Sweatshops Benefit Companies Rather Than Employees

715 words | 3 page(s)

The economic progress over the last few decades has been impressive by any measure. It is not an overstatement to claim that much of this progress has been enabled by technological advancements in information technology as well as the forces of globalization which have made financial and human capital more mobile. Even those not familiar with business lingo have heard or read about outsourcing which refers to transfer of certain operations abroad or a contract with third party to do some of the tasks originally done by the organization itself. Unfortunately, progress rarely comes without costs. In this case, it has led to an increase in the number of sweatshops, mostly in emerging economies with cheap labor and poor labor rights record. While the supporters of globalization claim globalization benefits both multinational corporations and citizens of the third world, the opponents of globalization point to sweatshops as one of the examples of exploitation of third world countries by multinational corporations. The working conditions in sweatshops benefit the corporations rather than the workers because workers rights such as fair pay and safe working conditions are violated to reduce costs which ultimately benefit corporations.

One of the most important determinants of business profitability is its production cost. Businesses outsource in search of lower labor costs which helps keep production costs lower. But sweatshops do not merely help multinational companies keep costs low through cheap labor but also cut corners in other areas to further lower costs. An investigative research into a sweatshop in Dhaka, Bangladesh found that it had no safety equipment, windows, and even the toilet was barely recognizable as a proper toilet (Fastenberg). These cost-cutting measures at sweatshops means the multinational corporations obtain their goods at significantly lower costs than would be the case if workers were treated properly.

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Sweatshops usually comply with no labor laws, even the ones that exist in their respective countries but rarely enforced. As a result, they engage in activities that would be unimaginable in the first world such as child labor and lengthy work hours with no over-time pay. These workers such as children often work for even lower wages than their adult counterparts. Meem, a 9-year old girl, from Bangladesh is a typical example. The room she works in has no windows or lighting, the toilet is in extremely poor condition, and Meem’s employment terms include no sick leave or holidays. UNICEF reports that 1 in 6 child in the world engages in child labor and the rate is especially high in Asia-Pacific region and Sub-Saharan Africa (Fastenberg). Similarly, sweatshop workers rarely have any negotiation power and almost never represented by unions which makes it even easier for employers to exploit them. Not surprisingly, multinational companies are able to offer extremely affordable products to their clients and still make profits in the process.

The sweatshops are also designed to benefit corporations at the expense of the employees because sweatshop owners are aware of the weak negotiating power of the employees who have few other alternatives. Sweatshops may conjure negative images in the west but for many workers, they are often the best alternatives and even with quite low wages, they still earn higher average pay than they would elsewhere. Thus, the low negotiation power of employees make it only logical that the sweatshop system works in favor of the corporations.

Globalization has led to rise of sweatshops due to an increase in international trade. While globalization has helped improve average life standards in third world countries, the benefits of globalization have mostly accrued to multinational corporations in many cases of which one example is sweatshops. The sweatshop system mostly works in favor of the multinational corporations because not only wages are extremely low in third-world countries but sweatshop workers are also excluded from rights and benefits such as overtime pay and safe working environment which helps keep production costs low. Similarly, sweatshop employees rarely have any labor rights and local labor laws are mostly ignored as evident by employment of child labor which is even cheaper than labor provided by adults. In addition, employees have low negotiation power because they don’t have many alternatives available to them and sweatshop owners know it.

    References
  • Fastenberg, Dan. What’s Life In A Sweatshop Like? Ask This 9-Year Old Manager. 14 October 2013. 31 May 2014 .

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