Sweatshop Labor

Sweatshop LaborSweatshop labor describes work performed under conditions that violate normal standards of minimum wage, employment, worker treatment, and workplace health or safety. It is an issue of great concern to human resource professionals charged with implementing employment laws and policies. While the term is most often associated with globalization and the movement of relatively low-technology jobs offshore by U.S. apparel manufacturers, sweatshop conditions can exist anywhere, including somewhat higher-technology firms or even in service industries. It can involve domestic operations hiring the unskilled, agricultural migrants, recent immigrants, or undocumented aliens. Particularly since the mid-1990s, controversy exists on many fronts regarding whether sweatshops assist or restrain the economic development and welfare of citizens where they are present. At the individual level, important ethical issues still remain for human resource professionals.

A good early example of sweatshops, at least by current standards, is the 1911 Triangle Shirtwaist Factory fire, where 146 mainly women and girls working in deplorable conditions died on the lower east side of Manhattan. This fire still ranks as one of the worst losses of life in U.S. workplace history. While the Triangle fire resulted in public outrage and passage of several anti-sweatshop laws, it was not until 1938 that President Franklin Roosevelt signed the Fair Labor Standards Act, which, at least on paper, outlawed sweatshop production. Yet in September 1991, 25 workers died and 56 were injured in a Hamlet, South Carolina, chicken-processing plant fire. And Homeland Security checks following the September 11, 2001, tragedy in New York revealed several cases of Chinese immigrant workers still enduring sweatshop conditions in Manhattan garment district factories.

Sweatshops provide cost advantages in cases where labor wage differentials exist or can be created; these may involve immigrants (such as Triangle and post-September 11, 2001, garment district), women and girls (Triangle again, and current Vietnamese and Chinese export market garment and textile factories), and lower wage, less-developed countries. Legal restrictions on sweatshops make the practice more difficult but not impossible; but weaker legal frameworks often are involved. The practice is often easier to accomplish in areas where labor unions are either weak or nonexistent. The cost advantages from labor cost reductions become more important in cases of manufacturers of branded products, which typically require very high marketing expenses. As an example, Nike exhibits all types of wage differentials, with its branded sports and sportswear products manufactured by close to 500,000 people in 35 countries. An alternate example involves call centers in Bangalore, India, where almost universal literacy among the populace provides a labor pool that will work answering customer service phone calls for a fraction of the wage it would be necessary to pay in the United States or Western Europe.

In the late 1990s, public opinion began to mobilize against sweatshops. One example is the Clean Clothes Campaign, begun in Holland in 1989, which is a broad-based coalition of unions, consumer organizations, solidarity groups, and world shops in nine European countries. A more recent example is the United Students Against Sweatshops (USAS), formed in 1998, which links student activists at over 200 university campuses. The USAS succeeded in forcing Nike in October of 2000 to disclose the locations of 42 plants in 11 countries that make its college apparel. This same group campaigned in fall of 2003 to oppose discussion of the Free Trade Area of the Americas (FTAA), a potential expansion of the North American Free Trade Area (NAFTA). A group of student activists was also successful in forcing Nike in April of 2000 to make public its audit of labor practices at 600 related global manufacturing locations and in 2001 helped uncover the use of child labor by sports equipment manufacturers contracted by Nike.

International trade groups have also joined the sweatshops issue. The Japanese Federation of Economic Organizations adopted an updated Keidanren Charter for Good Corporate Behavior on December 17,1996. In 1997, the Apparel Industry Partnership, created by the Clinton administration and including such well-known apparel companies such as Nike, Liz Claiborne, and Patagonia, publicized its Code of Conduct. As a result, many multinationals, including Nike, produced updated codes of conduct requiring contractors to fix harsh or abusive worker conditions. The International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work was adopted in 1998, covering most major abuses of sweatshop-type operations. The Organization for Economic Cooperation and Development (OECD) adopted Guidelines for Multinational Enterprises at its Ministerial Meeting in 2000. More recently, Adidas-Salomon, Eddie Bauer, GEAR for Sports, Liz Claiborne, Reebok, Nordstrom, Nike, Patagonia, Phillips Van-Heusen, and Zephy Graf-X all agreed to independently monitor and submit to external audits of their factories under the Fair Labor Association program. In April 2004, Reebok became the first apparel and footwear manufacturer accredited by the Fair Labor Association after establishing a compliance program that included both internal and external monitoring visits.

Other than the obvious ethical issues inherent in proper treatment of workers, economists and public policy researchers disagree about the overall impact of sweatshops on the economic development and welfare of the areas where they operate. Some say that no one is better off when workers receive only a minuscule share of the price for which these manufactured products retail and that consumers must unite to demand higher prices to allow for paying living wages to factory workers. Others argue that the anti-sweatshop movement is mistaken in its assessments. This group presents data that indicates that the comparatively higher economic proceeds earned by sweatshop workers allow them to found their own businesses and become independent contributors to the local economy. An example of this controversy is the economic participation of women and girls in Vietnamese export manufacture.

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  1. Arnold, D. G. and Bowie, N. E. 2003. “Sweatshops and Respect for Persons.” Business Ethics Quarterly 13: 221-242.
  2. Bender, D. D. and Greenwald, R. A., eds. 2003. Sweatshop USA: The American Sweatshop in Historical and Global Perspective. New York: Routledge.
  3. Lim, L. Y. 2003. “The Antisweatshop Movement.” Challenge 46:110-118.
  4. Pollin, R., Burns, J. and Heintz, J. 2004. “Global Apparel Product and Sweatshop Labour: Can Raising Retail Prices Finance Living Wages?” Cambridge Journal of Economics 28:153-171.