Transcript Sweatshop Ethics 2016 July16 File

Sweatshop Ethics
What’s your favorite brand of
clothes?

Uniqulo?

Gap?

Ralph Lauren?

Zara?

H&M?

How much do you know the conditions of workers
for these brands?
Clothing: Your interpretations

How much clothes do you have?

How many pair of shoes have you got?

How often do you do shopping?
https://www.mentimeter.com/app
What is FAST FASHION? What are
its characteristics?

CHEAP/ AFFORDABLE

DIVERSITY/ TRENDY

CHANGE FAST

? Unnecessary consumption

? Exploitative to the workers

? Unsustainable
A Quick Look: Fast Fashion
Short Video

https://www.youtube.com/watch?v=whRUmD
S9A4s
Article

http://www.huffingtonpost.com/entry/sustainab
le-fashions-real-problem_b_8174504
Sweatshops
Definition:

A shop employing workers at low wages, for
long hours, and under poor conditions.

Factory where workers do piecework for poor
pay and are prevented from forming unions;
common in the clothing industry
Common Abuses

Forced overtime

Locked bathrooms

Starvation wages

Pregnancy tests

Denial of access to health care

Workers fired and blacklisted

Occasional beatings

Withheld wages
But why would owners of the factories adopt this kind of policy?
Dhaka Fire
2012
A Fire at Tazreen Fashions factory (24/11/2012),
112 Killed.
http://en.wikipedia.org/wiki/2012_Dhaka_fire
How does the fire relate to
Walmart?
http://www.reuters.com/article/2012/12/08/us-wal-mart-fire-idUSBRE8B702620121208
3. Explain the Business Connection
between Walmart and its suppliers
1)
2)
3)
4)
Walmart
Success Apparel
Simco
Tuba Group
Huffington Post: Fashion’s real problem
http://www.huffingtonpost.com/entry/sustainablefashions-real-problem_b_8174504
4. Income
Difference/Inequality
1)
How much does a Bangladesh garment
factory worker earn in average ?
2)
What is the minimum wage in the US?
3)
How much does the Walmart CEO earn?
4. Responsibility: Should Walmart be held
responsible for the losses of lives there?
(If yes, what exactly are those responsibilities?)
5. Criteria: What should be the criteria for
Walmart to determine workers’ wages and
their working condition in Bangladesh?
Low Price Products
Walmart Index (5 Yrs)
Walt Disney
Nike
Pfizer
Starbucks
2013 Rana Plaza Tragedy

http://www.aljazeera.com/indepth/features/2013/09/
2013911122653772724.html
Would you still wear that?

https://www.youtube.com/watch?v=t_mA9L1DSr8
Made in Bangladesh

https://www.youtube.com/watch?v=onD5UOP5z_c
What are fair
wages?
6. Baseline: What are the baseline
to compare wage level?
1)
Home Country Standard
2)
Host Country Standard
3)
Market Standard
4)
Absolute Standard
5)
Golden Rule
A. Home Country Standard

Thomas Donaldson: “By arbitrarily establishing U.S.
wages levels as the bench mark for fairness one
eliminates the role of the international market in
establishing salary levels, and this in turn eliminates
the incentive US corps have to hire foreign workers.”
B. Living Wage Standard

De George: “a living wage should allow the worker to
live in dignity as a human being… corporations must
pay at least subsistence wages and as much above that
as workers and their dependents need to live with
reasonable dignity, given the general state of
development of the society.”
C. Golden Rule

A practice is permissible if and only if the members of
the home country would, under conditions of economic
development relevantly similar to those of the host
country, regard the practice as permissible. (Donaldson)
Criticism of the
Sweatshops
1. Income Disparity
U.S. CEO’s Pay versus Worker’s Pay
(Average hourly worker to CEO pay ratios)
Ratio of CEO to Worker's Pay
600
531
500
411
Ratio
400
300
200
100
42
85
0
1980
1990
2000
Year
© He et al.
Ratio of CEO to Worker's Pay
2001
2. Impoverishment
Former Labor Secretary Robert Reich:

“Free trade is not an end in itself, but a means to rising
living standards worldwide, more jobs and better jobs.
But if a country pursues policies that hold down living
standards and limit to a narrow elite the benefits of
trade and development, the promise of open commerce
is perverted and drained of its rationale.”

“Low-wage workers should become better off, not worse
off, as trade and investment boost national income. The
gap between rich and poor within a nation should tend to
narrow with development, not widen.”
3. Collusion with Repressive
Regimes

The developing countries may use military and police
to break strikes and repress independent unions. As a
result, companies such as Nike are profiting from
political repression.
Cambodia Garment Workers

http://www.aljazeera.com/video/asiapacific/2014/01/cambodia-blocks-garmentworkers-protest-20141263381788376.html
In Chinese

https://www.youtube.com/results?search_query=%
E6%9F%AC%E5%B7%A5%E4%BA%BA%E7%
A4%BA%E5%A8%81&sm=3
Are these
criticisms fair?
1. How to set the Baseline?

Horizontal Comparison: Compare the difference
between labor’s payment in the MNCs’ home country
and that in the host country

Opportunity Costs for the Workers: Should we ALSO
compare the difference of payment between factory
work and rural work in the host country as well?
Alternatives to working in
Sweatshops

1997 UNICEF study
 5,000
to 7,000 Nepalese children turned to
prostitution after the US banned that country's carpet
exports in the 1990s
Wage level in Indonesia
1996

Minimum wage is USD 2.28 (5200 rupiahs) per day,
which is what the Nike suppliers provide to their
labor.

But half of the adult population in Indonesia is
earning only 2000 rupiahs per day.
2. Impoverishment?

What have been the growth rates of GDP for Vietnam
and China in the last decade?

What have been the growth rates of GDP for Taiwan,
Korea, Singapore, and Hong Kong three decades ago?

The ILO (International Labor Organization) recently noted that
the most successful developing economies, in terms of output
and employment growth, have been those who best “exploited
emerging opportunities in the global economy.”

The successful attraction of foreign investment in plant and
equipment can be a powerful spur to rapid industrialization
and employment creation.
3. The Painful Trade-offs

Imposing higher wages may deprive these
countries of the one comparative advantage
they enjoy, namely low-cost labor.

The high wages come at the expense of the job
opportunities of much poorer workers.

If the higher standards advocated by critics retard the
growth of formal sector jobs, then that will trap more
informal and rural workers in jobs that are far more
hazardous and insecure than those of their formal
sector counterparts.
Possible Consequences of
“high wages”:

Reduced employment in the formal sector of
the economy

Less investment and slower economic growth

Greater inequality and poverty
Never Again?
在中國的民工荒

Improved labor condition 招工難
https://www.youtube.com/watch?v=992JvApPjG0

民工荒
http://www.mpfinance.com/htm/finance/2013022
6/news/ec_eca1.htm