Foreign Child Labor and Corporate Ethics
An old college essay for Throwback Thursday
I rediscovered an old file of college essays on the laptop, and figured I would post a couple for public consumption. My degree is in business management so they will mostly be topical to that nature.
From the middle of the 20th century to present day, the world has become increasingly smaller, and more interconnected through rising levels of technology. Super container ships that carry thousands of cargo boxes full of products regularly leave the countries of Asia, bound for the United States. Airlines allow one to travel almost to any place in the world with ease. Communication is now instantaneous from points across the globe. These technological breakthroughs enabled corporations and trading partners to create new economic opportunities through beneficial trade agreements. It also brings to the forefront the ethical issues of child labor when doing business in developing countries overseas. Many companies base their factories and production in underdeveloped nations where there is abject poverty, high birth rates and depressed economic opportunities. These conditions formulate an ideal setting for labor exploitation and abuse of the local workforce. The American clothing industry seems to get embroiled in scandals involving the misuse of child labor on a regular basis. Gap, a clothing chain, found itself discredited and shamed in 2007, over the discovery of child labor in one of their textile shops in India (Foster, 2007).
Ethical Dilemmas
In October 2007, 14-children were found in a New Delhi sweatshop making embroidered apparel, destined for Gap stores in the United States and Europe. The Daily Telegraph, a London-based newspaper, discovered the underage workers while investigating reports of child labor abuses in India (Foster, 2007). Posing as overseas buyers, they were given a tour of the sweatshop and took numerous pictures of the children at work. Once Indian authorities were notified of the abuse, they refused to inspect the business (Foster, 2007). It was only after the photographic proof became published in the Daily Telegraph that government officials were forced to act. Pictures of children as young as eight-years-old, working on Gap apparel, shocked the public. Company officials at Gap deflected public criticism with the explanation that the garment business they hired had subcontracted out parts of the apparel work without their knowledge (Gap: Report of Kids Sweatshop Deeply Disturbing, CNN, 2007). Inventory that was believed to have been made with child labor was removed from Gap stores (Gap Shelves Order Amid Child Labour Fears, 2007).
Corporate Social Responsibility
In modern business, a corporation is expected to strive for higher goals than simply making the most profit possible. Corporate Social Responsibility, or CSR, is the belief that they have a duty to act in the best interest of their environment, and society. This includes promoting policies that strike an ethical balance between profit and the betterment of society, as a whole (McWilliams, 2001).
Senior management’s role in advancing CSR within a company is paramount as they are the ones who dictate the approach and momentum behind those policies. CSR encompasses more than an organization’s donation amount to charity. Those that are fully-engaged to implementing CSR look to improve conditions globally, as well as locally. This includes having the consistency of approach when facing the universal issues of labor violations, human rights, and ensuring compliance with applicable laws and regulations in the countries they operate (Kim, 2016). Senior management dedicated to CSR must see this commitment not as a side project, but as part of the company’s overall strategic plan. This mindset must be implemented into all endeavors or expansions they chose to take on to be effective. Using CSR as a factor in planning who to procure materials from and selection of vendors to work with is an important step to safeguard ethical business practices are being adhered to (McWilliams, 2001).
Moral Paradox
The Gap episode involving child labor in India illustrates the quandary that many companies face when operating in underdeveloped nations. What is the solution to eliminating child labor? In the name of fighting against child labor, a company could simply shut down facilities and move operations to a more developed country that vigorously enforced labor laws. However, the result of that response would, with almost certainty, plunge the local area of the shutdown facility into a deeper level of poverty. Also, are the mass layoffs this would entail be fair to the legal workers? These issues display that not everything can have a solution, only trade-offs regarding one group or another. The Gap company revoked 23 vendor contracts in the year before this incident for labor violations, yet the practice of child labor continues in India (McDougal, 2007).
Custom, culture, and traditions play an outsized part on what is accepted behavior and on labor roles in society. The term Universal Human Rights can have many different meanings, depending on the country and local perspective. In India, the laws against underaged child labor are vaguely written to the point of being useless (Kannan, 2014). Prosecutions are rare and human traffickers know the odds are with them that they will not be punished. Adding to this is the tendency of the people in rural areas having large families they cannot support, leaving them only desperate options on how to survive. Children sent to work can be a vital stream of income for a household to survive, with estimates between 12 and 60 million under-age children working (Kannan, 2014). This points out the reality of what the standard of living situations are in these countries, where to work or not work may be the difference in whether they eat or starve.
Aftermath
The Gap Company moved swiftly to rebuild its tarnished image and reputation in light of the child labor scandal, by announcing a broad set of measures intended to combat child labor overseas. This included a grant of $200K directly to the factories in New Delhi to improve working conditions and announcing an international conference to address solutions on how to eliminate child labor globally (Gentleman, 2007). The children rescued were given backpay and promises to provide education and employment when they became of age. Also, the vendor involved with the subcontractor who employed children received a suspension of 50-percent from their purchasing agreement and was placed on probation from the Gap Company until conditions improved (Gentleman, 2007).
Conclusion
Companies who base operations in developing countries take on obligations that extend beyond quarterly profits and shareholder dividends. Gap and other companies can do more to help uplift economic struggles and standards of living in the low-wage nations they do business. A company that is truly committed to adhering to Corporate Social Responsibility needs to make it a mindset of “Make it better than how you found it.” The token gestures made after the India scandal display their indifference to this global issue. Especially when this was not the first incident. Children were found working in the Cambodian factories for Gap in 2000 by BBC reporters (McDougall, 2007). To have multiple issues within the supply chain procurement process regarding child labor is unacceptable for a company claiming to be a CSR advocate.
References
Foster, P. (2007, October 29). Gap sweatshop children saved in India raid. The Daily Telegraph. Retrieved from https://www.telegraph.co.uk/news/worldnews/1567849/Gap-sweatshop-children-saved-in-India-raid.html
Gap shelves order amid child labour fears. (2007, October 29). The Daily Telegraph. Retrieved from https://www.telegraph.co.uk/news/worldnews/1567748/Gap-shelves-order-amid-child-labour-fears.html
Gap: Report of kids sweatshop ‘deeply disturbing’. (2007, October 27). CNN. Retrieved from https://www.cnn.com/2007/WORLD/asiapcf/10/29/gap.labor/
Gentleman, A. (2007, November 15). Gap moves to recover from child labor scandal. The New York Times. Retrieved from https://www.nytimes.com/2007/11/16/business/worldbusiness/16gap.html?searchResultPosition=4
Kannan, S. (2014, February 5). Child labor: India’s hidden shame. BBC News, Delhi. Retrieved from https://www.bbc.com/news/business-25947984
Kim, S., Kim, J., & Tam, L. (2016). Think socially but act publicly: refocusing CSR as corporate public responsibility. Journal of Public Affairs (14723891), 16(1), 91–104. https://doi.org/10.1002/pa.1560
McDougall, D. (2007, October 28). Child sweatshop shame threatens Gap’s ethical image. The Guardian. Retrieved from https://www.theguardian.com/business/2007/oct/28/ethicalbusiness.india
McWilliams, A., & Siegel, D. (2001). Corporate Social Responsibility: A Theory of the Firm Perspective. Academy of Management Review, 26(1), 117–127. https://doi.org/10.5465/AMR.2001.4011987