Principles of Responsible Commerce - Essay Example

Principles of Responsible Commerce: Arguments For and Against Sweatshops Arguments For and Against Sweatshops The sweatshops operated by multinational corporations (MNCs) in developing countries are arguably a combination of good and bad news. Economically, the sweatshops provide a source of employment and some sort of economic livelihoods to the workers. For example, Powell and Skarbek (2004, p. 2) note that some economists believe that sweatshops are similar to any other form of an economic exchange contract, where willing sellers and buyers of services work out an arrangement that is arguably mutually beneficial. Considering the high unemployment rates in poor countries where most sweatshops are located, it is worth noting that the sellers of services (i.e. the sweatshop workers) do not have much bargaining power. If anything, they are given a ‘take it or leave it’ type of contract, where MNCs arguably take advantage of their desperation to offer them what would be unacceptable wages, working conditions and working hours in the developed countries. Moreover, the MNCs take advantage of the absence of strict labour regulations in developing countries, most of which lack regulatory guidelines on basic wages, working hours, and what would constitute safe working environments. One of the often cited advantages of sweatshops is that they provide “the best option available for desperately poor workers to improve their lives and the lives of their family” (Powell & Zwolinski 2011, p. 1). The foregoing statement can be regarded to be true considering the high unemployment rates registered in most developing countries. Moreover, Powell and Skarbek (2004, p. 15) observe that MNCs pay their workers comparatively better than domestic companies located in the poor developing countries. Thus, combined, the opinions by Powell and Zwolinski (2011, p. 1) and Powell and Skarbek (2004, p. 15) imply that the sweatshops provide some economic lifeline for desperate workers where none had existed before. It has also been argued that sweatshops play a critical role in the development of economies. Specifically, Sachs (2005, p. 11) indicates that every wealthy country had to have some sweatshop-like conditions at some point in its economic development. However, the writer notes that at some point the regulatory bodies must set some labour laws that give workers some dignity and make their employer companies more responsible. As Powell (2014, p.116) notes however, the effectiveness of externally imposed working conditions would not be effective in the long run, since there are many cases of countries where MNCs set sweatshops and access cheap labour while maintaining poor working conditions and long work hours. The same author therefore proposes that only economic development can provide lasting solutions to such workers since more firms with better job offers would come up, hence providing competition to the sweatshops. From a moral perspective, the counterargument is that the poor nature of the work environment where workers have to labour for extensive hours without proper compensation and protective clothing can be said to be demeaning to workers. The collapse of Rana Plaza in Bangladesh as analysed by Ferguson and Jolley (2013) is an indication of just how poor the working conditions in the sweatshops are. Arguably, despite the economic advantages that are related to helping people secure employment and earn relatively good wages based on their country’s standards of living, nothing justifies the poor working conditions and the unpaid overtime hours that workers in sweatshops are subjected to. Moreover, the argument that sweatshops pay better incomes than domestic firms in specific countries seems to be wrongly stated because after all, MNCs end up making considerably huge profits from the sweat of poor workers. Notably, it can be said that MNCs remunerate their executives highly, and as such, they also need to offer comparatively better pay and working conditions to their workers than the domestic firms. Support for Sweatshops in Poorer Countries by MNCs In view of the above arguments, it would appear that the option of not having MNCs means extreme poverty for the workers who find some economic saving grace in the sweatshops. The other alternative, which is most ideal for most countries, is economic development. As Sachs (2005, p. 11) indicates, economic development would lead to the enhancement of competition among employers and the eventual eradication of sweatshops in the subject countries. However, realistically, economic development does not just happen and the poor countries may take several decades before becoming economically developed. In the meantime, the percentage of the population that depends on sweatshops for employment and earnings must continue supporting their dependants and paying for the different provisions needed for their personal daily survival. Based on this, the idea of having sweatshops in poorer countries is worth supporting because advocating for the complete removal of sweatshops would be tantamount to advocating for the removal of the only lifeline that supports a significant percentage of the population. While the arguments made by moralists such as Arnold and Bowie (2003, 221), Snyder (2010, p. 189) and Mayer (2007, p. 606) that sweatshops are exploitative make perfect sense, it is also important to mention that morality cannot cater for basic survival needs such as providing food, educating children, supporting aged parents, paying for healthcare, or paying for housing. Besides, MNCs are not responsible for poor countries’ decisions to for example, create good investments environments, which would attract more investors and hence enhance the competitiveness of the job market as noted by Powell (2014, p. 18). It has even been suggested that MNCs thrive on the incompetence of current or past governments in the poor developing countries in eradicating corruption, rooting out negative ethnicity and utilising their natural resources to advance the economic welfare of their countries (Powell 2014, p. 18). Therefore, the MNCs are not morally obligated to advance what would seemingly appear like an economic incentive to workers at the expense of their profit motives, even to the extent of ruining the loyalty of bargain-hunting consumers who are attracted to their products because of affordable prices. While the poor pay, long working hours, and poor working conditions are an evil by themselves, one cannot deny that there is a bigger tragedy if an adult who has dependants and bills to pay is unable to cater for what the society perceives as his or her obligations. As such, given the choice between sweatshops and extreme poverty due to joblessness, one would possibly choose the former, since it can be regarded as the lesser evil. The same argument is applicable even in developed countries as is evident from Morris’ (2015) story aired by the Australian Broadcasting Corporation on August 03, 2015, indicating that subcontractors of Australian Post were being paid below recommended living wages. While such contracts are arguably morally wrong because they exploit workers who are desperate for work, the story provides evidence that even developed countries have difficulties implementing what is morally right because of the independent nature of employee-employer engagements. Besides, without the representation of labour unions, such subcontractors have the option of taking the job as offered and accessing some level of income, or refusing the offer and remaining jobless. Are Sweatshops in Australia Justifiable? In December 2010, an article in the Sunday Morning Herald exposed that indeed, sweatshops do exist in Australia. According to the article authored by Kaila (2010), the sweatshops in Melbourne were more exploitative and had worse working conditions than those found in developing countries. Workers reportedly earned $ 2 per hour, and would work up to 18 hours a day just to keep with performance-related pressure from their employers. Seen in the perspective of Sachs’ (2005, p.11) argument that sweatshops are essential for any developing country, the sweatshops in Australia can be regarded to be unnecessary. According to Saunders, Bradbury and Wong (2014, p. 5), people who do not have a source of income in Australia rely on social security payments, which act as a security net during times when they do not have their own incomes. While such payments may not be adequate, the individuals involved are not as comparatively desperate for a means of survival as their counterparts in developing countries. The unemployment level in Australia in 2012 was about 5 percent, while this year (2015), the Australian Bureau of Statistics (2015) reports the unemployment rate to be at an average of 6.2 percent. While a developing country like Bangladesh indicates lower unemployment rates at 4.3 percent (2013 estimates) as indicated by the CIA (2015), 40 percent of Bangladeshi workers are underemployed – with a significant portion of this percentage working in the sweatshops. If the argument advanced by Sachs (2005, p.11) that developing countries need sweatshops for the sake of economic development is indeed true, then it is apparent that Australia does not need sweatshops. Moreover, whereas there is absence of labour unions in most developing countries, the labour movement in Australia is relatively still strong. Kaila (2010) notes that the Textile Clothing and Footwear Union in Australia was investigating all cases of sweatshop conditions in Australia and demanding better pay, fewer working hours, and better work environments for employees. Unlike the developing countries’ case as argued above, Australia seemingly does not need sweatshops. This is because the country’s economy does not benefit from such practices, and most of the profits created in sweatshops end up in the pockets of brand owners who make up to 60 times more money than they have paid the sweatshop worker (Kaila 2010). Besides, Australia has laws on minimum wages, something that sweatshops cannot abide by. This means that sweatshop owners would find it hard to operate in Australia, or if they do operate, they would be paying low wages in contravention of the laid down rules – which is against the rules of responsible commerce. Conclusion Working on this assignment has made several aspects of responsible commerce more evident. Specifically, it is now clearer to this writer that left alone, firms (and especially MNCs that operate sweatshops) would have little regard for the people they employ besides the minimal wages that would make their job offers attractive to the desperate masses. However, this writer has also learnt that governments have a role of opening up the market and utilising opportunities that would lead to economic development, because as argued in this assignment, economic development is the ultimate solution to sweatshop-like conditions. Specifically, economic development would expand the employer base, hence bringing in competition to sweatshops especially in relation to labour resources. Like in the case of Australia, it is evident that responsible commerce may have to be forced on some firms, for example, by labour unions who demand better pay, work hours and work environments for workers. In other words, therefore, the mandate for enhancing responsible commerce is on all stakeholders who have the ability to hold the MNCs accountable. Another vital stakeholder who can force change among MNCs is the end consumer, who can reject products made in sweatshops hence forcing MNCs to enforce changes in their operations. References Arnold, DG & Bowie, NE 2003, ‘Sweatshops and respect for persons’, Business Ethics Quarterly, vol. 13, no. 2, pp. 221-242. Australian Bureau of Statistics 2015, Australia’s unemployment rate decreased to 6.2 percent in August 2015, viewed 23 September 2015, . CIA 2015, ‘Country comparison to the world’, viewed 23 September 2015, . Ferguson, S & Jolley, MA 2013, Fashion victims, viewed 23 September 2015, . Kaila, J 2010, ‘Workers exploited in Melbourne sweatshops’, The Australian, viewed 23 September 2015, . Mayer, R 2007, ‘Sweatshops, exploitation, and moral responsibility’, Journal of Social Philosophy, vol. 38, no. 4, pp. 605-619. Morris, M 2015, Wide spread practice of poor conditions driven by Australia Post culture claim subcontractors, viewed 23 September 2015, . Powell, B & Zwolinski, M 2011, ‘The ethical and economic case against sweatshop: a critical assessment’, Journal of Business Ethics, pp. 1-24, DOI 10.1007/s10551-011-1058-8. Powell, B 2014, ‘Meet the old sweatshops same as the new’, The Independent Review, vol. 19, no. 1, pp. 109-122. Powell, BW & Skarbek, DB 2004, ‘Sweatshops and third world living standards: are the jobs worth the sweat?’ Independent Institute Working Paper, no. 53, pp. 1-19. Sachs, J 2005, The end of poverty: economic possibilities for our time, Penguin, New York. Saunders, P, Bradbury, B & Wong, M 2014, Poverty in Australia 2014, Australian Council of Social Service, viewed 23 September 2015, . Snyder, JC 2010, ‘Exploitation and sweatshop labour: perspectives and issues’, Business Ethics Quarterly, vol. 20, no. 2, pp. 187-213. Read More