This paper looks at the ethical challenges in managing labour standards within global sporting companies.
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1. Ethics of Sweatshops: Managing Global Labor Standards in the
Sporting Goods Industry. JENIFER KESIK
2. 2 Introduction For more than ten years concerns surrounding
global labour practices in the sporting apparel industry have been
under a lot attention from the public (Arnold and Hartman 2003;
Young 2004). Since mid- 1990 a number of multinational sport
companies such as Nike and Adidas Group havestarted to be
criticizedby the press for proving seriously poor working
conditions in its overseas factories (The Guardian 2010; Mail
Online 2011). It has been brought to the public attention that the
majority of sporting goods especially shoes and athletic apparel
are produced in so called sweatshops where workers are made to work
extremely long shifts for very little wages and have their human
rights violated. The problem of sweatshop labor raised a
significantly importantethical dilemmaand made many sport
corporations weight improving work environmentfor their employees
against maximizing profits. The following case study carefully
analyses the problem of sweatshopslooking specifically at the
examples of sport organisationsand raises both ethical and economic
inquests. Moreover this case study attempts to propose different
ways in which businesses can respect their employees while at the
same time stay economically profitable and maintain their
competitiveness in the industry. Discussion First of all the term
sweatshop needs to be defined. In the past, afew different criteria
have been used in order to decide whether a workplace or a factory
is a sweatshop. The United States General Accounting Office (GAO)
referreda sweatshopto a workplace that violates more than one
federal or state labour law governing minimum wage and overtime,
child labour, industrial homework, occupational health and safety,
workers compensation, or industry regulations(Ross 2004). Others
however arguedthat violation of just a single labor practice such
as providing low wages which does not allow workers to cover their
basic cost of living is sufficient to describe a workplace as a
sweatshop (Rosenbaum and Schilling 1997).
3. 3 In the highly competitive economy producers of athletic
apparel are on a constant search for less costly methods of
manufacture (Frenkel 2001). In order to maximize its profits,
multinational sport apparel giants locate their factories in less
developed countries such as Indonesia and China where legal
protections for workers are minimal, health and safety is not an
issue and tax rates are almost non-existent in order to attract
foreign investment (Zwolinski 2007).As a result sport
organisationsdo not break any local labour standards and if
appliedto the earlier mentionedlegal definitions,it could be argued
that those workplaces should not be referred to as sweatshops.
Another important circumstance that needs to be noticed is that
most of the time multinational sport apparel enterprises are not
directly responsible for the treatment of sweatshops workers
(Sollar and Englander 2007). The Majority of those sport
organisatons usually direct the work to independent contractorswho
as stated in the employment law are allowed to perform the tasks
according to their own methods and are not under the principals
control regarding the physical details of the work (Kaufman 1997).
As a result of this, independent contractors take a great control
of how the factories are being run. Sweatshops practices Although
mangers of the overseas sweatshops comply with the local law,
sweatshops workers receive wages below living level, work long
shifts and usually are not paid overtime(Powell and Zwolinski
2012).For example one of the contacted factories of Nike paid their
workers as little as $2 per day while living cost was $4 per day.
Secondly workers of sweatshops are usually exposed to ahazardous
working environment that could be dangerous for their health or
safety.In 1997 Nike became the subject of health and safety
controversy when it came to light that workers in one of Nikes
contract factories were exposed to very dangerous toxic fumes
(Connor 2001). Moreover it has been proven that in some factories
workers are humiliatedin front of others and very often are an
object of serious mental and physical abuse including kicking,
slapping in the face and name calling (Mail Online 2011).The report
published by Global Exchange (Connor 2001) demonstrated that in
some Chinese factories of Nike, workers were not allowed to
talk
4. 4 during work and if they did so they were fined $1.2 to
$3.6 and at other Indonesian factory workers who made mistakes were
force to stand in the sun for prolonged period of time (WSWS 2011).
Nike however was not the only company who was accused of breach of
labour practices. Even though the mangers of sweatshops made a lot
of positive changes since 1990 when the majority of sweatshop
accusations took place, the problem of unethical labourpractices
still occur. Only recently The Guardian (2012) claimed that Adidas-
an official sportswear provider for the 2012 Olympic Games produced
Olympic uniforms in the sweatshop conditions in Indonesia where
workers had to work 65 hour weeks for as little as 34 pence per
hour (The Guardian 2012). Ultimately few important questions arise.
Can treatment provided for sweatshops workers bemorally
justifiable? And should multinational enterprises be responsible
for operations of their contractors? Critics of sweatshops The
opinions are conflicting. First of all, critics of sweatshops argue
thatlabour practices at overseasfactories do not meet rules of
international labourlaw standards proposed by the International
Labour Organization (ILO 2013). They are against a number of core
ILOconventions including Abolition of Forced Labour Convention,
Minimum Age Convention,Hours of Work Convention and Discrimination
Convention (ILO 2013). Moreover sweatshopsare very distressing for
individuals who are affected by them (Powell and Zwolinski 2012)
are against internationally proclaimed human rights within social
institution. The treatment received by workers at sweatshop
factories challenges the fundamental human rights proposed by
United Nations Declaration of Human Rights (1949) which states that
everyone has a right to freedom, shall not be held in servitude or
be an object to any offensive forms of treatment. Arnold and
Hartman (2003 cited by Radin and Calkins 2006) go further and
notices that these types of labour practices not only breach
universal human rights, they also contradict with basic moral norms
which regulate behavior standards in society.
5. 5 Critics use deontological ethical theories to justify that
sweatshops are morally incorrect (Meyers 2007). Philosophy provided
by Emmanuel Kant proposes a powerful perspective on human rights
and dignity (Radin and Calkins 2006). Individuals in Kantian
categorical imperative are seen to possess dignity and should be
treated as rational beings (Hartman and Desjardins 2008) rather
than used for certain purposes of other people. According to this
18th century philosopher following customs and legal or
institutional law is not enough to be considered moral (Hartman et
al. 1999). Instead actions can only be referred to as moral and
right if they are performed out of sense of duty by an individual
who has good will (Horn et al. 2006). Anti- sweatshops activists
also call attention to the fact that treatments received by workers
at overseas factories interfere with socially accepted values such
as: dignity, justice, fairness, equality, respect and
responsibility (Meyers 2007) as well as break the golden rule which
states that one should treat others as one would like others to
treat oneself. Critics of sweatshops argue that businesses which
use sweatshops labour have a very egoistic approach to the problem
and act merely in their own interest ignoring the needs of
employees. At the same time critics of sweatshops claim that this
behavior damages the psychological contract between workers and
employer-the deal between employee and employer which is based on
perceived fairness, trust and specific promises made by both
parties (Kaufman 1997). Defenders of sweatshops Contrary to what is
thought by the opponents of sweatshops, defenders of this type of
labourpractice offer entirely different view on the sweatshop
dilemma. First of all, defenders of sweatshops underline
thatgovernments of less developed countries encourage sweatshop
movement themselves by lowering tax rates and developing favorable
regulations (Young 2004). Economistsargue that sweatshops are
crucial for the economic development (Hartman et al. 1999).
According to Paul Krugman(1994) sweatshops are beneficial to the
workers in the developing countries and provide them with work
opportunities that would not be available otherwise. Scholars also
stress out that sweatshops are not purely empowered by the desire
to
6. 6 harm poor people from the developing countries (Radin and
Calkins 2006) and workers undertake available jobs voluntary
(Powell and Zwolinski 2012; Mayers 2012; Chartrier 2008). The
growth of this kind of employment is tremendous good news for the
worlds poor (Arnold et al. 2005) and economists point out that
sweatshops offer population of less developed countries much better
prospects than other available alternatives.Jeffrey Sachs from
Harward University contributes to this debate by adding that the
problem is "not that there are too many sweatshops, but that there
are too few (Samuelson 2010). Defenders of sweatshops similarly to
those who criticize sweatshop labour practices refer to ethical
theories to support their argument. They draw its support from the
utilitarian theory which states that themost 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). Mutually beneficial exploitation? On the basic
grounds of utilitarianism it is articulated that closing down
sweatshops would have a very adverse effect on employees who would
losetheir jobs. The end of sweatshops would mean that workers would
be forced to live in even worse conditions compared to what they
are used to and it would be significantly harder for them to
support their families. This would also have a negative influence
on the economic development of a whole nation who would
automatically loose foreign investment (Zwolinski 2007). Mayers
(2007) notices that sweatshopsdo not actually harm workers in the
long term. Instead the sweatshop movement expresses utilitarian
qualities and brings better overall consequences for all people
affected (Hartman and Desjardins 2008). As a result of this it
could be argued that sweatshopsare a form of mutually beneficial
exploitationwhich provides all stakeholders: employers,
contractors, workersas well as consumers with some advantages.
Employersprofit from the access of cheap labour, contractors
benefit from external investments, consumers enjoy low prices on
sporting goods and workers can earn wages. This situation is
normally acceptable (Mayers 2007).
7. 7 However this brings this debate back to the discussed
earlier concept of morality andperceived fairness.While it is true
that workers of sweatshops undertake their jobs on a voluntary
basis, it has to be emphasized that those poor people are in
desperate circumstances and frequently find that other potential
job opportunities are much worse than work in the sweatshops. Thus
it is clear that one party- in this case workers of sweatshops are
being taken advantage of and simply used as disposable instruments
to profit maximization rather than treated as independent and
rational human beings.This corresponds back to the Kantian concept
of categorical imperative and enables the author to make a
determination that mutually beneficial exploitation which takes
place at sweatshops cannot be morally permissible. Ultimately the
first question of this case study is clarified. However the second
question whether multinational enterprises owe responsibility for
operations of their contractors still remains unsolved. Corporate
Social Responsibility In order to answer the second inquest of this
ethical case studyit may be worth to deliberate theviewpoint of
Iris Youngfrom University of Chicago. Young (2004) provides an
important point to the sweatshop debate by saying that within the
society some people have more power than others, not only over the
conditions of their lives but over decisions and processes that
affect others. In case of sweatshops, multinational companies
possess extensive authority over their contractors and are primary
decision makers especially in the matter of price of the goods
produced, quality and quantity as well as the finishing date
(Arnold and Bowie 2007). At the same those companies caneasily
influence other stakeholders ethical principles. It could therefore
be proposed that in the discussed earlier examples of sport
organisations, they are the companies themselves who are
responsibleover the actions of other stakeholders including
external contractors and workers. As a result of this,multinational
sport enterprises should apply the concept of corporate social
responsibility (CSR) to its operations overseas. This would mean
that apart from maximizing firms profits, companies should focus on
all the positive and negative impacts (Mark- Herbert and Schantz
2007) and aim to fulfill the broader
8. 8 societal obligations (Freeman and Gilbert 1988) especially
those in regards to improving treatment of the workers in its
overseas factories. Following the concept of CSR the second inquest
of this case study whether multinational sport organization should
be held accountable for the actions of their contractors can be
answered positively. Although the managers of sport
organisationsvery often do not directly employer workers of their
oversees factories, it is absolutely crucial that those sport
organisationstake responsibility for the labour practicesof their
contractors and remember that those actions not only impact the
future and profits of the company itself, but have a huge influence
on the quality of lives of sweatshops workers. Conclusion To
conclude this debate, the problem of sweatshops receives
conflicting arguments from both critics and defenders of this type
of labour practice. Throughout this case study the duality of the
problem has been adequately demonstrated. Two important conclusions
have been reached. Although sweatshops are a form of mutually
beneficial exploitation and provide better consequences for the
majority of people expressing utilitarian values, it has been
concluded that sweatshop labour practices are against Kantian
concept of categorical imperative and therefore cannot possibly be
morally justified.The author of this case suggests that although
boards of directors of the multinational sport companies should act
in the company interest, the moral principles cannot be detached
from this process. Limiting the company to just following the rules
is not sufficient in these circumstances. In regards to whether
multinational companies should be held accountable for the actions
of their contractors, the author established that because of the
higher power and influence that those organisations possess, it is
their responsibility to influence the actions taken in the
sweatshops. There are number of ways in which multinational sport
organizationscan findright balance between respecting workers basic
moral rights, providing better working environment as well as
ensuring that the company is staying economically profitable. First
of all
9. 9 importantethical principles must be embraced by the
company through creating a culture of shared responsibility.
Secondly, correct ethical behaviorssuch as respecting human rights
of employees need to be clearly communicated to the external
contractorsthrough learning programs and specially designed ethical
trainings. At the same time sport organisationsneed to review their
codes of conduct and monitor whether they are being
followed.Finally it has to be remembered that good intentions and
slogans that highlight values of respect and fairness are
completely worthless unless they are effectively implemented.
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