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Sweatshop, Case Study Example

Pages: 1

Words: 1054

Case Study

Introduction

The aim of this paper is to compare the wages of individual firms being accused of being sweatshops and the industrial wages so as to measure the standard of living in these developing countries. The general characteristics of a sweatshop involve workers receiving poor pay, working conditions are poor, and long durations of work. The economists view on sweatshop is from an exchange perspective. The firm gains from the worker equally the worker gains from the wages received.

Scholarly works on sweatshops have majorly been carried out by non-economist or limited it to documenting the organization and the activities of the anti-sweatshop movement.

Other material illustrate how FDI increases with sweatshops firms and provides above average pay and benefits to 3rdworld countries.

Studies conducted by researches revealed that;

  • Multinationals firms pay higher wages than domestic firms.
  • Multinationals firms improves living standards through increasing demand for labor

ACIT indicates that multinational corporations pay higher wages than the prevailing market wages while the SASL point out that that the sweatshops provide pathetic conditions for production since most are subcontracted by multinational corporation.

Apparel jobs compared to Average living standard

Apparel industry employs majorly sweatshop labor since the production requirements of these corporations are massive and require great amount of labor. The companies in US directly employ third world country workers but in most cases subcontract their services to companies in home nations.

Average apparel industry wages in countries where sweatshops exist is as shown in the figure below:

Average Hourly Apparel Worker Wages

Average Hourly Apparel Worker Wages  
Bangladesh 0.13
China 0.44
Costa Rica 2.38
Dominican Republic 1.62
El Salvador 1.38
Haiti 0.49
Honduras 1.31
Indonesia 0.34
Nicaragua 0.76
Vietnam 0.26

For the workers working 70 hours per week the average income received by these apparel workers exceeds the average income of each individual in each country. A report of 9 countries out of 10 shows that their average national income low for workers working 50 hours per week. The comparison of average incomes of workers who only support themselves with those who support their families and extra persons provide an accurate assessment of the living standards of individuals in the developing world countries.

In order to approximate the average wages data, the employment participation data to adjust the average income per capita so as to reflect the average income per worker.

Apparel Industry Wages as a percentage of Average National Income

The graph indicates that an apparel industry wage is equal to or exceeds the average income per worker in 8 out of 10 countries. At 70 hours per week, it is indicated that the average worker earnings in 6 countries exceeds 150% of the average income per worker and they are more than double the average income in 3 countries.

In addition, the earning of apparel industry workers is compared to the poverty of these developing nations. The table below illustrates the percentage of population living on less than 1 or 2 dollars a day. The larger percentage of the population in developing nations live below $2 a day and this is true for the people in the developing nations.

People Living on Less than
  $1 a Day $2 a Day
Bangladesh 36.0% 82.8%
Cambodia 34.1% 77.7%
China 16.6% 46.7%
Costa Rica 20.1% 94.5%
Dominican Republic 20.0% 20.0%
El Salvador 31.1% 58.0%
Honduras 23.8% 44.4%
Indonesia 7.5% 52.4%
Nicaragua 45.1% 79.9%
Vietnam 17.7% 63.7%
Source: World Bank, World Development Indicators

Data for the most recent year available were used for each country. Currency conversions by PPP

 The apparel firms in these countries have been criticized for being exploitative even though their pay is much higher than the average earnings of other workers in the country. However, this is for particular corporations.

Wages in Sweatshop firms Compared to living Standard

This research is based on the data collected by the anti-sweatshop activists hence bias in this case understates the actual level of compensation and after comparison, most sweatshops pay more than the most average income hence improving the standards of living of these nations.

The tables show the average wage of the sweatshops workers and the company. Though average wages are low in 41 out of 43 cases, where workers take 10 hours a day in the company results in earning more than $1 a day and in more than half the of the earnings are greater than $2 a day. The sweatshop wages raises worker’s standards of living higher than a significant fraction of the population.

Four estimates that have varying hours worked per week between 40 to 70 hours. The 40 hours per week is the minimum number of hours worked in a week in the sweatshops whereas the 70 hours are the most hours worked in the companies per week.

In 9 out of 11 countries, the wages of the sweatshop workers reported equals or exceeds the average income of workers in the developing countries at 70 hours without the inclusion of non-monetary compensation. For instance, in Indonesia, workers receive free health care and meals in addition to the wages their wages.

In 7 out of 8 instances in Indonesia allege that Nike factories are sweatshops not including non-monetary compensation hence the estimates appear much lower.

Even though anti-sweatshop protests are staged in some countries, the wages paid by the firms are on average higher than the prevailing market wages. The figure shows wage comparison for the workers and non-workers. The bias of the information collected comes from those with most incentives understating their earning.

The average protested worker’s earning is more than the average worker in Cambodia, Haiti, and Nicaragua. The protested wages in most countries are at 60% of average wages. The relevant comparison of an individual worker is individual alternative rather than average wages since the sweatshop workers living standards are improved or made better off when they are paid more than their next best alternative.

However, in other countries such as China, it is alleged that individuals were forced to work in sweatshops hence this coerced labor reported wages that were of a lower percent than the income of the other countries.

References

Kernaghan, C., Public Affairs Video Archives., & C-SPAN2 (Television network). (1999).“Sweatshop” labor & global economy. West Lafayette, IN: C-SPAN Archives.

Graham, E. M. (2000). Fighting the wrong enemy: Antiglobal activists and multinational enterprises. Washington, DC: Institute for International Economics.

Sullivan, R. (January 01, 2010). Organizing Workers in the Space between Unions: Union-Centric Labor Revitalization and the Role of Community-Based Organizations.Critical Sociology, 36, 6, 793-819.

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