Introduction

Multinational corporations (MNCs): Corporations that operate extensively in

more than one country, usually through branches or subsidiaries engaged in
production, marketing or both.
Why operate in less-developed countries? Cheap labour, available resources, tax
shelters, markets.
In their pursuit for this benefits, some increasingly focus only on product design &
marketing and rely on contractors elsewhere to manufacture their products. This
have, nevetheless led to the vast increments in sweatshops around the world.
Sweatshops is a term that is used broadly to include a variety of poor working
conditions. Typically sweatshops are in old buildings with poor or little
ventilation; poor sanitary facilities and unsafe, unhealthy and crowded working
conditions. They pay very low wages for long hours of work and the workers
have no rights within them. They receive no benefits, and are often subject to
physical and verbal abuse and sexual harassment or worse. In general the term
refers to extremely poor working conditions.
A more neutral definition would be industries which violate labor standards
(either host country legal standards or standards defined by international
norms) in a way which makes their actions prima facie wrong.
However defined, it violates the human rights or workers. Even though
multinational corporations did not introduce sweatshops in less developed
countries but only found them there and only a small fraction serves for
exports; they have came in for the greatest amount of criticism.

Law
Any discussion of norms and standards of proper
behaviour would be incomplete without considering
the law. It should be noted early on that legal norms
and ethical norms are in no way identical nor do they
always agree but only that the law undeniably
provides an important guide to ethical decision
making as it provides insights of what is acceptable
and not in a particular community.

Arguments against Sweatshops

1. Race to the bottom
Governments locked in a bidding war with one another to attract and retain the
business of large MNCs. MNCs use the threat of withdrawal or withholding of
investment to pressure governments and workers to grant concessions. Countries
allow lower and lower wages and fewer regulations to attract them.
Result: a race to the bottom a destructive downward spiral of the labour
conditions and wages of workers throughout the world. MNCs ethically obliged
not to promote a race to the bottom.
2. Many third world regimes are repressive, suppress independent union-organising
efforts.
Some MNCs profit from political repression. Only enforced legislation that mandates
decent working conditions would work; as it worked during the mid-19th century
England where sweatshops were rampant and working conditions parallel to
present day developing countries. Moral pressure will produce some results but
many local and multinational companies will ignore such pressure unless it is
deemed detrimental to its financial performance.
Sweatshop workers often work long hours for very low pay, regardless of laws
mandating overtime pay or a minimum wage. Child labour laws may be violated.
Sweatshops may have hazardous materials and situations. Employees may be
subject to employer abuse without an easy way to protect themselves.

3. Working conditions
Wages and working conditions inferior by developed nations standards. Minimum
wage levels in countries such as Thailand, the Philippines, and China, are
significantly lower than that of the United States (7.25 dollars, while it is 1.48
dollars in Thailand, 69 cents in the Philippines, and 67 cents in China). Frequently
paid less than these estimates suggestbarely enough to survive on even
considering the lower cost of living in these regions.
But are improvements over that in developing countries, otherwise workers would
not have taken the jobs. Sweatshops offer an improvement over subsistence
farming and other back-breaking tasks, or prostitution, trash-picking, or
starvation by unemployment.
4. Sweatshops cause harm
Verbal, physical and sexual abuse by supervisors. (in 2000 businessWeek published
an expose about a factory in China that made bags for Wal-Mart. A nightmarish
place in which 900 workers locked in a walled compound all day and security
guards regularly punched and hit workers )
While workers aren't "forced" to work in certain places, they must choose (to
survive) to work under people who abuse them.
Suffer psychological abuse - forced to work under armed supervision; physically
assaulted with no legal protection if productivity is not up to standards.
Workers forced to work overtime (without extra pay); fired if they do not - despite
overtime not being a part of the contract.
We dont expect developing nations to match the wages in developed nations but

5. MNCs do not provide better jobs than the average jobs

Sometimes true sweatshop workers wages are higher than the average wage
for a worker in a third world country, but no evidence that jobs of sweatshop
workers are "better."
Exploited: work exceptionally long work days, subject to harsh practices in unsafe
conditions.
Even if one chooses to work in a sweatshop for their own survival, does not make
sweatshops ethical - shows how they are a means to an end.
Being considered a sweatshop means maximising profits for the company while
having no regard for employees.
6. System is oppressive - Once workers demand higher wages or better
conditions:
companies simply move to another country
companies continue to pay as little as possible for labour
demand for their labour doesn't increase because companies simply hire different
labour.
jobs are outsourced putting them once again in a vulnerable position where any
labour at all seems better than starvation.

7. Great poverty in developing countries. Any work that brings in an income is better
than no work. The local entrepreneur however, is not a multinational corporation and
is not financially able to build new sanitary and efficient factories. Many simply grew
out of small workplaces and expanded to the extent possible. The local entrepreneur
provide work that would not be otherwise available. If high standards of safety and
sanitation are enforced, most of the factories would be shut down and again the
workers would be worse off. The local entrepreneur has no choice but to operate
within the existing circumstance or not to operate at all. Despite the fact that they
violate the right of workers to safe and sanitary workplaces, it is the lesser of two evils.
Providing work is better than not providing it. However, they have the obligation to
make improvements to the extent they can when they have more money.
Multinationals on the other hand has a very real option of not operating there at all,
while continuing to operate elsewhere. Second, the multination does not need to
engage in operating sweatshops. Unlike the local entrepreneur, the multination
company has a large variety of options such that the multination have no justification
to engage in such practices.

With its strong position, the multination has a positive obligation to set an example of
ethics in business and to encourage the development of background institutions
conducive to stability and to business practices that benefit the society as a whole. As
an outside interest entering the country for the company's benefit, it should not be
exploitive and seek its good at the disadvantage of the local population, albeit legal.

John Rawls argument from the veil of ignorance would suggest that it cannot
be fair for sweatshop workers to suffer under such appalling working
conditions, precisely because even the very corporate business owners who
fuel the demand for sweatshop labor cannot condone this from an objective
and disinterested perspective. Considering the inequalities between the United
States and developing Asian nations, Rawls would suggest that in
circumstances like these, the only morally acceptable course of action is one in
which the net benefits accruing to the least-advantaged people of developing
Asian countries is maximized. In practical terms, this means that U.S.-Asia
relations must pay special attention to these low-wage laborers and work
toward better working conditions in production facilities so as to eventually
eradicate their endemic exploitation.
Nike pays Indonesian workers ($2.28) , whereas an average worker receives
less then $1 a day. Benefit the least-advantaged members of the global society
which is justified by Rawls theory.

Kantian universal principles should govern the employment relationship

and that the ethical obligation of respect for persons should guide the
employment interactions. To fuly respect a person, one must actively treat
his or her humanity as an end, and not merely as a means to an end thus
impermissible to treat persons like disposable tools. A fundamental moral
minimum set of standards exists that should be guaranteed to workers in
all countries notwithstanding culture, stage of economic development or
availability of resources. Arnold and Bowie contend that multinationals
must ensure the physical well being of employees and refrain from
undermining the development of their rational and moral capacities.
Adhere to local labor laws, refrain from the use of coercion, provide decent
working conditions and provide wages above the overall poverty line for a
48 hour work week. Living wage enough to meet basic sustenance needs.
De george says that it is appropriate to put pressure on multinationals to
make sure they they do not operate or use sweatshops, and the pressure
has led to some positive results in the way of improved working conditions
and higher pay. Jobs related to exports become the most sought after
because the conditions and pay are better than in the factories that
produce for local consumption put in the Apple case.

Arguments for Sweatshops

1. Most of the time it is better than the alternatives

The affiliates of U.S. multinational corporations pay on average twice

the local wage in the developing world. In Vietnam and Indonesia in
2000 and found that workers there earned on average five times each
countrys respective minimum wage. Ten years ago, when Nike was
established in Vietnam, the workers had to walk to the factories, often
for many miles. After three years on Nike wages, they could afford
bicycles. Another three years later, they could afford scooters. Today, the
first workers can afford to buy a car.
Workers are free to quit or look for another job anytime But they remain
because they consider it the next best alternative.
Pay and working conditions seem low, but are an economic step forward
compared to subsistence farming.
Real slavery exists today not due to economic development, but due to
totalitarian regimes that do not recognize basic human rights
E.g. North Korea, Cuba, and militias of Sudan and Somalia

Child labour necessary in 3rd world countries given

parents low productivity of their parents - alternative
is starvation.
UNICEF 1997 study: 5k-7k Nepalese children turned
to prostitution after the US banned Nepals carpet
exports in the 1990s.
When Child Labor Deterrence Act (US) introduced about 50,000 Bangladeshi children dismissed from
garment industry jobs. Many took up stone-crushing,
street hustling, prostitution, etc.
Alternative jobs - more hazardous and exploitative
than garment production (UNICEF).

2. The economic case

The major argument for sweatshops is that the low cost labour entices
large MNCs to come and outsource here. Higher wages may deprive
some countries of the one comparative advantage - low-cost labour.
Sweatshops offer considerable improvement from their previous state a permanent state of near-starvation, or the backbreaking labour of
subsidence farming. Sweatshop wages are more than double the
national average in Cambodia, Haiti, Nicaragua, and Honduras.
Harrison and Scorse estimate that in Indonesia a 100 percentage point
increase in the real minimum wage would be accompanied by
employment declines between 12 and 36 %
Exploitations of cheap labor allows developing countries to expand
export activities and to improve their economies. This economic growth
brings more jobs, which will cause the labor market to tighten which in
turn will force companies to improve conditions in order to attract
workers. Moreover, greater global production will create additional
opportunities for expansion domestically providing a positive impact on
stakeholders.

Jeffrey Sachs and Paul Krugman say that low-wage plants making clothing and
shoes for foreign markets are an essential first step toward modern prosperity
in developing countries.
The US went through its own period of sweatshop labour during its
development. Recent countries that benefited from having sweatshops
includes the Asian tigers: HK, S. Korea, Taiwan & Singapore propelled them into
the economically developed world.
A study on poverty relief and development by the University of Santiago de
Compostela also suggests that such sustainable international investment in low
income countries is important to economic progress.
This represent not only investments in production facilities, but also add to
the latters investible resources and capital formation, transfer production
technology, skills, innovative capacity, organizational and managerial practices,
as well as provide access to international marketing networks, all of which are
exceedingly helpful to these developing economies.
For example from an agricultural economy in the 70s Malaysia moved to an
export orientated market in the 80s with the influx of many sweatshops . This
was largely the role of high levels of investment. With Japanese investment,
heavy industries flourished by the 90s and now it is a technology orientated
economy. The advent of MNCs in Malaysia early on helped Malaysia to play
catch up growth and asccend rapidly in the likes of the other Asian tigers (i.e.
Singapore, Hong Kong, South Korea and Japan).

This can also be seen 50 years ago when comparing countries like India, which
resisted allowing foreign investments with the likes of Taiwan and South Korea
accepting it; including the working conditions that came with it. Today, Taiwan
and South Korea boast modern, well-educated first-world economies while
india's refusal to accept foreign 'exploitation' wrough wide scale poverty and
devastation for decades.
i. Jeffrey Sachs "My concern is not that there are too many sweat-shops, but
that there are too few. Cited the theory of comparative advantage
that international trade will, in the long run, make all parties better off.
that developing nations improve their condition by doing something that
they do "better" than industrialised nations (do same work but charge
less)
Developing nations get factories and jobs that they would not otherwise.

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3. Wages are not low

The repugnance brought about from sweatshops also seem to stem from the
fact that these workers are treated differently from those working in the
developed nations.
Walzer argues that different goods belong to different socially defined spheres,
each with its own distributive logic. Thus, wages, which should have been
distributed in accordance of principle of degree of hard work, should be
universally standard.
However, this ignores the concept of fact of pluralism viz. that one can
expect a free society to be marked by reasonable disagreement over the
values at stake in each of these spheres, as well as the appropriate
principles of distribution. Thus, if people assign different value to their
labour, (those in the developed work may despise doing manually intensive
work; while those in developing world are immune to such hardship), then
the principle of distribution should be sensitive to the difference in
valuation. The easiest way in satisfying this sensitivity constraint is to create
a market for the good, based on their own estimation of its importance in
their overall plans.
Allowing the markets of the individual societies seems to be in line with the
views of cultural relativism. Different cultures puts different values on their
labours, and respecting those believes can be argues from a cultural

Maitland (1997) : Does not accept the view that sweatshops pay
unconscionable wages, or that they impoverish local workers and widen the
gap between rich and poor. Not only paying market wages in developing
countries is morally permissible but also that it may be morally wrong for
companies to pay wages that exceed market levels. Disrupts the market.
Kristof (2009) : Argued, in the New York Times, that The central challenge in
the poorest countries is not that sweatshops exploit too many people, but that
they dont exploit enough. Best way to help people in the poorest countries
isnt to campaign against sweatshops but to promote manufacturing there.
De George: Rejects the view that home-country standards should apply in host
countries. Otherwise MNCs would have little incentive to move their
manufacturing abroad
Disrupt the local labour market with artificially high wages that bore no
relation to the local standard or cost of living. This might have cause the local
companies to also increase their wages in order to attract the best. This
unnaturally high wages would not be sustainable as in the short term, the
companies would have to either increase the price of its goods (including
domestically) or fail. The society in that area would suffer from the side effects
of that. It would be better to follow the market and allow the invisible hand to
slowly appreciate wages naturally.

4. Employees rights to choose to work

The right to work is recognized in the UN Declaration of Human Rights. Each
person has a liberty right to pursue work and should not be prevented by others
(directly or indirectly) from doing so. The way work is provided however depends
on the kind of society it is and its stage of development. The right to work typically
arises when the supply of labor exceeds the demand, when large numbers of
people have no available alternative to earning their living.
Multinationals serve an important function in supplying employment. Thus
although sweatshops do not pass all ethical requirements, taking it away in any
means, direct or indirect is worse. The path forward is on improving the standards
there rather then taking it away.
EG. Due to public pressure, Wal-Mart cut all ties with Kathie Lee Giffords

clothing line when it was discovered to be produced by sweatshops,

essentially closing down the factories supplying that line. It appeared to
be a victory for human rights, yet the Chinese immigrant workers who
had been paid little or no wages for their 60-80 hours of toil each week,
were outraged as they now earn nothing.

Zwoliski defends the moral legitamacy of sweatshops based on the workers

under these conditions giving consent. The fact they workers chooce to
work in sweatshops is morally significant. Sweatshop workers choice can be
morally transformative in two ways by being exercises of their autonomy
or by being expressions of their preferences.
The proper response to an autonomy exercising choice is one of respect
and this respects seems to counsel non interference with the agents
choice even if we believe the consequences of interfering would be
superior for the agent (religion example). (However important to note that
autonomy is not an insuperable barrier to interference, merely that it is a
barrier. Eg if my neighbors religious practices lead him to be a danger to
himself, there may come a point where my interference with those
practices become justified on paternalistic grounds).
Preference evincing choices often give us reason for non interference only
because we think the consequences of doing so will be better in some
respect for the agent. The express of a choice for one thing over another is
good evidence that one actually prefers that thing over the other and it is
ceteris paribus, better for one to get what one wants (cooking fish for guest
example) . Thus, there is strong moral reason for 3rd parties to refrain from
acting in ways which are likely to deprive sweatshop workers of their jobs.

Immanuel Kants practical moral imperative asserts that human beings

must be treated as ends in themselves and not merely as a means, and so
sweatshops are inherently unacceptable from a deontological perspective
since their workers seem to be treated as mere instruments in the
amassing of business profits.
Yet, if sweatshop labor was simply banned, people in developing Asian
countries who are critically reliant on these jobs for survival would suffer
even more, and this is all the worse for their Kantian right to selfdetermination. This suggests that in the real worldor at least in this
caseideas of absolute right vs. wrong are at best inadequate, and cannot
be conflated with ideas of better vs. worse, which account, more
importantly, for the relative outcomes of decisions.
Raising of wages above market levels should be expected to increase unemployment
particularly among the least skilled. Rawls arguments actually could establish a
concern for the well being of the least-advantaged

Despite the string of tragedies--the latest of which involved the collapse of

the Rana Plaza factory building and 190 deathsBangladeshs garment
industry is still thriving. Workers there were paid as little as $37 a month, but
Bangladeshs garment manufacturing sector generated US$20 billion in exports
in 2012 for the impoverished country. The practical problem revolves around
the fact that sweatshops are mutually beneficial, making both employees and
workers better off, thereby difficult to give force to the normative arguments
against sweatshops.

Utilitarianism considers how everyones collective welfare may be maximized.

Sweatshop workers are relatively better off than if they had no such work.
Normatively speaking, sweatshop labor is morally wrong and should be
banned. Practically speaking, however, there are shades of gray representing
better and worse outcomes of moral decision-making within the existing
political and economic environment.
Consequently, sweatshop laboreven in the current contextmay be
practically but never normatively permissible. This acute distinction between
practical and normative perspectives can never be overlooked; ethical issues
operate at both levels, while each may generate very different
recommendations as in the case of sweatshop labor. Even while sweatshops
are conceived in practical terms as the lesser of two evils, their moral value
remains questionable at best.

Thus, the rejection of sweatshops is at odds with two core moral values
that both consequantialists and Kantians must recognize: welfare and
autonomy. It is clear enough that rejection of sweatshops cannot be based
on concern for sweatshop workers welfare since rejecting it entails
rejecting transations that are Pareto-superior. It cannot be grounded in
concern for workers autonomy either. After all, if workers autonomy was a
central value, they why would we not allow them to waive certain of their
right when they themselves judged that the benefits they could gain by
doing so are worth the cost?
It can be seen that the rejection of sweatshop is more paternalistic in
nature; substituting the activists own values for those of the workers
themselves. But until these activists can provide proper alternative
pathways via moral imagination that do more good then harm when
removing sweatshop, the current situation is ideal. The ways in which
sweatshops treat their employees might be morally repugnant and
absolutely impermissible. But this is not enough to establish that it is
morally permissible for third parties to interfere or at least until moral
imagination

They must pay slightly higher than the minimum

wages (comply the law), start to pay the living wages
(where there is no minimum wage). Wages that is
enough to cover the living needs. Dont need to pay
as their home, and not to pay too low, and not to pay
too high so that the attractiveness of the market will
enshrine.