Additionally, workers who lack basic education have few choices for work. The bargaining power of these workers is absent, and their disenfranchised status enables exploitative practices. Almost every large retailer is vertically disintegrated. Aside from Foxconn, it is rare for the general public and mainstream media to know the name of a supplier factory. Vertically disintegrated business models decrease the liability for companies if something goes wrong at the factory, and increase their flexibility in buying.
But, would customers return a shoe if they found it was produced by exploited workers? Companies might have policies for issues such as forced and child labor, as well as an ethical code of conduct, but in the end it all comes down to the purchase order.
Often, but not always, the supplier has a comparably smaller voice and decision-making power than its retail customers. Many suppliers are faced with short-term contracts and inadequate lead-time to produce goods. Supplier factories are independent businesses, and their customers are retailers that buy their goods. Do you have a long-term contract with them? Alone, audits of codes of conduct or voluntary standards are seldom able to change workplace conditions, nor provide a guarantee.
Auditors take a snapshot of the factory at a given time and place. Supplier factories will do what is expected and inspected. Ultimately, it is what is done with the information found in the workplace, whether by an auditor or anyone else, that effects change.
Often they are unaware of their legal rights. They are often migrant workers with no bargaining power. If a price increase for goods ensured an ethical product, would consumers purchase it? Of course this depends on the circumstances, but according to a Harvard case study on ethically labeled towels, coffee and shirts, the answer is — yes, they would. A study quoted on the doSomething website showed that doubling the salary of sweatshop workers would only increase the consumer cost of an item by 1.
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As a result, wages would increase and poverty would decrease. The benefit of sweatshops is that they move low-skill workers out of the countryside and into the cities, allowing the country as a whole to grow. Between and million Chinese citizens had migrated to the cities from the countryside , the largest internal migration in human history. And the gains have shown.
India, to a lesser extent, has experienced a similar decline since the s as a result of policies focused on industrialization. Especially when compared with the massive profits gained from outsourcing labor to low wage, low regulation countries, there is certainly room to improve safety without harming development. So long as reforms are modest enough to keep employment in low-income countries attractive, it should not harm growth within those nations.
Basic safety measures can go a long way in improving workers living standards and reducing the risk of tragedies which are all too common. In , just outside of Dhaka, Bangladesh, a fire in a garment factory , claimed the lives of workers and have left many more injured. The reason for this event leading to the death of so many was due to the lack of fire exits.
Tragedies like these are unnecessary and certainly not the right path to take for development, especially when they could be easily prevented by implementing low-cost safety precautions. And while we cannot ignore the catastrophes, we also cannot ignore the miracles.
The nation of Bangladesh itself has experienced strong development, with a GDP growth rate of 6. And as shown by the graph below, poverty has been steadily decreasing. Thanks to outsourcing low skilled labor and western consumerism, development has been rapid in Bangladesh, but the road to development does not need to contain deadly factory fires.
Krugman, as mentioned earlier, stated in his New York Times blog , that if any significant labor regulation were to take place in Bangladesh, it would lose its competitive edge to other low-income nations like Cambodia and China, as its economy which relies upon cheap labor would suffer greatly. He believes that so long as factory reforms are kept modest and are shared among all nations, appropriate reform should be implemented.
The Trans-Pacific Partnership goes in the right direction as it attempts to establish labor protection among the member nations. Gradually, more improvements can be made. Also, this election cycle has focused on the negative effects of outsourcing manufacturing jobs, spreading the idea that his moving jobs to these countries hurt Americans. Many wish for the factory jobs that have left the US to nations like China and India to be brought back so they may provide jobs to struggling unemployed fellow nationals.
On both sides of the political spectrum, we are hearing the danger that outsourcing poses on hard working Americans. This idea, like the anti-sweatshop movement, hurts the people it intends to help.
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