRIALIZATION
4 SWEATSHOPS IN INDIA
6 ARE SWEATSHOPS A NECESSARY EVIL?
7 HOW SWEATSHOPS HELP THE POOR?
9 CONCLUSION
10 APPENDIX

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 INTRODUCTION

Sweatshop refers to any factory which may have dangerous and unhealthy (both physically and
psychologically) working conditions for labor, and enforces long hours with low pay. The term also
frequently describes a factory employing child labour. Many developed nations, including the United
States, have at some point engaged sweatshop production facilities on a large scale, and a major
segment of the world’s remaining sweatshops are located in Asian countries (Bangladesh, Pakistan,
India).

From a business perspective, sweatshops are very lucrative since they capitalize on low-wage labour
in developing countries and significantly reduce production costs. Brands are notoriously secretive
about what percentage of their retail prices go to the worker, so there is very little we can say for
sure. However, while labour costs vary, for most garments, wages for production will scarcely
exceed 3% of the price you pay in the shop. This percentage could be drastically less for an item
from a luxury fashion brand, since workers producing high end garments do not typically earn more
than workers producing for high street brands.

Many major clothing and footwear companies, for example, have been linked to sweatshops. Brands
such as Nike, GAP, and Levi’s, have all been guilty of numerous violations of requirements for
reasonable working conditions in their production facilities. All of their headquarters and customer
bases are located in the United States, while the manufacturing component of the production process
is carried out in Asia. Such companies have been criticized as being complicit in the exploitation of
workers because they fail to correct the manufacturers’ malpractices, of which they are aware but
often claim are hard to
correct. An internal report
carried out by Nike, for
instance, found that nearly
2/3rd of the 168 factories
making Converse (one of
the company’s brands)
products failed to meet
Nike’s own standards for
manufacturing.

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 SWEATSHOPS: THE UGLY FACE OF INDUSTRIALIZATION
One of the most significant thing about sweatshop labour is that the workers are simply underpaid,
especially considering the kinds of working conditions they endure. Minimum wage levels in
countries such as Thailand, Bangladesh, and China, are significantly lower than that of the United
States. The federal minimum wage per hour in the United States is currently at 7.25 USD, while it is
1.48 USD in Thailand, and 67 cents in China. However, workers are frequently paid less than these
estimates suggest—amounts barely enough to survive on even considering the lower cost of living in
these regions. Many developing Asian countries have official minimum wage levels, but the lack of
uniform and comprehensive regulations with nationwide coverage across all labour groups and
industries remains a huge problem. For instance, minimum wage regulations are applicable in
Cambodia only to the garment and shoe-sewing sector, and in Sri Lanka only to over 35 industrial
trades. Furthermore, the lack of institutional regulatory effectiveness in enforcing compliance is an
even greater problem.

Since turnover is extremely rapid, sweatshop workers are not guaranteed even these meagre salaries
over the long term. For example, the International Textile, Garment and Leather Workers’ Federation
(ITGLWF) investigated a factory in Indonesia and found that over 80% of their workers were on
short term contracts. Such factories hire and fire workers as the production is volatile, with little
regard for their employees’ job security or welfare. These workers have no financial security to
speak of, and also reported they did not get any sort of severance pay. In addition, these laborers are
also subjected to violence, another common aspect of sweatshop operations in the developing world.

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Workers at a Converse plant in Indonesia, reported that their supervisors ill-treats them, throwing
shoes at them, slapped, kicked, and called them dogs and pigs. It is hard to measure the frequency
and severity of physical and verbal abuse in these settings, as fear deters workers from reporting such
cases and there is a characteristic lack of supervision. Furthermore, many sweatshop workers are
children; roughly 1 in 8 children in the Asia-Pacific is between the ages of 4 and 15 and works in a
sweatshop. India has the highest rates of child labor of any country in the world, employing over 55
million children, many of whom were sold into labor by their families.

SWEATSHOPS IN INDIA
India’s garment industry is among the world’s biggest for manufacturing and export, employing 12.9
million people in formal factory settings, and millions more indirectly in informal, home-based
settings.

A research by the University of California, Berkeley found that women and girls from the most
marginalised communities toils for as little as 15 cents an hour in homes across India. Child labour
and forced labour are widespread and wages are regularly suppressed. “Every major brand, every
boutique retailer and everyone in between who sources garments form India is touched by this
issue,” said Siddharth Kara, a lecturer at the University of California, Berkeley. “It ends up on the
shelves of every major brand in the west.”

Roughly one in five home-based garment workers in India are aged 17 and lower, according to the
study, which draws on interviews with 1,452 workers. The youngest individual interviewed was 10
years old, although researchers witnessed dozens of younger children.

In northern India, more than 10% people are trapped in forced labour. Almost 6% are in bonded
labour, where a person is forced to work to pay off a debt. In all, 3/4th of those interviewed said they
began the work due to some form of duress, with many citing family pressure or severe financial
hardship.

Across India, the vast majority of workers are women and girls from the most marginalised
communities. None belongs to a trade union or had a written contract, leaving them with no way of
seeking redress for unfair or abusive treatment.

Almost all workers – 99.2% of them – are subject to conditions of forced labour under Indian law,
which means they did not receive the state-stipulated minimum wage. In most cases, workers receive
only a tenth of the minimum wage.

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Payments are often late, with many workers reporting that they had been penalised for not
completing hefty orders on time. Problems of this nature worsened in the run-up to busy periods such
as Christmas as shops rushed to meet demand.

“Imagine you’re earning 13, 14, 15 cents an hour. Then imagine your payments are not even on time,
they’re delayed by a month or two. Then imagine you’re given an order that’s going to take you five
days to complete and you don’t complete it on time and you’re not paid,” said Kara.

Women are often unable to leave the home for weeks or months at a time, he added. “Their days
amount to little more than running the home and working as many hours as they can to meet these
orders, cooped up inside,” said Kara.

Injury and chronic illness, including back pain and diminishing eyesight, are common. The vast
majority of home-based workers, approximately 85% of them, works exclusively in supply chains
for clothing shipped to the US or EU.

Some companies have made efforts to stop abuses in supplier factories but they have not yet felt
motivated or pressed to address the treatment of home-based workers.

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 ARE SWEATSHOPS A NECESSARY EVIL?
Some of the world’s leading economists have cited sweatshops as a necessary step in modernization
and development. Jeffrey D. Sachs of Harvard and Paul Krugman of the Massachusetts Institute of
Technology have asserted that sweatshop manufacturing—especially in the production of goods like
clothing and shoes—for foreign markets are an essential preliminary move toward economic
prosperity in developing countries. Many credit these labor-intensive industries for propelling the
Asian Tigers (Hong Kong, South Korea, Singapore and Taiwan) into the economically developed
world. A study on poverty relief and development by the University of Santiago de Compostela also
suggests that such sustainable international investment in low income countries is important to
economic progress. The investments in developing countries represent not only investments in
production facilities, but also add to the latter’s investible resources and capital formation, transfer
production technology, skills, innovative capacity, organizational and managerial practices, as well
as provide access to international marketing networks, all of which are exceedingly helpful to these
developing economies.

The intuitive objection to sweatshops is based on notions of dessert; clearly, sweatshop laborers
deserve better working conditions, and it is unfair where they are deprived of just compensation for
their labor. John Rawls’ argument from the veil of ignorance would suggest that it cannot be fair for
sweatshop workers to suffer under such appalling working conditions, precisely because even the
very corporate business owners who fuel the demand for sweatshop labor cannot condone this from
an objective and disinterested perspective. Considering the inequalities between the United States
and developing Asian nations which have become more entrenched over the course of history,
people in developing Asian countries are relatively worse off than those in the United States, with or
without regulations against sweatshop labor. It therefore appears that sweatshop labor is an aspect of
U.S.-Asia relations that is symptomatic of a systemic disadvantaging of the latter. Rawls would
suggest that in circumstances like these, the only morally acceptable course of action is one in which
the net benefits accruing to the least-advantaged people of developing Asian countries is maximized.

Companies are not charity organizations and are inevitably subjected to market mechanisms, but this
does not mean that they can maximize their profits without regard for the well-being of sweatshop
laborers. Immanuel Kant’s practical moral imperative asserts that human beings must be treated as
ends in themselves and not merely as a means, and so sweatshops are inherently unacceptable from a
deontological perspective since their workers seem to be treated as mere instruments in the amassing
of business profits. Yet, if sweatshop labor was simply banned, people in developing countries who

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are critically reliant on these jobs for survival would suffer even more, and this is all the worse for
their Kantian right to self-determination. This suggests that in the real world—or at least in this
case—ideas of absolute right vs. wrong are at best inadequate, and cannot be conflated with ideas of
better vs. worse, which account, more importantly, for the relative outcomes of decisions.

The Kantian right to self-determination has great intuitive force and cannot simply be abandoned.
Yet, if deontology alone is an unsatisfactory approach to evaluating the moral value of sweatshop
labor, perhaps the existing conditions of the modern economic world call for a supplementary
utilitarian approach. Utilitarianism—defined by the likes of Jeremy Bentham and John Stuart Mill—
considers how everyone’s collective welfare may be maximized. Sweatshop workers are relatively
better off than if they had no such work, as are the companies which benefit from lower production
costs. Normatively speaking, sweatshop labor is morally wrong and should be banned. Practically
speaking, however, there are shades of grey representing better and worse outcomes of moral
decision-making within the existing political and economic environment. Theoretically, the need to
respect human rights is directly associated with deontology and not utilitarianism. Yet, the utilitarian
relativization of outcomes appears—counter-intuitively—to support human rights in the case of
sweatshop labor better than a strictly deontological approach which flatly denies that sweatshop
labor could ever be morally acceptable.

HOW SWEATSHOPS HELP THE POOR?

Sweatshops are frequently vilified, and rightfully so. They are often horrible places to work, with
long hours and few workers’ rights. An alternate viewpoint, according to Adam Smith, states that the
sweatshops play an important role in the world economy and in bettering the lives of millions across
the globe.

The first point to note is that more often than not, the alternative for those who work in sweatshops is
much much worse. Yes, they may be blisteringly uncomfortable places to work with disease and
abuse rife, but if people have chosen to work there, it must be better than their alternatives.

The danger posed to those unfortunate enough to consider them their best choice was shown by the
horrific Rana Plaza collapse in 2013, where 1,129 people died. These included individuals making
goods for high street names such as Matalan, Primark, Monsoon and Walmart. Given this, it is easy
to see how sweatshops may be viewed as incredibly evil. But it is important to remember that for
many of these people, the alternative is to work in agriculture, particularly subsistence farming,

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which is the most dangerous line of work in the world. If sweatshops were banned, then many of the
people working there would be forced to move into far more dangerous, less desirable professions.

This point was illustrated well in 1993, when US Senator Tom Harkin proposed a ban on imports
from countries that employed children in sweatshops — a measure that would seem to many both
noble and right. But in response to the proposal, a factory in Bangladesh let go off 50,000 of its
workers. According to Oxfam, a significant number of children who got unemployed as a result
became prostitutes.

It is important to remember that conditions in sweatshops are awful to us by our own standards. By
the standards of very poor rural Bangladeshis’, they might well be very lucrative. Likewise, the pay
that sweatshop workers receive would be seen as unimaginably meagre if we were to frame it in the
context of the society in which we live. It would be impossible to exist in the UK on what they earn
in sweatshops. But to them, sweatshops bring a pretty sum of money. Research by David Skarbek in
2006 found that wages from sweatshop work exceed national average income in eight out of ten
countries surveyed. In paying more than the national average, it brings people out of poverty and
gives them money to spend and invest in things that improve not only their individual lives, but the
condition of the nation as a whole.

Sweatshops are great for the economic and social development of a country. The extra money that
can be earned could be taxed to provide basic infrastructure and sound governance. More
importantly, the extra money
earned can be spent by people on
education, healthcare etc.

Rachel Heath and A. Mushfiq

Mobarak, of Yale and Washington
Universities wrote a paper in 2014
that took a look at the impact of the
garment industry (sweatshops) on
young girls and women in
Bangladesh. They found that girls
who live in villages closest to garment factories (also known as sweatshops) had significant
advantages compared to those who did not. Amongst the findings were that girls living near a factory
were 28.2 % less likely to get married in the school year than on average for a Bangladeshi girl,

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similarly, girls were 29.4 % less likely to get pregnant in a school year. These findings were most
pronounced amongst 12-18 year olds.

CONCLUSION

No doubt the exploitation of the poor is unethical and yes, boycotting sweatshop-produced-clothing
can close down the factories, the most visible instruments of labour exploitation. But such ethical
decisions should not be taken without assessing the impacts of their closure on the vulnerable groups
that we are supposedly trying to protect
through these boycotts.

Economically, the closure of sweatshops

cuts off a major source of income for
poor families in the short term, and
results in the lowering of a nation’s GDP
in the medium term. The ultimate impact
is especially harsh without making
provisions for alternative sources of
income for the poor.

We must pay special attention to these low-wage laborers and work toward better working conditions
in production facilities so as to eventually eradicate their endemic exploitation. Of course, advocacy
and actions to improve working conditions, stopping the exploitation of workers, and the inequities
and human rights violations associated with sweatshops, must remain priorities provided the poor
and the vulnerable, who we are trying to protect, are not adversely affected.

In the past decade, much has been done to promote the plight of these workers, with brands like
Nike, Gap and Benetton repeatedly urged to tighten their policies and prevent sweatshops from
operating in their supply chain.

Since then, the majority of big brand companies have taken steps to change policies and have
attempted to review their supply chain to eradicate any child labour or sweatshop practices in their
supply chain. As an example, Nike and Gap now publish the following policies:

• All workers should have at least 1 day off in every 7

• Zero tolerance of underage workers
• No forced overtime

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 • GAP require all workers to be at least 14, or the legal working age in their own country, and
Nike require workers to be 16 or 17

In nutshell, a careful effort with a collaboration of government and companies is necessary to help
solve the problem of sweatshops.

APPENDIX –
1. https://www.globalethicsnetwork.org/profiles/blogs/two-faces-of-economic-development-the-ethical-
controversy
2. https://www.adamsmith.org/blog/how-sweatshops-help-the-poor
3. https://www.cips-cepi.ca/2018/02/26/the-ethics-of-buying-clothes-produced-in-sweatshops/
4. https://www.theguardian.com/global-development/2019/feb/01/major-western-brands-pay-indian-
garment-workers-11p-an-hour
5. https://labourbehindthelabel.org/
6. https://waronwant.org/sweatshops-bangladesh
7. https://qz.com/1042298/nike-is-facing-a-new-wave-of-anti-sweatshop-protests/
8. https://www.cockandbullmenswear.co.uk/ethical-fashion-and-sustainable-menswear-the-sweatshop-
issue--why--we-should-care

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