The Use of Child Labor, Research Paper Example

Abstract

The use of child labor in developing countries is by no means a shocking discovery. Over the decades in the United States, corporations have moved out of their home towns and sought the refuge of tax exempt countries, cheap labor, and monetary gain that comes from that labor, in the developing world. United States corporations have profited from this scheme for the better half of last century and most of this century. This paper will focus on U.S. companies that have benefited from such egregious acts of human rights violations and offer reasons as to the corporation’s impetus to use child labor, and the effect and consequence of said actions.

Keywords: child labor, U.S. corporations, and human rights, developing world, ethical violations

The Use of Child Labor in the Developing World by U.S. Corporations

Many developing countries are benefiting from their place in the global economy through paired interest with U.S.corporations. Developing countries are depending on a widening global economy that is inclusive of their country’s industry and export but it’s coming at a large price. Laws in business ethics forbid the use of children as laborers; there are no such sanctions throughout certain developing worlds. This lack of moratorium on child laborers by U.S.corporations has a damaging effect on said corporation’s image (which could affect their economic growth) so such practices are operated on a clandestine level (e.g. sweat shops). There are many examples of various corporations in the United States making a profit off of cheap labor in China and other developing countries. Some companies that have benefited from the use of child labor will be included in this paper: such companies as Nike, Reebok, Addidas, Walmart, and H&M clothing store. The use of child labor in these companies though profitable comes at a moral cost. The negligence of these companies and their lack of internal policing in their many industries outside of the United States will be examined. This paper will also focus on the use of child labor for such companies in the United States, and the reasons behind their exploitation, and the consequences, if any, of such use by major United States corporations.

Child labor is problem in developing worlds in part due to competition. United States corporations place a heavy emphasis on stock market points and lowering the cost of production in order to gain a more impressive profit margin.Child labor however comes at the price of ignoring basic moral and ethical standards and more importantly effects the welfare and the health of children in developing countries. While a child may gain a wage from a company, albeit a low wage, this in turn creates a domino effect as the children are effectively selling their labor for less than an adult would. In order to maintain their lifestyle and support their family, the adult then has to compete with the child and lower their wages. The ILO suggests that this cycle has had such a detrimental effect on developing countries and their wages and more importantly on child labor that in “2000 about 211 million children aged 5 to 14 years old have been engaged in some form of economic activity globally. Of these, only 25 million are deemed as acceptable by the standards set by various ILO conventions and recommendations” (Neumayer, 2005, p. 3). Of these 25 million the average age range was from 12 to 14 years old, meaning the majority of the rest of the 211 million were under that age or above it. Although minimum wage requirements are an argument in these developing nations and human rights groups, there are other problems and issues at hand as well concerning child labor; “In addition to minimum wages, companies in the developed countries must provide high social benefits that include pension contributions, vacation, paid sick leave, social security, and health benefits, etc. They are also bound by occupational safety and health rules. In many developing countries, there are no such laws, not even with respect to child labor” (Bigman, 2000, p. 50). Laws for child safety and labor don’t exist in developing countries and therefore United States companies stand to profit off of their lax laws. The World Trade Organization is one such company has set in place an agreement to enforce mandatory rules for these developing countries; “…the pressures of many groups and labor unions in the developed countries to enforce minimum environmental standards and child labor laws under WTO [World Trade Organization] agreements reflect not only a genuine concern for these issues, but also efforts to lower the comparative advantage that these exporting countries have on account of their low environmental standards and the absence of labor laws” (Bigman, 2000, p. 51).

Standards of living in developed countries are low; many believe this is due to the IMF and the World Bank and the “race” they have to outdo their competition in regards to cheap labor equaling cheap manufacturing. This race allows for a breeding ground of cheap labor that in turn disregards the quality of human life and labor rules that are not only custom but mandatory in the developed world: “Labor, as one example of this, gets cheaper and cheaper which benefits the multinational companies, but not the workers themselves. Various international trade agreements that large corporations are able to strongly lobby favorable conditions in, are often designed in part to make resources (including work forces) cheaper” (Shah, 2006, para. 1). As the world is no longer compartmentalized in regards to labor and market venues, globalization has an increasing effect on developing countries as they have proven a record-breaking resource to U.S.corporations. This record breaking refers to cheap labor, often in the form of child labor. The developing world’s opposition to this business practice can be seen in Massachusetts where laws were being made in order to curtail the practice of use of child labor or at least to “restrict corporations doing business with regimes that violate certain rights of people in some way — they were pressured by a coalition of 600 major corporations in that State, saying that this is unconstitutional” (Shah, 2006, para. 2).  In a sweeping win, the judge presiding over the case agreed.

Some of the corporations that were included in this “600” corporation are Nike and Coca Cola. These are no small brand companies. Their advertising is phenomenally well done, and their market value is such that a certain level of avarice must exist in order to allow for the exploitation of minors in other countries in order to gain a margin in the stock market trade. Some researchers have pointed to the fact that this cycle of abuse in regards to child labor may in fact be more about competition than about avarice. In order to have competing prices on a global market, then any trick a competitor uses in order to boost not only their sales but their manufacturing to market sell will be repeated in each company. It is something that Shah (2006) refers to as the “cycle of competition” (para. 3) in which companies “driving each other to such measures to keep up and to maximize profits” (Shay, 2006, para. 3). In this cycle of competition Nike has even gone to such lengths as to utilize the cheap labor force found in South East Asia where the government is lax in such areas as lack of similar regulations and child enforcement laws that are present in developed countries such as the United States and Europe. Nike was actually exposed for this exploitation and gross misconduct in human rights. Similar to Nike, Coca Cola has also bee on the chopping block for their use of child laborers. Coca Cola has gone a step further, and has also been accused of “hiring (often indirectly, through intermediaries) paramilitaries to intimidate or kill union leaders” (Shay, 2006, para. 3). Even Walmart was accused and found to be using child laborers in Bangladesh (Torres et al., 2012, p. 52).In 2005 the major U.S. shopping conglomerate was publically accused of having two factories in this country and “Children aged 10-14 years old were found to be working in the factories for less than $50 a month making products of the Walmart brand…” (Torres et al., 2012, p. 60). Walmart was considering cutting ties with their Bangladesh factory but was advised against it as “Critiques said that it only discourages workers from telling the truth to factory auditors for fear of losing their jobs and encourages suppliers to hide abuses or to subcontract work to other factories that will escape inspection” (Torres et al., 2012, p. 60). Walmart did eventually discontinue its use of the two factories in Bangladesh.Walmart stated that it tries to keep tabs on all of its factories but that it is difficult to police all of their factories with their own personal and ethical code of conduct because they are inundated with “subcontractors around the world” (Torres et al., 2012, p. 60). For a company that makes over a billion dollars in profit every year, to say that they don’t have the man power to oversee their thousands of factories across the world to check for labor law regulations and adherence is simply unbelievable.

Certain apparel companies have also had their dalliances in questionable ethics and humane treatment of their workers. In 1996 an expert panel representing international law but to the forefront of its business an expose on the use of child laborers, and sweat shops in undeveloped countries by companies such as Nike, Addidas, H&M, Levi Strauss, and Walt Disney. Testimony from various people who gave eyewitness accounts of sweatshop conditions (Shay, 2006, para. 4).The majority of companies on the above list have their head quarters stationed in the United States, as such the Human Rights Watch has harshly criticized the United States for its unfair treatment of workers and child labor use in under developed or third world countries especially since the United States “provides a better standard of living, opportunities etc. than most countries” (Shay, 2006, para. 8).

Researchers point out, however, that when a developing country does make strides in human rights and protecting children from gross misconduct and unfair labor at a young age, U.S. corporations are more likely to shift their manufacturing business away from that country and simply move to a cheaper, less strict, area. This was the case with Coca-Cola moving its Zambia location after fights about tax exemptions.  The too large to fail tobacco company (with main offices in Virginia and the Carolinas) have moved their manufacturing business to Asia so their United States sales that were on the decline, have a chance to benefit from cheap, child labor. Phillips-Van-Huesen closed their factory in Guatemala because workers there were trying to form a union, and with a formed union working conditions are very much improved as the union requires health benefits, working wages, sensible hours and breaks, no child workers, and all of this cuts into profits so the company moved their manufacturing business out of Guatemala to a more sweat shop friendly place (Shay, 2006, para. 14).

It is fair to say that the use of child labor in the developing world is one of high social impact. Child labor not only detrimentally affects a company’s brand but also more importantly affects the welfare and health of the children. Cheap wages for children in developing countries ultimately lead to a decrease in adult wages as wages must be kept competitive in order for workers to find employment (Bachman, 2000, p. 30). If a child is willing to work for half the amount of an adult then the adult is out of work unless they met market value that is now directly influenced by child wages. ILO suggests that in “2000 about 211 million children aged 5 to 14 years old have been engaged in some form of economic activity globally” (Neumayer, 2005, p. 3). Of the 211 million children working in a third world labor force, only about 25 million were being paid a fair wage according to standards of practice in developed countries (a standard set by the ILO conventions). Of these 25 million most were between the ages 12 and 14.

Critics have argued that child labor has dramatically influenced company perspective so much so that their competition with one another has propelled a type of cyclone in profiteering while also using cheap labor in the form of child workers.Developing countries are trying to use child labor to their benefit by imploring United States companies to come to their country and set up shop in something called trade openness: “Developing countries with lax labor standards, low wages and an abundant supply of unskilled labor, including child laborers, are regarded as a haven for foreign investors – a perspective called the ‘conventional wisdom’ … High profile cases such as Nike, Reebook and Adidas show that multinational corporations do at times subcontract to enterprises that employ children” (Neumayer, 2006, p. 8). This means that foreign investors as well as American CEOs are involved in the exploitation of children and unfair labor conditions.  Even Apple has had their time in the spotlight in regards to child labor since in 2011 media reports stated that the huge computer and tech company had issues with child labor as it was revealed that there were “91 underage workers at the suppliers” (Torres et al., 2012, p. 64).

French, L., and Wokutch, R. (2005) studied the use of child labor in the Brazilian shoe market business and came up with the following data:

(p. 623).

The age of children from 12-14 (ages considered child labor) grossly outweigh those of legal age. In any case, the authors make a point to note that even despite the age distribution, the working conditions in the factories for these children are reprehensible (French and Wokutch, 2005, p. 624).

Many main companies such as Nike, Coca-Cola, and Walmart have used child labor in developing countries. The policing of human rights violations in developing countries have been sadly lax. It seems that companies are only caught after the fact, after years of exploitation of children and after their profits have increased. Some corporations are trying to curtail the use of child labor in developing countries but it seems to be an uphill battle. This paper has shown a surplus of examples of United States companies and their exploitation of children, young children, in third world countries because the labor is cheap. While cheap labor provides cheap wages, it in effect demotes the company on a moral scale as the petitioners in Massachusetts exemplified.

References

Bachman, S.L. (2000). The Political Economy of Child Labor and its Impact on International Business. Business Economics, 30, 30-41.

Bigman, D. (Ed.). (2002). The Pros and Cons of Globalization for Developing Countries. Cambridge, MA: CABI Publishing.

French, L., and Wokutch, R. (2005). Child Workers, Globalization, and International Business Ethics: A Case Study in Brazil’s Export-Oriented Shoe Industry. Business Ethics Quarterly, 15(4), 615-640.

Neumayer, E and De Soysa, I. (2005). Trade Openness, Foreign Direct Investment and Child Labor. World Development, 33(1), 43-63.

Shah, A. (2006, May 28). Corporations and Worker’s Rights. Global Issues. Retrieved from http://www.globalissues.org/article/57/corporations-and-workers-rights

Torres, C., Garcia-French, M., Hordijk, R., Nguyen, K., and Olup, L. (2012). Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy? Utrecht Law Review, 8(3), 51-73.