Ethics and the Indian Laborer: Unethical Business Practices in the Indian Textile Industry - Essay Example

? Ethics and the Indian Laborer: Unethical Business Practices in the Indian Textile Industry Pepi Jordan Business 120 - IvyTech September 17, Ethics and the Indian Laborer: Unethical Business Practices in the Indian Textile Industry Introduction India represents many different strategic advantages to business managers in the United States for many different reasons as an outsourcing labor location. First, India maintains a very high population of unskilled citizens that have not received education to find jobs in specialized fields such as information technology and investment services. Because of this, they are forced to work in manufacturing facilities for low pay. Additionally, India currently has very strict labor policies related to productivity, making their outputs of textiles very high compared to other nations which fuel a powerful supply chain for American managers. Silk production in India is currently ranked second globally in relation to total output (IBEF, 2010). Much of this is due to the government allowing 100 percent foreign direct investment in the textile industry which has significant advantages to the Indian government. This direct investment builds a low-cost infrastructure for manufacture for American companies that avoid the high costs of labor incurred when using domestic, U.S. citizens in the production process. However, the lack of progressive labor relations changes in India and government tolerance of worker exploitation represents very unethical behavior. Why is Indian Textile Labor Unethical? The average pay for workers in the textile industry is only 91 cents per hour, which is just three percent of what American workers are paid (Sincavage, Haub & Sharma, 2010). This is significantly inappropriate considering that employees are held to very strict output standards in order to meet with ever-rising demand from international buyers. Furthermore, it is very common in India for businesses to ignore recent regulations that restrict working hours, thus making employees work excessive overtime. At the same time, most employment contracts are only oral contracts and therefore the employees do not have legal protections in the event that they are exploited (Sincavage, et al., 2010). Development of effective employee-employer relationships in this country is significantly difficult as well (Kumar, 2002). Government is aware of this non-compliance by business managers, however manufacturing leadership in India are focused on meeting the supply demands of American businesses especially as it relates to retail clothing apparel and accessories produced in these textile companies. Therefore, Indian government and manufacturing supervision are putting profits ahead of the Indian health condition with no additional compensation for these poor working conditions for the laborer. Even though international agencies such as the United Nations continue to exert pressure on improving labor reform, such groups have little to no legal influence in these countries and no changes are implemented for the Indian employee. Another difficulty in providing ethical behavior for the workers is the tiered system of production common for clothing manufacture in India. Many American companies source their apparel brands with a large textile company where orders are placed and final shipment of the merchandise is delivered. However, these companies have tiers of manufacture that include small factories and individual workers that do hand-beading, sequin work, embroidery and other associated decoration on more expensive clothing (Level Works Limited, 2009). Those smaller companies’ low-skilled laborers that are not protected under the jurisdiction of certain labor laws are usually managed by independent business owners. The companies from the U.S. that source in this way are aware of these tiers of supply, but do little to invest capital into building a more efficient supply network in the larger company. In this case, the American manager is turning away from the plight of the exploited second and third tier employees in the process while India allows private companies to keep quality laborers in the poverty zone. Having no domestic or foreign advocate to improve worker rights is unethical from many different angles. The tiered system even allows for child labor, which is attributed to high poverty rates (Biggeri & Mehrotra, 2007), which only fuels more unethical behavior by Indian business leaders. Employees who work in textile industries are also exploited because American companies want to avoid the high holding costs of inventory. These businesses choose to outsource from India because they have high output capacity and therefore American companies can have leaner inventories with faster shelf replenishment (Tewari, 2006). Indian companies, in response, demand faster production and longer hours to ensure that they are able to meet with American supply orders on a rapid and continuous cycle. This can lead to exhaustion and health conditions by these already-poor laborers, which impacts not only the worker but the families that rely on their wages to ensure shelter and food provisions. Finally, in India, it costs approximately between $3.00 and $5.00 to produce certain garments, based on data received by other overseas textile producers (Worker Rights Consortium, 2005). Companies will then increase their profit margin by adding a moderately higher selling price to the American buyer. After reaching the U.S. sales floor, many of these items will sell for upwards of $35.00 (Worker Rights Consortium, 2005). Indian manufacturing leadership could be adding a much higher selling price to American businesses and taking these profits to improve working conditions or provide for other incentives such as productivity bonuses. Instead, the business makes a very high margin profit on each item which is not distributed back to employees. Both the American company and the Indian company are acting unethically in this pricing structure and lack of employee reimbursement through the activities Conclusion As identified by the research, unethical business behavior is occurring at multiple levels in the Indian textile industry. Rather than using profits to establish better training or improve quality of life, managers simply create more productivity guidelines that demands more clothing and accessory outputs. Employees in Indian textile companies are working in very deplorable conditions without any incentive to remain productive other than fear of losing their jobs and remaining in poverty living conditions. American buyers that are allowed to invest in these nations should be providing more support for improving the condition of Indian laborers, as well as Indian government and corporations providing such investments and improvement of existing laws. It is a highly unethical industry that exploits workers regularly and does not provide for equal procedural justice in terms of compensation or securing worker rights. Agencies, companies and American leaders that profit from these conditions should be doing more to provide appropriate corporate social responsibility in the Indian textile industry. References Biggeri, Mario & Mehrotra, Santosh. (2007). Asian Informal Workers: Global Risks, Local Protection. Routledge. IBEF. (2010). Textiles and Apparel, India Brand Equity Foundation, Retrieved September 13, 2012 from http://www.ibef.org/download/Textiles_Apparel_270111.pdf Kumar, A. (2002). Labor Reforms in India: Some issues for consideration, Manpower Journal, 37(4), pp.39-47. Level Works Limited. (2009). Wages, Working Hours and Child Labor in India. Retrieved September 12, 2012 from http://level-works.com/India-Paper.pdf Sincavage, J.R., Haub, C. & Sharma, O.P. (2010). Labor Costs in India’s Organized Manufacturing Sector, Retrieved September 12, 2012 from http://www.bls.gov/opub/mlr/2010/05/art1full.pdf Tewari, M. (2006). Is Price and Cost Competitiveness enough for Apparel Firms to Gain Market Share in the World after Quotas? A Review, Global Economy Journal, 6(4). Worker Rights Consortium. (2005). The Impact of Substantial Labor Cost Increases on Apparel Retail Prices, Retrieved September 13, 2012 from http://walmart.3cdn.net/884178defb9d403cf4_qum6bnoew.pdf Read More