Nike-Child Labor Issue - Term Paper Example

 Introduction Child labor is one of the malpractices that have been occurred since many decades. Though there have been many laws against child-slavery practices, still it has only been good in paper but not in reality. One of the major issues in recent times has been the exploiter “NIKE” being accused of using child as slaves for their different modes of production .In spite of the international laws regarding the abandonment of child labor; still they paid no heed to it. Here, in this case, a portrait of the impacts of child-labor misuse of Nike will be under the spotlight. Apart from that the policy implications if any, taken by Nike for enhancing their corporate social responsibility, will be taken into account. The Issue: Nike has been the major head behind the use of child –labor for the manufacture of soccer balls and shoes in Pakistan, India and other developing countries. Though each economy has laws against child labor and under-age slavery, the government has taken very little action to eradicate it. Thus Nike produces by slaughtering children under their shoes. Each of the low developing countries faces a low per-capita income. The high inflation rates accompanied by low rate of income have made situations difficult for the people to live even at the subsistence level. Even if Nike has come up with a proposal for their own benefits, but it’s the sole responsibility of the respective governments to take immediate steps against it for the welfare of the citizens. The picture says quite a different thing that that they are reluctant to take any actions. People of these countries are concerned with the increasing production of the goods rather than acquisition of human skills. (Friedman and Miles)           Nike has been investing in countries with low per-capita income or those who are in the verge of development like India. Due to cheap labor, a dearth of human rights appeal, authoritarian government and union government, Nike has been able to get a cost advantage over the profits. Thus the popularity of Nike has not been due to good way of advertising and effective way of production with an ethical background. Rather they lack the social responsibility by means of child labor. Nike always moves ahead in its way of thinking. It does not entered in to a direct venture with the low-developing countries for their business but it subcontracts with the local firm by bestowing the responsibility upon them. This makes them obligatory to follow the rules and regulations of the international firm, Nike. As the motives of the local and international firm are to maximize the profits, thus they involved into illegal practices such as child labor. Thus, in a direct way, nobody can claim against Nike as this contract, of production of Nike products, has been in charge of the local firm i.e. the under developing countries. But if one gets into the depth, it is clearly seen that if Nike fails to control its subcontracted firms, it means they lack the power in proper implementation of rules and regulations while subcontracting the project. Thus the corporate responsibility along with business ethics has never been a major concern for Nike. (“Nike and Child labor”)       The plan of Nike has not been for the past years but a strategic planning of a decade. Being an international firm, Nike must have been aware of the child-labor abandonment laws; instead, in spite of having prior knowledge of favorable conditions it took no preventive measures against child-labor usage in the production of their goods. In turn Nike has made profits through the contracts of low-developing countries through the trap of bonded child labor. The countries, which have been conquered by the materialistic, international typhoon Nike, are Vietnam, Pakistan, India, China, and Indonesia. It is because of their adoption of such business perspectives to lower the operations costs. For Example a twelve-year-old girl working at an Indonesian sweatshop working 70 hours per week making Nike shoes in hazardous factories. This should have been the time for her to go to a school equipping her with a primary level of education and becoming a future proud individual of the Nation. Nike has been hiding under the camouflage through advertising and promotions. Several charity programs organized by Nike, donating equipments etc have been an added advantage in fostering its popularity. For this reason no attempts have been made to trace for its other hand digging down into the hearts of child. Recent consumer awareness programs publicly brought Nike under the critical eye of media but still it did no good job in scrutiny of work of subcontractors under the international firm Nike .In spite Nike chairman Phil Knight acknowledged that soccer balls of Nike have been purchased in Pakistan in the year 1996 and was made by a subcontractor, using child labor with severity and extreme brutality. Nike has always been seeking countries with low per capita income but still has never manufactured shoes in United States. Nike’s strategy is to look for their prey, traveling nations and nations and sow their seeds of business and once the pace of industrialization improves in the respective economies, Nike sets its journey to look for another prey for its profitable production. (Penny) Major areas of concerns for Nike: This has been the first time that Nike had to be answerable to the public as the child-labor issue has a negative impact on the public relations of the company. In order to fulfill their short-run objectives it’s high time that Nike should undertake remedies to improve their situations, lest it might topple down along with its public image. As it’s only with the name that Nike has such a good market share, but if the company profile is garnished with child labor and servile acts of labor, then nothing would be left for Nike to vogue for. It should be the motive of the firm to work with zeal in order to accomplish both economic as well as social goals globally. Being a consumer company, Nike should be concerned about how to satisfy its consumers and have the courage to face the public eye. Nike should feel that if an employee says that he/she works in the company they feel proud for it, instead of engaging child below the age of 14, who cannot even proudly proclaim that what and for whom they work for. Pros and cons of Nike’s actions: Pros: On viewing the child-labor scenario, people of developed and developing nations might think that it is a criminal offence to let the child work instead of imparting them with education. This is absolutely true on the humanity and social welfare side. However this is an imperfect and uncertain world where destiny is not written by us, but by the God himself. Due to extremities and financial exigencies people usually the parents unwillingly have to send their child to work instead of a school. These children only serve as lords providing the family with basic necessities of life such as food and shelter and without their child working for them the parents might have to face abject poverty and even death due to starvation. It has a critical observation, which has been presented to world attention that government while enforcing laws against child-labor phenomenon resulted in homeless children without parents to enter the sex trade which becomes a cemetery for them. Even if they are alive they have to satisfy the quench of wealthy people’s thirst for unhealthy desire, which is always preferable to death. They even engage themselves in different kinds of illegal practices like pick pocketing or other criminal activities in order to earn a livelihood. Due to all these activities it proves to be detrimental to the society and at the same point of time it proves to be harmful and hazardous to the youth of the nation. No one should forget that this younger generation contributes to our future generation; so in order to maintain sustainability both the present and the younger generation have to be given equal weights. The various loopholes in connection with the child labor might be offset by the advantageous effect of child labor in an economy. So an overwhelming as well as promising action in this regard has been taken by the international firm, Nike, who seek child labor as its only source of labor in the production of their products. On various grounds people might think that especially the developed nations should take immediate steps regarding child slavery in the form of labor just in order to maximize their profits and lower the costs by paying a lower wage to them. In spite if one takes in to account the pros of the child labor, then we can infer that by giving the child of the family an opportunity to earn on a legitimate basis, it renders shelter, food and clothing to the child and to the homeless family. In addition it is also better than entering into wrong ways to earn a living. Even if the child has to work in streets or in factories but it provides a healthy mind towards the way of working. Thus Nike helps in instilling in them the impetus to work for their family without causing any harm to the moral standards of the society as well as to themselves. (Haas) Thus it adds to the ethnic values of a family acting as a promoter freeing them from the bondage of financial crunch and abject poverty.  Cons: In regard to arguments against the Nike: child labor, it makes the task easier. Many of the Third-world countries are under the dominating strategy of the developed nations. The intention of the developed nations is to invest in a profit making economy in order to materialize their plans for success in the long run. A parent should always think of the human skill acquisition and also to give him/her proper guidance in order to build up his career .Due to the working environment of the various places, they might be infected with lots of diseases which might sometimes turned out to be fatal. This leads to shortening of their life spans and they are wiped out from the fantasies, happiness and even freed from their dreams. They indulge themselves in to poor working culture that their aspirations gets imprisoned in themselves and finally succumbed to death.     The capital formation or rather the per-capita capital also falls drastically in the respective economies, which never allow them to converge towards the developed nations. Eventually they are trapped in the vicious circle of poverty and low capital formation. Summarizing the above, it signifies the negative feedbacks of the child labor. Most of the third world countries like Vietnam, India, Pakistan, and Indonesia etc. are being attacked by the business typhoons that for their profit making intentions exploit the people of such economies. In this battle to win over, the adolescent children are also not left out and they are butchered under the condescending demands of the developed nations. In order to achieve economic growth and economic development an economy has to have a sustained rise in per capita income and also an improvement in the life -expectancy rate, literacy rate and standard of living. But once it comes under any developed nations, there is hardly any scope for development or an even a satisfactory level of economic growth. Due to the interdependencies on the other nations these economies, in spite of having a full set of rules and regulation of labor laws and child-labor abandonment laws, they fail to raise any voice against the powerful nations. This trickles down in the economy as an onset of poverty, exploitation and underdevelopment.      The negative effects of the child-labor issue first hits the individual, family and through the routes of income it results in low gross domestic product and low per-capita income along with low life-expectancy rates of the children. On studying the pros of the child-labor issue, Nike can be regarded to be concerned about the livelihood of the child and his family, but it does not get unnoticed that it is only in the long-run that it might be beneficial. If conclusion is drawn on the basis of long-run intergenerational equity and future of the economy, the low developing economies are becoming poorer and poorer where as the developed nations are getting wealthier. In this scenario Nike has crossed al its lines in order to meet raise it mark-ups. The most vulnerable nation has been Pakistan where the child of almost every family is engaged in shoe-making process instead of attending schools. It can be empirically supported by the fall in the GDP level. Even if in the recent times Pakistan economy has been flourishing but still the take-off stage towards economic development is yet to seen. The standard of living has not improved and in the future it cannot be in any better condition in the near future, as the every child in the coming years also has to work at an early age in order to face its poverty-stricken life. (Hass) The following are summarized to be the cons of the child-labor issue: 1. Short-life spans for children below the age of fourteen due to the harmful working environment in the industrial plants 2. A vicious circle of poverty and low per capita-income occurs in to which the economy is trapped and is unable to free itself due to its poverty-stricken status. They fail to improve the status of living by good living habits, consuming good food and living in well-built houses. Their dreams are entrapped in to the vicious circle of poverty and they fail to pursuit their own ambitions. 3. The employment of the children in manufacturing Nike products is not based on legal contracts. So, even if they try to improve themselves there is no guarantee that the company itself can benefit them in any ways. 4. Economy will be poorer and the level of Gross Domestic Product will face a downfall. 5. Many are compelled to work without giving any facility of using proper toilets and hand-washing facilities. Thus we see that Nike’s initiative to use child as labor has been an advantage but also there have negative externalities, which restricts these effects to offset the cons of child labor. Due to the growing popularity of Nike, the subcontractor is unable to raise their voices against Nike in pursuit of their economy’s betterment and welfare of the citizens. The Government, though aware of the child-labor and slavery practices, still in order to have a reputed collaboration with the developed nations or international firms, like Nike, it does not have any incentives to prevent Nike in implementing their business plans. The actions taken by Nike in this regard are almost negligible as they are not at all concerned about the sustainable development but only on the short-run and long run profit motives. In United States, they prefer children going to schools and getting the high school education until the age of 18, and then they are free to do as they want, and no further pressure comes from their parents. In contrast to this, the less developed countries are seen forcing their children, especially family who are below the poverty line, and send them to work under unhealthy working places. (Boggan) Actions Taken by Nike: Nike has started to diversify its thinking power in order to answer the public. It has been issuing some legal restrictions on the age limit of employees in the manufacturing sector on the basis of subcontracts. It even admits that prior to this Nike has been guilty in neglecting the negative effects of child labor and further they mislead the future generation. Though in 1995,it has been observed that subcontracted countries like Pakistan has engaged children below the age of 14 in the shoe-manufacturing business but Nike has done nothing to bring the issue to the international bureau. In other words, it supported the Child Labor from the beginning. Now the entire scenario has changed, Nike has promoted a program under which investigators will be visiting each subcontracted countries and find out whether any child below the age of 14 has been working there or not. If it is found that any child has been an employee, then steps will be taken against the firms and provision for minimum wage and primary level of education are to be provided to the child. It also states that once when the child is old enough and meet the minimum age requirements, it can join in the factory to start his work from the beginning. However, as always these rules look good only in papers but they fail to have any positive consequences on the life of the children and the corresponding family. Lately, Nike has been criticized for its ruthless nature to employ children for their work. On hearing this, Nike defended saying that age proofs can be issues illegally in these developing countries within a fortnight. The board of directors on behalf of Nike states that the wage paid to the Nike employees is decent enough for above subsistence level of living. In the long run with this wage amount they can even start their own businesses. So if at any circumstances Nike tries to raise the wage rate per worker then the company itself cannot help people to achieve future benefits through their fruitful production strategy. In spite of Nike stating that it has not resort to any detrimental way of production, it lacks the power to proclaim that it has been abiding by the rules of corporate social responsibility. Nike has failed to increase the standards of the people through neglecting the child-labor laws. In 2005, Nike has proved itself among the topmost companies to report and audit every official data and thereby disclosing everything to the Report Review Committee. It seemed that company with better transparency would help in increasing its compliance. This is, indeed, just a necessary condition but not a sufficient condition for long-run solutions. To every contractor Nike should mention in its code of conduct that a file of documentation of required number of employees including any child or forced labors. Supplementary to this, Nike must use Global reporting initiative along with the sustainability principles. This comprises with the International Labor Organization (ILO) setting a minimum age for the labors to be hired in the production process of Nike and also a monitoring system for each subcontracting firm, whether they follow the rules, that, a child below a given age should not be employed, under any conditions of their living standard or on the pretext of low-income groups of family. After several ways or methodologies for monitoring, Nike showed disappointing results portraying that it took no immediate steps against the firms hiring child labor for the manufacturing of their shoes and other products. Thus Nike claim for non-violation of rules of international standards are totally rejected to the media and public eye. It started losing its decade-earned image because of lack of responsibility towards social aspects of an economy. It has never been able to incorporate the business ethics while contracting with the other Third world countries since its prime motive was to increase profits and not to achieve a welfare optimization economy. This lack of philanthropic spirit in Nike has resulted in to force the company to look into the matters of child labor and thus try to take convenient steps against it. (Sislin and Murphy) Recent Action taken by Nike: Nike has been the topmost multinational company that has also been tagged to have the most unethical business processes in the production of shoes, apparel and other products with inhuman conditions of working environment. In the workplace the workers are subject to severe exploitation, for example harmful working conditions, no discipline, paucity of any kind of medical or travel allowance and the workers are hit by abuse and child labor is common malpractice. Social and cultural environment does not exist at the working place and the workers usually poverty-stricken people, despite the long working hours they put in. Usually the workers are also illiterate and thus do not have the spirit to fight for their rights. Another reason is the long-lasting effect of is that individuals do not follow any precautions while working. Even non-governmental organizations (NGO’s) protest against the international firms like Nike, stating that they hire people at a wage level below the minimum efficiency level and condemned them because of unhealthy, unsafe environment. Nike has always been under the critical eye of international bureau on the pretext that they ignore human and labor rights and also the disrespect shown to all the workers, especially to the forced and child labor of the contractor’s countries. The individuals and NGO’s demand that Nike ensures decent working conditions in its factories that comply with U. S. Labor regulations, living wages for workers in the factories, disclosure of names and locations of all factories producing apparel for Nike and independent monitoring of these production sites. So it is the high time that Nike should be working with a business strategy incorporating all these social issues. (“Business Ethics Fortnight”) Though Nike has been aware of mishaps regarding the child-labor issue has been occurred in the sub-contracted countries, still it did not take any such steps. But recently Nike has been working on this issue in order to improve its own compliance as well as monitor the developing countries. So presently Nike feels that using unethical business ways to improve their revenues would make it notorious among the mass people and in the long run the demand for its various products might decline. This will result in massive disasters in the fall of consumerism against their products. Nike has instilled in itself the spirit to work for it company as well as for the welfare of the citizens globally. Furthermore, Nike maintains that it is cruel to even think that the contract firms are under its power and they lack the qualities to foster themselves for economic development. Thus Nike has set forth a Code of Conduct that follows all the rules and regulations of the ethical status proposed by NGO’s. It has set forth that its contract factories such as Pakistan, Indonesia, India and even Vietnam to act and hire people accordingly, thus maintaining an equivalent level of corporate social responsibility. Going through the above issue of Chile labor, which has been a phenomenon of over a decade for Nike, it is only in late nineties that Nike has taken the initiative to address the problem of child-labor scenario. Nike Board of Directors (audience) appointed a Task Force in order to effectively measure and monitor “how effectively the respective firm has responded to the ethical and social criticism received and is still receiving from United Students against Sweatshops (USAS), different NGO’s, and the public relating to the association with the Third-world countries oversea.”(“Business Ethics Fortnight”) The Task Force will analyze the solution from the legal, financial, institutional, social and ethical perspectives and report to the Board on its findings. This action taken by Nike considering the sustainability in the future is ethical in terms of the ideologies but its validity and impact on the developing economies can only be accepted if and only if it is approved globally. (“Business Ethics Fortnight”) Conclusion In going through the above case-study, it is seen that initially Nike has been irresponsible in undertaking any initiative regarding the child-labor issue, but, in the later period when it had to face a conflicting atmosphere in front of the media, it did take step against it. The appointment of special investigators regarding any mishap caused by the subsidiary firms has proved to be much more convincing, and people believed that Nike has been successful in maintaining good ethical image. The intensity and the effectiveness of such an action taken by Nike depend upon how far people are satisfied in the coming years. References 1. “Nike and Child labor”, American. Available at:http://www.american.edu/ted/nike.htm(accessed on June 10,2010) 2. Hass, Werner. “The Pros and Cons of child labor”. November 21,2006.Available at:http://www.associatedcontent.com/article/87595/the_pros_and_cons_of child_labour.html (accessed on June 10,2010) 3. Penny, B.”Pros and cons of child labor”.(August 28,2008).Available at:http://www.associatedcontent.com/article/87595/the_pros_and_cons_of child_labour.html (accessed on June 10,2010) 4. Friedman, Andrew L and Miles, Samantha. Stakeholder: Theory and Practice. Oxford: Oxford University Press. n.d 5. Sislin, John and Murphy, Kara. Approaches to reducing the use of forced or child labor. Washington: The National Academies Press, 2009 6. “Business Ethics Fortnight”,Ethicsandbusiness, 2010.Available at:http://www.ethicsandbusiness.org/photo_gallery/montgomerygroup.html (accessed on June 10,2010) 7. Boggan, Steve.”Nike admits to make a mistake over child labor”. The Independent, Available at: http://library.thinkquest.org/trio/TTQ02189/nike.htm (accessed on June 10,2010) Read More