Why Sweatshops Aren’t Black and White

In the era of globalization, businesses must make continual strides in order to compete on a global scale. Often this is done by improving their supply chains through more efficient distribution channels that offer quality goods or services at the lowest possible cost. In many developing economies, wages are low, working conditions are poor, long hours are demanded, and there are typically no age restrictions to work; this helps to keep costs down for both producers and consumers. This makes an ideal prospect for completion of low-skilled manufacturing work, like textiles and parts assembly. This creates the favourable opportunity for overseas businesses to compete for major contracts with brands such as Nike, H&M, or Apple, to name a few.

Though many believe this to be exploitation of labour issues, why does the problem still persist? Auret van Heerden said it best in his TED Talk: “We don’t have a regulatory system able to ensure that production is safe. We don’t have a system to ensure that human rights, basic dignity, are [secured]”. Just thinking about it for a moment it seems easy — raise wages or find a new supplier and ban child labour in order to get children in schools instead. However, what makes this issue so controversial is that any action or policy can cause serious unintended consequences. For example, wage increases cause labourer layoffs, followed by demands from management for overtime hours in order to maintain output, or not considering that education is only an option for the wealthy; children working do so in order to contribute an income to their families, avoiding other possible avenues such as drug trafficking or prostitution.

It’s easy to assume that governments should take the onus for enforcing standards. However, it seems government involvement in this one would yield minimal results for maximum effort. The government in the country of manufacture, in this case, is in a developing economy and likely does not have the resources or incentive to enforce labour standards. In the case of the home country (where the company is headquartered), we would be asking a national government to tackle an international issue which would manifest as a slow and painful effort to coordinate with all parties (government and corporations).

So why don’t consumers help by making the right choices? StatsCan research describes the ethical-products-seeker as under the age of 54, educated, higher income and born in Canada. (Marketers, take note if this describes your target consumer). However, in an Ipsos study, 82% of Canadians agreed that oversees worker conditions were exploitative, showing common acknowledgement for the issue at hand. Additionally, seven out of ten Canadians claim they are willing to pay a premium for ethically made products. However, it can be difficult knowing which products are made ethically and unethically at the time of purchase without having done proper research. Therefore, we see only about 40% actually participating in some form of boycotting unethical brands or actively buying ethical products.

Contrary to government action or consumer discretion, I believe that the international corporations themselves should be stepping up to ensure at least minimum standards in their supply chains. If Nike were to threaten suppliers that they will take business elsewhere unless certain working standards were met, the suppliers would be compelled to comply because this account loss would be detrimental. Although I am not advocating for this course of action as it can result in negative unintended consequences, it is a good example of the magnitude of power that corporations possess in this matter.

Here is a possible solution to these problems. Let’s pretend we’re Banana Republic and we choose to create the Labour Equity Program (LEP). The program could impose a 10% increase on the final price of specially marked products. This premium would then be pooled and directly reinvested into our third-party suppliers to improve worker conditions through improved wages, infrastructure, safety measures, etc. This is a transparent move as it admits that there is a problem and seeks to address it head on through the empowerment of their consumers. Further it accomplishes all of this while avoiding the unforeseen consequences of traditional policy.

The next move should be joining a regulatory organization like Fair Labour Association (FLA), along with many other major brands such as Apple, Adidas and Nike. FLA performs supply-chain audits to ensure accurate assessment of existing labour conditions and then publishes the results publicly, which creates accountability for any participating company to continually make efforts to improve.

Over the next year, we can internally measure the program to see how these investments improve morale and productivity at supplier locations. As well, we can gauge consumer responses to see whether or not they feel empowered to do the right thing at the time of purchase. Lastly, we can survey to see how this affects Banana Republic’s brand as a whole. My guess is that the company would be pegged as transparent and forward-thinking, which are great labels when competing in a global landscape!

So is it unethical to market for products made in sweatshops? Even after my analysis, I can’t come up with an answer since this issue involves so many layers. However, I will say this: I am personally very concerned with the values of the organizations I work for and the impact that their products/services have on society. Therefore, if products are inherently good or do good, like TenTree planting trees when you purchase their products, I find an easier time selling or marketing them. Otherwise, I lose motivation (I think most people can agree with this line of thinking). Every company, regardless the industry, has the power to be a better corporate citizen and every person has the duty to educate themselves on the organizations they associate with. If you are a stakeholder to a company, ask yourself this question, “Would I be ashamed to support this company if my close friends and family knew the full story about their products and way of conducting business?”, and if the answer is yes, then you better bet that it is unethical.

Thanks for reading! Happy to hear any thoughts!

Disclaimer: Slave labour is an even more complicated global issue that must also be addressed, though it is out of the scope of some of my suggested solutions.