Concept of Sweatshops and its Impact on Business and Society - Research Paper Example

Student name Professor’s name Course Code Date of submission Executive summary This research report was intended to explore the concept of sweatshops and its impact on business and society. The report has been commenced with a brief introduction of the concept of sweatshops and its characteristics such as overcrowding, low pay and unsafe working environment where there is no job security. At the introductory part of this research report, the author has identified when the concept was first identified and that is during the industrialization era between 1830 and 1950. The report has also defined what is meant by the word sweatshops with regard to business context as the exploitative ways the contracting companies used to benefit themselves at the expense of the workers. Further, the report has critically evaluated the reasons that have caused the existence of sweatshops which include lack of regulation policy and the influence of free trade. Some other important areas that the report has tackled include: The effects of sweatshops on business and society with reference to the case of the Apple Company from China and what transpired at the company with regard to sweatshops before concluding by looking at some of the lessons that have been learnt through out the research and some of the management proposals that can be used to improve the usage of sweatshops by companies. Table of Contents Executive summary 2 Table of Contents 3 Introduction 4 Literature review 4 Definition of Sweatshops 4 Reasons for sweatshops existence 5 The effects of sweatshops on business and society 6 Case presentation 7 Case review 8 Conclusion and better management proposals 10 Works cited 11 Introduction In many years, the history of workplace has been characterized by several characteristics such as overcrowding, low pay and unsafe working environment where there is no job security. The concept of sweatshops has also been on existence for more than one and half a century when it was fist identified. The concept was discovered between 1830 and 1950 when it was realized that in certain workshops like the one that processes and produces sweaters, there were middlemen who were fond of directing the other business dealers using arduous ways (Robert, Burns and James 153-171). This research report is aimed at critically evaluating the whole concept of sweatshops and it is applied by companies and it is effect on both business and society. Literature review Definition of Sweatshops The term sweatshops was originated during the industrial revolution era in order to describe how the businessmen who traded as middlemen subcontracted for business on very large profits but with low pay for the workers (Denis and Laura). In the essence these middlemen were only interested on how much they can make for the business and not what the workers will be paid. In other words the term sweatshops has been used to demonstrate the exploitative ways the contracting companies used to benefit themselves at the expense of the workers. In simpler terms the word sweatshop has been developed from two main words which are; ‘sweat and shop’ meaning that the workers were expected to sweat in order to earn (David). In order to review the concept of sweatshops and its impact on business and society two main cases one involving the study by Denis G. Arnold and Laura P. Hartman on positive deviancy and global labor practices in 2008 and the one on Women and Sweatshops labor done by the Human Rights Watch in 2010 in the United States have been considered. These two cases have been used as build up of this literature on sweatshops and its impacts on the society and business as a whole. The two cases have also considered the main reasons as to why sweatshops exist even in the 21st century (Bhagwati 342-345). Reasons for sweatshops existence One of the main challenge that has been cited by these two studies as the obstacle to eliminating the idea of sweatshops is because there is no enough material facts that can be used against a middleman with sweatshops. The nature and structure of business does not provide room for any person to understand how the systems within them work (Denis and Laura). This is because the business is done mainly through sub-contracting retailing companies who do not sell the products on their brand names but on very different brand names which may include those of sportsmen and women, famous politicians and even celebrities such as Tommy Hilfiger and Levi-Strauss. On the other hand the manufacturers in some occasions can hire contractors and subcontractors who are responsible for hiring and paying their own workers (Denis, Arnold, and Wokutch 17-23). This way it is not easy to determine who should actually be held responsible for the sweatshops. In this kind of system, the workers are put behind the scenes even though they are the company’s base and strength. In actual terms, the complexity of the structures under which the sweatshops are established, it is not easy to determine who the real employer is and therefore making it very difficult to exercise the full force of law on those that are responsible. However, important to note is that even though the manufacturers claim that they are not responsible in determining the workers’ salaries and wages, they actually exercise a lot of control on them. On the other hand, the free trade policy has also been associated with the establishment of sweatshops. This is because like many other industries, the garment industry is a global industry and it is not easy to exercise their control since there are already existing trade agreements among different countries. The ultimate goal of free trade is to remove all obstacles that maybe perceived as limiting factors to trade. And for this reason, it is not easy to determine the common legislation that will control the establishment of the sweatshops since every country has it is own legislation (Arnold and Bowie 221-242). The effects of sweatshops on business and society According to the human rights report of 2008, a number of social abuses which arise as a result of sweatshops were cited. For one, those people who are employed are paid salaries and wages that cannot enable them to survive in the current world where the cost of living is very high. According to this report, the workers are limited on their free time by working for long hours without compensation alongside other harassment such as sexual harassment especially for the female employees (Bhagwati 342-345). The social impact of sweatshops is that the employees cannot afford to pay their monthly bills either because their salary is delayed or because the wage is too small to take into account all the expense the employee incurs through out the month. However, on the other hand sweatshops have been identified as one of the company strategies use to increase the profits. This is because the employees are paid at very low rates which do not clearly reflect the true input per individual employee. This trend has been used for many years by many companies to benefit themselves at the expense of their workers (David). Case presentation In order to present the concept of sweatshops in a more elaborate and understandable terms, this report employed the case of the Apple Chinese Workers report which was released in April 2007. The study on the same was done by the guardian company of the United Kingdom. The aim of the research was to confirm some of the complaints that had been raised by the company workers that they were being overworked by working over long hours in a week with very low pay (Martin & Maskus 317-328). The company that is a manufacturer of iPhones and iPads is based in china and much of its market is based in European countries and more specifically the United Kingdom. As part of contribution towards the fight against unfair workplace terms, the employees had made their complaints known to the government through the ministry of labor and the local based NGO known as the Guardian early in 2007. However, because of the government policies and procedures which must take place, the government did not manage to take any proactive step till April 2007 when the NGO, took the responsibility and did its survey and published its findings in the public media during the same month in 2007. However, like many other companies it is not always easy for the other stakeholders such as the owners and other business partners of the company to take any step to remedy the situation because of different vested interests and for the sake of the company image and reputation (Arnold and Hartman 425-461). Case review The case study at the Apple Company was instigated by the fact that the company was able to offer the iPhone and iPad products at the west at very cheap and more competitive prices that had proved to be killing the other compatriot companies who could not be able to offer the same products into the market at same prices. The study was designed in such away that it could be able to ascertain all the cost elements that were incurred by the company to manufacture the gadgets. The research that was done by the Guardian NGO from the United Kingdom, however, revealed shocking revelations that showed that the employees of the company were being overworked without good compensation. The research further revealed that this trend was almost common in every company that was based in the southern parts of China. This followed the shocking draconian rules that were used by the company management to reap more benefits at the expense of the workers’ rights. For example, before joining the company as an employee, the workers were expected to take a pledge that they would always respect and remain committed to the contract terms. By doing this the company was interested in ensuring that employees were bound to any rule that the company deemed important to introduce (David). In a different study that was done by the same NGO at the Shenzhen company which manufactures the same products also revealed that over 500,000 employees who were working at the company were treated in an inhumane manner where they were expected to work like machines. These cases and many other examples such as the Arcadia Group of companies in the United Kingdom reveals how various companies are reporting huge profits at the expense of the workers. The report on the working conditions at the Arcadia Group in the United Kingdom was according to the press release of the 14th May 2011 by the ‘Campaign Group Labour Behind the Label tonight express.’ This report uncovered serious issues with regard to the employees’ working conditions thus making it one of the companies that are still using the ‘sweatshop strategy’ to achieve its objectives (Wilson 7). The press release revealed that as long as the company wished to have increased productivity it did not provide proper working conditions for the employees to carry out their functions. In responding to the study, the Arcadia group of company argued that committing to such deals will not be easy unless there is standard law that is set by the government to regulate the employees’ wages across the industry. As away of finding the truth in the claims in the argument, it was actually found that the law that regulates the employees is there but has not been fully put into operation and the workers were paid less than it ought to be (Martin & Maskus 317-328). On the other hand, in the case of the Apple Chinese company, employees were forced to stay in the company dormitories and whoever did not wish to abide by that was allowed to rent his own apartment but with his own means. In my own view, a number of factors have contributed to the existence of different conditions that employees are working in. First, it is the stiff global competition that the companies are operating in, which has forced them to use all forms of actions at their disposal to survive in offering quality goods at low cost. Secondly, lack of seriousness by different governments to ensure that laws that protect workers are passed and enacted. Lastly, there is an element of global recession which has resulted into high levels of unemployment which has forced many workers to work under any conditions as long as they can earn some living. Conclusion and better management proposals Labor capital exploitation is an important factor for national development. Through labor exploitation, countries are able to increase their Gross Domestic Products (GDP) and exports as well as increase their economic activities. It is from this view that economists argue that sweatshops should hold. According to the economist, Paul Krugman, use of sweatshops is important in stimulating economic activities especially in the developing countries where unemployment levels are high. On the other hand, another economist, Jeffrey Sachs, is of the view that so far there have not been enough sweatshops, and therefore there is need to establish more. He continues to argue that future prosperity of world economies cannot be possible if in a free trade there are still labor restrictions. Cheap labor is important in helping companies to realize cost advantages against those of other compatriots in the export market since it is easy to produce cheaper goods. However, more important for the managers to consider is the capability of the workers to execute their functions as required and this alongside sweatshops can be achieved if the companies can realize the importance of ensuring that there are proper training frameworks for the employees in order to enhance their experience. Developing job related skills and general capabilities among the employees will not only enable them to be relevant in the global economy but also will enhance their social conditions. In addition, many people work in sweatshops because that is the only way that can make their ends meet and thus providing optimal value for developing economies since it demonstrates how easy labor can be exchanged between the producers and consumers thus making it easy for multinational companies to venture into any part of the world (Martin & Maskus 317-328). Works cited Andrew Wilson, “Special Report: Business and Human Rights,” Corporate Social Responsibility Magazine 2.1 (2001): 1-7. David, Skarbek, et el. Sweatshops, Opportunity Costs, and Non-Monetary Compensation: Evidence from El Salvador. 12 April 2010. 24 Oct. 2011. http://www.davidskarbek.com/uploads/SweatshopsElSalvador.pdf Bhagwati, James. The Demands to Reduce Domestic Diversity and Trading Nations, International Labor Standards and Trade and In Defense of Globalization. New York: Oxford University Press, 2004. Denis G. Arnold and Norman E. Bowie. “Sweatshops and Respect for Persons.” Business Ethics Quarterly 13.2 (April 2003): 221-242. Denis G. Arnold and Laura P. Hartman. “Moral Imagination and the Future of Sweatshops,” Business and Society Review 108.4 (2003): 425-461. Denis G. Arnold and Laura P. Hartman. Beyond Sweatshops: positive deviancy and global labor practices. 23 Jan. 2010. 25 Oct. 2011 http://www.positivedeviance.org/pdf/research/ArnoldHartmanPositiveDeviance%5B1%5D.pdf Hartman, Denis G. Arnold, and Richard E. Wokutch. Rising Above Sweatshops: Innovative Management Approaches to Global Labor Practices. Westport: Praeger, 2003. Robert, Pollin, Justine Burns and James Heintz, “Global Apparel Production and Sweatshop Labour: Can Raising Retails Prices Finance Living Wages?,” Cambridge Journal of Economics (2004): 153-171. William, J. Martin and Keith E. Maskus. “The Economics of Core Labor Standards: Implications for Global Trade Policy.” Review of International Economics 9 (2001): 317-328. Read More