Business and Professional Ethics - Case of Sweatshops (MBA assignment)

BUSINESS AND PROFESSIONAL ETHICS

INTERNATIONAL SWEATSHOPS

JOHN T. NJOVU

LUSAKA -ZAMBIA

©2007

Business and Professional Ethics

JOHN T. NJOVU 5/2007 2


Table of contents Page

1. Introduction 3

1.1. Definition 3

1.2 Criticism of sweatshops 4

1.3 Counter arguments 5

2. Minimum wages 6

2.1 Minimum wage fixing convention, 1970 7

2.2 using ethical theory 7

2.2.1 Results based (Consequentialism) 7

2.2.2 Standards based ethic 7

2.2.3 Ethical intuitionism 8

2.2.4 Ethical egoism 8

2.2.5 Virtue ethics 8

3. Conclusion 9

4. Bibliography 11

5. Appendix 12




1. INTRODUCTION

Based on the case study, we can observe that sweatshops around the globe as shown by

television images are de-humanising plants where human rights of workers are extremely

abused. Sweatshops are usually associated with abuse and exploitation of children and

women. There are therefore issues of ethics arising out of operations of sweatshops. Ethics

(Silbiger, 1999:71), rest on the assumption that business ought to adhere to a socially

responsible approach to decision making called the socially responsibility approach.

Proponents of this approach believe that corporations have societal obligations that go

beyond maximising profits.

Ethics is defined as the study of the moral value of human behavior. Ethics as a division of

philosophy uses the methods of philosophy, not the methods of religion. In other words, it is

not faith in the writings of religious figures, which is used to develop ethical positions; it is

the application of human reasoning to ethical issues.

1.1 Definition of an international sweatshop

Sweatshop is a pejorative term often used to describe a manufacturing facility that is

physically or mentally abusive, or that crowds, confines, or compels workers, or forces them

to work long and unreasonable hours, as would be the case with penal labor or slave labor.

http://en.wikipedia.org/wiki/United_Students_Against_Sweatshops

The charges of unethical conduct against the international sweatshops in

the case study are that:

“The organisations are (by proxy) exploiting workers in the plants sweatshops) of their

suppliers. Specifically the organisations stand accused of chasing cheap labour around the

globe, failing to pay their workers liveable wages, utilising child labour, turning a blind eye

http://en.wikipedia.org/wiki/Pejorative

http://en.wikipedia.org/wiki/Factory

http://en.wikipedia.org/wiki/Penal_labor

http://en.wikipedia.org/wiki/Slave_labor




to abuses of human rights, being complicit with repressive regimes in denying workers the

right to join unions and failing to enforce minimum labour standards in the workplace, etc”.

1.2 Criticism of sweat shops

Critics of sweatshops like Charles Kernaghan of the USA National Labour Coalition have

highlightyed the inhuman conditions in these manufacturing plants. The critism against sweat

shops go back as far as the 19th

century slavery abolitionist movement. They considered

slavery similar to sweat shops. After the abolition of slavery the movement turned to the

conditions of workers in urban areas.

The abolitionist movement spread into workers movements such as trade unions and labour

based political groups; marxists and socialists. There was focus on solidarity of workers

around the globe.

The Marxist - Leninist slogan was, “Workers of the World, unite”.

However, there were setbacks in the trade union movement after the second world in the

Western World, as many Western goverments restricted the operations of trade unions. This

was in efforts to counter the influence of the then Soviet Union which was a so-called

workers’ state. Lately, abolotionist tendencies are being manifested in human rights

organisation, pro-environment organisations, and anti-globalisation movements or anti-big

business groupings.

The lack of a balancing super power after the fall of the Soviet Union and globalisation have

had their own adverse effects on poor nations. International capital has been very exploitative

in poor countries where it has penetrated. This could be due to the lack of socio-economic

choices that citizen of poor countries have.

The International Labour Organisation has introduced a number of convention to protect

workers who may not be able to protect themselves; especially women and children. There

are also a lot of lobby groups engaged in advocacy against sweatshops. These are non

governmental organisations working in national governance, children rights’ and gender

http://en.wikipedia.org/wiki/Abolitionist



rights’ areas. These are working also with United Nations agencies such as UNICEF. The

most prominent agency in the fight against child labour is UNICEF.

1.3 Counter arguments

However, there also supporters of sweatshops. They counter that living and

working conditions in poor countries cannot be compared to those in the

developed nations. The low wages in the poor countries may enable the

workers receiving them afford to live above subsistence level. They compare

the life that was primitive when for instance natives of poor countries where

subsistence farmers of food gatherers ion forests to the life they lead in

urban areas.

There also arguments citing “ the economic theory of comparative advantage, which

states that international trade will, in the long run, make most parties better off. The theory

holds that developing countries improve their condition by doing something that they do

"better" than industrialized nations (in this case, they charge less but do the same work).

Developed countries will also be better off because their workers can shift to jobs that they

do better. These are jobs that some economists say usually entail a level of education and

training that is exceptionally difficult to obtain in the developing world. Thus, economists

like Sachs say, developing countries get factories and jobs that they would not otherwise

have had. Developed countries will be better off because of the decreased cost of producing

various goods will drive down prices at home. Also, developed countries can specialize in the

areas in which they do best”.


There also citations of that 1/5th of human beings live under the international poverty line.

World poverty has become better due in a large part to the economic success of China and

India, the two countries with the largest number of workers in sweatshops. Against this

progress in the developing world, one should also note that economic inequality between the

richest and poorest has never been so large.

http://en.wikipedia.org/wiki/Comparative_advantage

http://en.wikipedia.org/wiki/International_trade

http://en.wikipedia.org/wiki/Specialization


http://en.wikipedia.org/wiki/Poverty_line

http://en.wikipedia.org/wiki/China

http://en.wikipedia.org/wiki/India



In the United States, shoemaker New Balance is notable for changing its policies after

intense pressure from campus anti-sweatshop groups. Clothing retailer Gap Inc. – which

includes Gap, Old Navy, Banana Republic and Forth & Towne brands – has significantly

changed its policies. Gap Inc. has developed a Code of Vendor Conduct [6] which applies

across all of its brands based on internationally accepted labor standards. Walmart and Nike

are two of the largest corporate sponsors of sweatshop labor, but believe that they have

safeguards in place to avoid using the worst sweatshops.


There also trends of changes in the way multi-nationals deals with suppliers from

disadvantage nations. They insist for the sake of retaining a good reputation to obtain

supplies from reputable companies. They are now a lot of vigilant consumer groups in

developed nation which campaign against any corporation whose supply sources are thought

to be linkde to sweatshops. So, some companies even publicsh claims that their products are

not from sweatshops.

The US Federal Trade Commission can also issue an order prohibiting products from the

sweatshops from being imported into the U.S or penalise an importer

http://www.globalexchange.org/campaigns/sweatshops/4439.html

2. MINIMUM WAGES

Ethical problems have no definitive answers and will remain for a long time debatable.

The International Labour Organisation (ILO) has been dealing with questions of ethical and

acceptable levels of wages and labour standards on an international level. For instance, the

Abolition of Labour Convention of 1957 (C105) prohibits members of ILO who have ratified

the convention from making use of any form of forced and compulsory labour.

http://www.ilo.org/ilolex/cgi-lex/convde.pl?C105

http://en.wikipedia.org/wiki/New_Balance

http://www.gapinc.com/public/SocialResponsibility/sr_ethic_cvc.shtml

http://en.wikipedia.org/wiki/Walmart

http://en.wikipedia.org/wiki/Nike_Inc.






2.1 Minimum wage fixing convention, 1970

The ILO also adopted certain proposals with regard to minimum wage fixing

machinery and related problems, with special reference to developing countries, in

an international Convention, the Minimum Wage Fixing Convention in June1970.

This is fully cited in the appendix below. http://www.ilo.org/ilolex/cgi-

lex/convde.pl?C131 Accessed 17.5.7

2.2 Using ethical theory

2.2.1. Results-based (consequentialism) ethics

We may need to consider rewarding the majority of people in sweatshops above the

world poverty datum line and have conditions that are as favourable as in developed

nations.

Result-based ethics looks at an act being morally right or wrong by the results or

consequences of an act or rule. This theory is sometimes called "consequentialism" ;

it is similar to some definitions of "teleological ethics". Telling a lie is morally wrong

because of the damage this lie will cause; both to the liar and to society which

depends on honest relationships.





One example of this theory is called "utilitarianism". Jeremy Bentham (1748-1832)

an Englishman, started this. In the process of trying to reform some of the unfair

laws in England, he developed his theory that the morally correct rule was the one

that provided the greatest good to the greatest number of people.

http://www.philosophyclass.com/ethics.htm

2.2.2 Standards-based ethics

There should be a benchmark that should be universally acceptable for wages and

labour standards across the globe. This could be the standard set by ILO or other

international bodies.

This theory states that an act or rule is morally right or wrong if it meets a moral

standard. This is sometimes called the "deontological" theory or "duty ethics". The

most famous philosopher proponent of the theory was Immanuel Kant (1724-1804).

Kant was a German philosopher who developed a "universal test" to see if a rule

could be a universal standard. If a rule can be made universal without contradiction,

then it is morally good; if a rule cannot be made universal without contradiction, then

it is morally bad. Not keeping your promise is morally wrong because you cannot

make it a universal law that everyone can knowingly make promises with no

intention of keeping them. Kant felt this was a contradiction in terms. When you say

"I promise." while you are thinking you do not intend to keep your promise, you are

contradicting yourself. http://www.philosophyclass.com/ethics.htm





2.2.3 Ethical intuitionism

The wages and labour standards should be determined according to the

consciences of the owners of the sweatshops.

The correctness or wrong of an act or rule is determined by the appeal to the

common intuition of a person. This intuition is sometimes referred to as your

conscience. The example given is that anyone with a normal conscience will know

that it is wrong to kill an innocent person. http://www.philosophyclass.com/ethics.htm

2.2.4 Ethical egoism

The wages and labour standards should be set according to the self-interests of the

stakeholders. Self-interest or ego becomes the basis for action or moral choices.

2.2.5 Virtue ethics

The wages and labour standards should be set according to the virtues and moral

character of the owners of the sweatshops. This theory states that ethics should

develop character traits or virtues in a person so that person will do what is morally

right because they are a virtuous person. Aristotle (384-322 B.C.) was a famous

exponent of this view. Aristotle felt that virtue ethics was the way to attain true

happiness. http://www.philosophyclass.com/ethics.htm Accessed 25.2.6

3. CONCLUSION





Sweatshops exist and are considered by some to be in-humane places of work.

There are both arguments against and for sweatshops. Like any ethic question,

there might note be one agreeable answer to a group of debaters. The shops will

obviously receive emotional criticism. What are acceptable or appropriate levels of

wages and labour standards may be topical depending on which side of the fence

you are on. Guidelines are, however, in the ILO labour standards and conventions.

4. BIBLIOGRAPHY

1) Bradburn Roger. (2001). Understanding business ethics. London: Continuum.

2) Cameron Sheila. (2000). Business students’ handbook – developing transferable skill.

New Delhi: Paul Press

3) Chatterjee Bhaskar. (2002). Human resource management. New Delhi : Sterling

Publishers.

4) Cole G. A. (1997). Strategic management – Theory and practice. London: Letts

Educational.

5) Cole G.A. (2003). Organisational behaviour, London: Continuum

6) D’Souza Anthony A. (2001). Leaders for today, Hope for tomorrow. Limuru: Pauline

Publications Africa.

7) Ferrell O. C, Fraedrich John and Ferrell Linda. (2000). Business ethics – Ethical

decision-making and cases. New York: , Mifflin Houghton Company

8) George D. Chryssides and Kaler John H. (2005). An introduction to business ethics.

Cornwall: Thomson

9) Global Exchange. (2007). Sweatshops -Senators Push Law Banning Sale of

'Sweatshop' Imports

http://www.globalexchange.org/campaigns/sweatshops/4439.html [Accessed 29

March 2007].




10) http://www.philosophyclass.com/ethics.htm [Accessed 25 February 2007]

11) Mancosa. (2006). Business and professional ethics. Johannesburg: Management

College of Southern Africa.

12) Pride, William; Hughes, Robert and Kapoor, Jack. (1999). Business. New York:

Houghton Mifflin.

13) Silbiger, Steven. (1993). The 10-Day MBA. London: Judy Piatkus (Publishers)

Limited.

14) Somasundaram and Choudhary B. (1997) A first course in mathematical analysis.

New Delhi: Narosa Publishing House

15) The International Labour Organisation. C105 Abolition of forced labour convention.

http://www.ilo.org/ilolex/cgi-lex/convde.pl?C105 [Accessed 17 May 2007)].

16) The International Labour Organisation. C131 Minimum wage fixing convention,

1970 http://www.ilo.org/ilolex/cgi-lex/convde.pl?C131 [Accessed 17 May 2007].

17) Verzuh Eric. (1999). The fast forward MBA in project management. New York: John

Wiley,

18) Wikipedia. (2007). United students against sweatshops.

http://en.wikipedia.org/wiki/United_Students_Against_Sweatshops [Accessed

29.03.07].

19) Wright, Nevana. (1999). The Management of service operations. London:

Continuum.

5. APPENDIX







C131 Minimum Wage Fixing Convention, 1970

Article 1

1. Each Member of the International Labour Organisation which ratifies this

Convention undertakes to establish a system of minimum wages which covers all

groups of wage earners whose terms of employment are such that coverage would

be appropriate.

2. The competent authority in each country shall, in agreement or after full

consultation with the representative organisations of employers and workers

concerned, where such exist, determine the groups of wage earners to be covered.

3. Each Member which ratifies this Convention shall list in the first report on the

application of the Convention submitted under Article 22 of the Constitution of the

International Labour Organisation any groups of wage earners which may not have

been covered in pursuance of this Article, giving the reasons for not covering them,

and shall state in subsequent reports the positions of its law and practice in respect

of the groups not covered, and the extent to which effect has been given or is

proposed to be given to the Convention in respect of such groups.

Article 2

1. Minimum wages shall have the force of law and shall not be subject to abatement,

and failure to apply them shall make the person or persons concerned liable to

appropriate penal or other sanctions.

2. Subject to the provisions of paragraph 1 of this Article, the freedom of collective

bargaining shall be fully respected.

Article 3

The elements to be taken into consideration in determining the level of minimum

wages shall, so far as possible and appropriate in relation to national practice and

conditions, include--

(a) the needs of workers and their families, taking into account the general level of

wages in the country, the cost of living, social security benefits, and the relative living

standards of other social groups;



(b) economic factors, including the requirements of economic development, levels of

productivity and the desirability of attaining and maintaining a high level of

employment.

Article 4

1. Each Member which ratifies this Convention shall create and/or maintain

machinery adapted to national conditions and requirements whereby minimum

wages for groups of wage earners covered in pursuance of Article 1 thereof can be

fixed and adjusted from time to time.

2. Provision shall be made, in connection with the establishment, operation and

modification of such machinery, for full consultation with representative

organisations of employers and workers concerned or, where no such organisations

exist, representatives of employers and workers concerned.

3. Wherever it is appropriate to the nature of the minimum wage fixing machinery,

provision shall also be made for the direct participation in its operation of--

(a) representatives of organisations of employers and workers concerned or, where

no such organisations exist, representatives of employers and workers concerned,

on a basis of equality;

(b) persons having recognised competence for representing the general interests of

the country and appointed after full consultation with representative organisations of

employers and workers concerned, where such organisations exist and such

consultation is in accordance with national law or practice.

Article 5

Appropriate measures, such as adequate inspection reinforced by other necessary

measures, shall be taken to ensure the effective application of all provisions relating

to minimum wages.

Article 6

This Convention shall not be regarded as revising any existing Convention.

Article 7

The formal ratifications of this Convention shall be communicated to the Director-

General of the International Labour Office for registration.

Article 8



1. This Convention shall be binding only upon those Members of the International

Labour Organisation whose ratifications have been registered with the Director-

General.

2. It shall come into force twelve months after the date on which the ratifications of

two Members have been registered with the Director-General.

3. Thereafter, this Convention shall come into force for any Member twelve months

after the date on which its ratification has been registered.

Article 9

1. A Member which has ratified this Convention may denounce it after the expiration

of ten years from the date on which the Convention first comes into force, by an act

communicated to the Director-General of the International Labour Office for

registration. Such denunciation shall not take effect until one year after the date on

which it is registered.

2. Each Member which has ratified this Convention and which does not, within the

year following the expiration of the period of ten years mentioned in the preceding

paragraph, exercise the right of denunciation provided for in this Article, will be

bound for another period of ten years and, thereafter, may denounce this

Convention at the expiration of each period of ten years under the terms provided for

in this Article.

Article 10

1. The Director-General of the International Labour Office shall notify all Members of

the International Labour Organisation of the registration of all ratifications and

denunciations communicated to him by the Members of the Organisation.

2. When notifying the Members of the Organisation of the registration of the second

ratification communicated to him, the Director-General shall draw the attention of the

Members of the Organisation to the date upon which the Convention will come into

force.

Article 11

The Director-General of the International Labour Office shall communicate to the

Secretary-General of the United Nations for registration in accordance with Article

102 of the Charter of the United Nations full particulars of all ratifications and acts of

denunciation registered by him in accordance with the provisions of the preceding

Articles.



Article 12

At such times as it may consider necessary the Governing Body of the International

Labour Office shall present to the General Conference a report on the working of this

Convention and shall examine the desirability of placing on the agenda of the

Conference the question of its revision in whole or in part.

Article 13

1. Should the Conference adopt a new Convention revising this Convention in whole

or in part, then, unless the new Convention otherwise provides:

a) the ratification by a Member of the new revising Convention shall ipso jure involve

the immediate denunciation of this Convention, notwithstanding the provisions of

Article 9 above, if and when the new revising Convention shall have come into force;

b) as from the date when the new revising Convention comes into force this

Convention shall cease to be open to ratification by the Members.

2. This Convention shall in any case remain in force in its actual form and content for

those Members which have ratified it but have not ratified the revising Convention.

Article 14

The English and French versions of the text of this Convention are equally

authoritative.



MANAGEMENT COLLEGE OF SOUTHERN AFRICA

MBA ASSIGNMENT COVER SHEET

Surname Njovu

First Names John Tembo

Student Number 502000538

Subject Business and Professional Ethics

Assignment number 4

Tutor’s name Dr. M. Mandela

Date submitted 18 May 2007

Postal Address Zambia Revenue Authority

VAT – Compliance South & Central

Revenue House

P.O Box 35710

Lusaka

E-mail [email protected] & [email protected]

Contact Numbers Work 260-1-236227

Home: 260-95- 5882861

Cell: 260-97-7882861

Course/Intake MBA Final Year – July 2006

Declaration: I hereby declare that the assignment submitted is an original piece of work

produced by myself.

Signature: JTN Date: 18 May 2007

mailto:[email protected]

Business and Professional Ethics - Case of Sweatshops (MBA assignment)

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