This is a dilemma for an economist. If we boycott goods made in ‘sweatshop factories’ – does it help or hinder workers in developing economies?
Firstly, when we hear about working conditions in some ‘sweatshop factories’ – low pay, harsh and dangerous conditions, and military-style discipline – it is human nature to want better conditions for those workers who make the products we use. When asked whether consumers would pay a small premium to enable better conditions for workers of the goods, a large majority say they would be willing.A study conducted by Robert Pollin (2001) found that retail prices for clothing in the US would need to only rise by 1.8 per cent in order to cover a 100 per cent wage increase for sweatshop workers in Mexican garment factories.
However, is a blanket boycott actually helpful? Economists such as Nicholas Kristof, Paul Krugman and Jeffrey Sachs all suggest that sweatshop labour can be better than the alternative – which is no job or really badly paid jobs like scavaging on rubbish heaps to earn a few cents per day. The danger is that a blanket ban on sweatshop products could see low-paid workers in developing economies going back to even lower paid jobs in agriculture or worse.
Sweatshop labour may seem very unattractive, but it could be more amenable than back-breaking labour in agriculture, with even gloomier prospects?
Suppose the average wage in the US is $20 an hour, but, workers in developing economies get paid only $0.50 – by this metric, it seems unfair and gross inequality for those in the developing world.
But, if you are earning $0.10 working on a farm or at a recycling plant, a sweatshop job which pays $0.50 – may appear relatively more attractive.
It is understandable to be repulsed by the way workers in developing countries can be used by monopsony employers – but, a boycott of sweatshop goods could cause a loss of income, jobs and potential.
Also, by outsourcing production to cheap labour abroad, it could cause domestic job losses.
It may seem wrong for goods to be made by child labour, but for very poor parents, what are the alternatives? If there is no free education, the parents may be forced to sell children to work in gangs or begging.
Many developing economies started off with very badly paid sweatshop labour – but it provides a step on the road to economic development and economic growth. The inward investment and higher wages cause a positive multiplier effect and benefits throughout the economy.
A campaign against Wal Mart using child labour in Honduras to make the Kathie Lee Gifford clothing line led to Wal Mart cancelling its contract. However, this was criticised by those young girls who lost their ‘sweatshop’ jobs. (link)
The best of both worlds
Some economists fear a boycott of sweatshop labour could lead to job losses and even worse conditions. But, a better campaign would put pressure on companies to produce responsibly and ensure minimum standards in factories where their products are made. Even a small increase in wages will have only a minimal impact on overall costs for a multinational.
Furthermore, ensuring fair, safe and decent working conditions, can help increase labour productivity in the long-term. The Efficiency Wage Theoryefficiency wage theory states – better wages and better conditions can almost pay for itself through increased productivity.
For multinationals, there can be a reputational cost of producing goods from sweatshop labour which appears to be exploited. Some multinationals have sought to improve conditions in factories where their products are produced. Arnold and Hartman (2003) noted Adidas-Saloman and Nike Management had relative success in improving conditions for workers – without changing production to other factories. This shows that developing economies can benefit from inward investment, new jobs but also maintain reasonable standards for workers – it is not a case of either very poor jobs or no jobs at all.
Buycott of firms who do make efforts
‘Buycott’ – making effort to buy from firms who deserve support. An alternative strategy is to make efforts to reward companies who do ensure certain standards in their supply chain.
Conclusion
A blanket boycott of goods on its own, could prove counter-productive if a multinational was simply to move production to another country and job losses would occur.
However, the threat of boycotts or reputational damage can put pressure on multinationals to improve conditions for workers in developing economies. When multinationals make the effort to ensure basic standards, it can also be compatible with maintaining profitability and long-term good relations.
They give employees very low wages or do not pay them at all. Furthermore, very little money goes into the developing country's economy. This is due to extremely low wages and production costs. Neither developing countries nor the people living in those countries benefit from sweatshops and slave labour at all.
Closing down sweatshops, boycotting them, or banning them only hurts the workers who will be forced into lower wages, worse conditions, starvation, and homelessness due to inevitable factory shutdowns. In fact, sweatshops have actually done a lot of good for developing countries.
The anti-sweatshop movement, in this view, can harm the impoverished workers by increasing labour costs for factories which, in turn, can incentivize turning to technology instead of people for labour and thus reduce the number of employees needed.
Sweatshops are often seen as stepping stones on the path to economic development. When millions move away from subsistence living and produce a surplus that can be invested and spent, whole nations rise up out of poverty.
Working conditions are poor, unhygienic and unsafe since a large number of sweatshops are located in poor nations with weak labour laws and little government control; as a result, if workers attempt to challenge their rights or work conditions, they risk losing their jobs.
If workers' rights are respected sweatshops can actually help poor countries. For example, in Honduras, the average clothing “sweatshop” worker earns 13 US dollars per day, which is a decent wage considering that 44 percent of the country's population lives on less than 2 dollars per day.
Boycotts rarely succeed in hurting the bottom line
Marketing experts say, "Yes," but perhaps not in a way an activist/consumer might expect because while one might hope to use the boycott to hurt a company's sales, they actually end up accomplishing something else instead.
“The typical boycott doesn't have much impact on sales revenue.” One reason is consumers' habitual nature. Even people who publically denounce a company might still purchase that company's products. Plus, the people boycotting a company might not be its target consumers.
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. Lewis's theory can be best shown in China, where urbanization has led to rapid industrial growth and development.
Sweatshop exploitation is an example of the second class of exploitative relationships: sweatshop employers do benefit their victims in some way, since the exchange is mutually advantageous, but these employers nonetheless benefit the workers insufficiently.
Sweatshops violate women's human rights throughout the world. Common abuses include low wages that fail to meet basic costs of living, substandard and unsafe working and living conditions, long hours of overtime for which employees are not compensated, and sexual harassment.
Sweatshops of all types tend to have child labor, forced unpaid overtime, and widespread violations of workers' freedom of association (i.e., the right to unionize).
The environmental impact of this behaviour is significant: the clothing and textile industry is depleting non-renewable resources, emitting huge quantities of greenhouses gases and using massive quantities of energy, chemicals and water.
Sweatshop labor in impoverished countries is widely regarded as a paradigm case of wrongful exploitation. The most common accounts of what makes sweatshop labor wrongfully exploitative hold that the terms of sweatshop workers' employment are either unfair or disrespectful/degrading.
In addition to low wages, poor working conditions are also a common feature of sweatshop jobs. Excessive overtime, harmful effects of prolonged durations in factory floors, work that poses risk to physical and mental well-being, are common examples.
Through strikes, embargos, and boycotts, workers can bring a nation's industries to a halt, thus causing an internal crisis to the state machinery. The methods of economic noncooperation increase in effectiveness with a nation's increased reliance on a capitalist form of economy.
The purpose of a boycott is to inflict some economic loss on the target, or to indicate a moral outrage, to try to compel the target to alter an objectionable behavior.
A boycott is a collective and organized ostracism applied in labour, economic, political, or social relations to protest practices that are regarded as unfair. The boycott was popularized by Charles Stewart Parnell during the Irish land agitation of 1880 to protest high rents and land evictions.
They set up an experimental environment of a simplified market. Their findings showed that a consumer goods price increase will often lead to a call to boycott. They further found that such a boycott is ineffective at keeping market prices down. The only real effect of the boycott was to reduce market efficiency.
In the short term, a boycott by country B will probably reduce demand, that is, it shifts the whole demand curve to the left. But it should not affect supply, that is, the supply curve as a whole should not shift.
Political donations are the No. 1 reason boycotters stop spending money with a company (cited by 39%). Other top reasons: treatment of employees (34%), stance on social issues (33%) and policy positions (30%).
A look at examples of the successful boycott campaigns since 2000, including Mitsubishi, Burma Campaign, De Beers, Fur Trade and The Body Shop. Boycotts have a long and important history of contributing to progressive social change, as well as succeeding in their more immediate goals.
We find that political protests significantly increase costs for firms. Using flexible cost function based on factor analysis we see that the factor-neutral effect of strikes is positive and statistically significant, showing evidence of a reduction in firm productivity due to hartals .
For people who desperately need money, this is the best thing that can happen to them. It can often be an improvement to their lives. The people who choose to work in sweatshops are doing so because they believe that this job is the best alternative available to them, even when the pay is low and the job is dangerous.
Although sweatshops are wrongfully exploitative and defend the harmful conditions through claiming that workers accept those conditions, they are still of benefit to labor. Sweatshops provide employment for many poor people, improve their standards of living, and exempt them away from poverty wage spiral.
Throughout the years, Nike is one of those companies that has been linked over and over in various ways to child labor and unsafe conditions in their factories. As recently as 2020, investigations showed that Nike (along with Apple) was linked to forced labor from the Uyghur people in China.
No doubt the exploitation of the poor is unethical and yes, boycotting sweatshop-produced-clothing can close down the factories, the most visible instruments of labour exploitation.
Sweatshops are an instrument for capitalist development. The oppressive exploitation of workers under the horrendous conditions of sweatshops permits the capitalist to accumulate sufficient profits to expand production and better compete with other capitalists.
The ILRF is a U.S. based organization that advocates for just and humane treatment of workers worldwide. Projects include ending child labor, protecting the rights for working women, ending sweatshop conditions, and protecting works' ability to organize.
One of the many downsides of sweatshops is the poor working conditions employees face. Some of factories lack natural light, safety equipment such as fire extinguishers, emergency exits, and indoor plumbing (Travis). The factories are very unsafe in regards to the safety of the workers.
The Nike Sweatshop Scandal began in 1991 when Jeff Ballinger published a report detailing the appalling working conditions of garment workers at Nike's factory in Indonesia. Nike's initial response was to deny its association with unethical practices.
During the process of manufacturing, chemicals often end up getting poured into the surrounding environments of the sweatshops, polluting local air, water, and land. We see an example of this in Bangladesh, where nearly-toxic pollution fills the air, and water supplies are polluted with dangerous chemicals and toxins.
The ethicality of sweatshops can come into question when issues such as the right to basic wages, safe working conditions and cases of exploitation and harassment come to light.
Child labour is one of the most serious impacts that sweatshops have brought. According to the International Labour Office, more than 250 million children are employed in sweatshops, of which 170 million of them are engaged in textiles and garments industry in developing countries.
The Choice Argument seeks, in other words, to shift the burden of proof onto those who wish to regulate sweatshop labor. It does so by forcing critics of sweatshops to specify the conditions under which it is morally permissible to interfere with sweatshop workers' choice.
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. Lewis's theory can be best shown in China, where urbanization has led to rapid industrial growth and development.
Introduction: My name is Nathanael Baumbach, I am a fantastic, nice, victorious, brave, healthy, cute, glorious person who loves writing and wants to share my knowledge and understanding with you.
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