Impact of Child Labour on Business and Society: A Report

This report investigates the use of child labour by corporations and its impact on children's lives and society, focusing on the H&M case. The report reviews existing literature, exploring factors that promote child labour, such as poverty and business profit motives, and the consequences including health issues, lack of education and involvement in illegal activities. The analysis incorporates primary and secondary data to assess the issue. The report also includes a case study of H&M, examining how the company sources products and the ethical implications of using child labour in its supply chain. The discussion section analyzes findings, highlighting the importance of ethical business practices and the role of corporate social responsibility. The report concludes with recommendations to mitigate child labour, emphasizing the need for businesses to prioritize ethical sourcing and social development, and the importance of education and triple bottom line considerations.

Business, Society and Policy

Table of Contents
Introduction................................................................................................................................1
Review of literature....................................................................................................................1
Factor promoting child labour................................................................................................1
Consequences of child labour on society and children lives..................................................2
Case study..................................................................................................................................3
Discussion..................................................................................................................................4
Conclusion and recommendations.............................................................................................5
References..................................................................................................................................7
Appendices.................................................................................................................................9
Appendix 1.............................................................................................................................9
Appendix 2.............................................................................................................................9
Appendix 3...........................................................................................................................11
List of figures
Figure 1: Working hour of child labour in different countries...................................................2

Introduction
Business policies have numerous impact on the society because it affects the mental
and physical health of individual (Carroll & Buchholtz 2014). In this context, the present
report is based on the questions which is “Why is child labour used by some corporations,
and how does this impact on the conditions of children’s lives and the society they live in?”.
For this purpose, case of H&M has been selected because it is associated with the child
labour issue. Here, several sources have been accessed to critically analyse the available
literature. Furthermore, both primary and secondary data have also been collected to assess
the selected topic. Moreover, the recommendations have been also provided to avoid the
child labor issue.
Review of literature
Factor promoting child labor
According to Elena (2014) child labor is main issue in emerging country because the
large number of public live below the poverty line. Each member of these family is source of
income including children. Thus, the financially unstable family forced their children to go
for work to earn money that helps in the family survival (refer figure 1). Further, André and
Godin (2014) mentioned that the family business such as agriculture and handicraft in
emerging countries also exploits the child labor because they do not pay them for their work.
On this note, according to the World report on child labour (2013), 17% of child population is
working and it is the key scenario in the countries where public have lowest living standards.
However, Ahmed and Ray (2014) commented that organizations use the child labor because
they work on the lower wage in comparison to adult labor. Further, Abdullah et al. (2014)
noted that child labour are not having knowledge about their rights about housing, food,
education, health and safety which provokes them to restrict this condition. The lower human
resources cost assists the business to offer the product and services to the clients at lower
cost. It further attracts the overseas business to purchase the products from these suppliers for
increasing the profit margin. It shows that the lower living standard of public and
aggressiveness of business to increase the profit margin are the main contributor in increasing
child labor. Although, Sarkis and Dhavale (2015) commented that the child labor provides
the short-term growth to businesses because it negatively affects future of labor market by
increasing the number poorly educated workers. Therefore, child labor is promoted through
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lack of family resources and poor knowledge which adversely influence the upcoming labor
trend.
Figure 1: Working hour of child labour in different countries
(Source: Ortiz-Ospina and Roser, 2013)
Consequences of child labour on society and children lives
According to Ahmed and Ray (2014), child labors are involved with the hazardous
and unsafe working condition that adversely affects their health. In this context, André and
Godin (2014) asserted that malnutrition, premature aging and depression are main impact on
the children that prevents them to live a healthy life. However, Abdullah et al. (2014)
commented that child labor also involved in the illegal activities and become drug addicted
that have negative impact on the society. Similarly, Elena (2014) mentioned that the child
labor does not get opportunity for education that creates barriers in their growth which further
alleviate the poverty. In this context, Islam and Sivasankaran (2014) mentioned that the
academic education is significant for the development of society and economy because it
increases the competencies of children that assist them to get right employment in future as
well as improves their living standards. On this note, businesses should focus on the triple
bottom line in determining the business strategies because it helps to prevent the unethical
activities accompanied financial and social benefits (refer appendix 3). Therefore, the
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perpetuating poverty, increased illegal activities and lack of education are the kay
consequences of child labors that has adverse impact on the growth of children and society. It
can be resolved by increasing the focus on the triple bottom line.
Ahmed and Ray (2014) noted that the child labor highly faces the sexual abuse that
resultant in early pregnancy and abortion that has adverse impact on the health of girl
workers. It further forced them to get involved with the prostitution and pornography which
negatively affects the society by increasing unethical activities. In this context, Elena (2014)
asserted that the interest in illegal activities forced the child labor to avoid the schooling that
creates the barriers in the social and technological development which adversely affects the
economic growth of country. It is because the ease availability of cheap labor for long
working hour decreases the interest of employers on the technological advancement in
production. It shows that child labor adversely influences the economic and social growth by
preventing technological advancement as well increasing prostitution and pornography. In
this context, El Kassar, Yunis and Tarhini (2017) noted the businesses needs to increase the
investment in the corporate social responsibilities for developing the society. It provides the
long-term growth by creating the positive image of brand. Therefore, sexual abuse and high
involvement in illegal activities are the key consequences of child labor. Businesses can
avoid it by enhancing the focus on corporate social responsibilities.
Case study
The case of H&M has been selected to analyses the social issue of child labor. H&M
is the Swedish fashion brand found in 1947 which operates in the 73 countries with 4,972
stores. Further, the firm also operates the business in 50 online markets (H&M Group 2019).
It sales around 300 million garments and accessories in a year which values around $ 3.15
million (Reference for business, 2019). Apart from this, the key strategy of the business is
“Fashion and Quality at best price” and monthly update its inventory to encourage for repeat
purchase (H&M Group, 2019). For managing the inventory in these stores, the organization
source the products from the emerging country by manufacturing the product in the cost-
effective manner (Hitchings-Hales, 2018). It further offers the cost advantages that increases
the profitability of business. However, the supplier of H&M follows the unethical practices
that have adverse impact on the brand image. It is because its supplier in emerging countries
like Bangladesh appoint the children under the age of 14 to work at factories (Hendriksz
2017). In the same manner, the primary data also reveals that the H&M involved with the
child labor. It reveals that the H&M also faces the issue of child labor.
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The association with the child labor degrades the brand image because the business
exploits the child labor through low wages and long working hours (Nissen 2017). In the
same manner, it is also found in primary data that the H&M encourages the use child labor
for increasing the profitability of business (refer appendix1,2). It further affects the mental
growth of child labor by exploiting them. Similarly, majority of respondents also supports
this argument that child labor faces the issue of poor mental health that further affects their
whole life. In this context, the response of H&M responds to media by communicating the
“We have taken action regarding those suppliers because it is important for us to ensure that
our product is made in good working condition” (Butler 2017). On the other hand, long
working hour prevents the child labor to complete their education that creates barriers in their
future growth. It was also found the primary data where the large number of respondents
believed that the working of children decreases the opportunity of their future development as
well creates the issue in the economic growth of country (refer appendix 2). It forces the
organization to take the significant action regarding this. However, the suppliers try to hide
this unethical activity from the clients. It makes the child labor as critical issue for the
business.
Discussion
According to above analysis, it has been found that the child labor is the main ethical
issues which are faced by the several businesses because their suppliers do not follow the
code of conduct. In this context, the secondary sources are in the support with this argument
because the client business increased the profitability by exploiting child workers. Further,
the under aged workers highly influence the economic development because it highly
depends on the growth of the individual. Apart from this, the easy availability of cheap labor
provokes the business to focus on technological advancement to increase the productivity. It
is also evident in the secondary sources where the study of Elena (2014) mentioned that the
lack of technological development adversely influences the economic growth because the
living standard of public is degrading. However, literature also mentioned that besides
business, the lower living standards also have high contribution in increasing the number of
child labor. It is because child labor is the main issue of developing economy where the large
number of populations are not having enough resources to live their life. As found in primary
data, poverty in developing countries provides opportunity to the business to appoint the large
number of child labor by taking advantages of their forcedness. This is supported by the
secondary sources because the study of Abdullah et al. (2014) mentioned that the appointing
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underaged workers is highly unethical practices that is used by the businesses to promote the
profitability. Thus, the business should increase the focus on the client’s policies that are
being employed to manage the routine operation
According to primary data, child labor has adverse impact on the development of
children because they are unable to complete their education which is significant to create the
base for their future growth. It is also mentioned in the literature review because the study of
Ahmed and Ray (2014) noted that the lack of focus on the education bring them in wrong
direction by moving toward the drug and prostitution that creates issues in surviving their
families in future. It further makes the unpleasant environment in the society wherein
everyone gets attached towards the illegal activities. Further, findings of primary data reveals
that high working pressure on the child labor decreases their mental health that provokes
them to take the right decision for themselves as well as for society. In the same manner,
secondary sources support that the child labor decreases the health of individual in the society
wherein the large mass of public is infected from the several diseases that brings society
towards poverty. It shows that child labor is used to survive the family but it consequently
continuing the chain of poverty and lower economic growth. In this context, the secondary
sources mentioned that it is imperative for business to ensure the prevention of child labor in
business activities as well as in the operation which performs by their clients (Elena 2014;
Ahmed and Ray 2014). The high focus on the triple bottom line would assist H&M to design
the strategies that have lower adverse impact on the society. It further supports to ensure the
consistent growth of organization. Apart from this, high focus on social development
leverage the business with skilled and qualified workers that positively contribute the growth
of businesses like H&m. Thus, businesses have opportunity to decrease number of child
labor and positively contributes in the development of society.
Conclusion and recommendations
On the basis of above report, it has been concluded that business have vital role in
increasing the child labor. In this context, the high profitability is the main concern that
motivates the business to tie-up with those partners who are involved in the unethical
activities like child labor, long working hours and hazards environment. It had adverse
impact on the society by creating unpleasant environment with high level of illegal activities.
Further, the underage working increases the stress in children that adversely influences their
mental health as well as future growth. For this purpose, its recommended that H&M should
increase the focus on the triple bottom line and tie-ups with only those suppliers that manage
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the operation in an ethical manner. Further, the organization can increase the investment for
developing the society by providing opportunity to get education. For this purpose, the H&M
should also compensate the child labor by facilitating them with quality education. Apart
from this, the company can also tie-ups with the social organization like NGO to improve the
living standards of public in emerging countries. On the other hand, the firm can force its
strategic partners like suppliers to avoid the unethical activities through timely inspection and
monitoring. Apart from this, H&M can create the sound policies for selecting the suppliers.
These recommendations can help organization to prevent the unethical activities at the
partners’ side and create the positive image of brand.
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References
Abdullah, M.A., Basharat, Z., Lodhi, O., Wazir, M.H.K., Khan, H.T., Sattar, N.Y & Zahid,
A.2014, ‘A qualitative exploration of Pakistan’s street children, as a consequence of the
poverty-disease cycle’, Infectious diseases of poverty, vol. 3, no.1, pp.11
Ahmed, S & Ray, R. 2014, ‘Health consequences of child labour in
Bangladesh’, Demographic research, vol. 30, pp.111-150
Alhaddi, H. 2015 ‘Triple bottom line and sustainability: A literature review’, Business and
Management Studies, vol.1, no.2, pp.6-10
André, G & Godin, M. 2014, ‘Child labour, agency and family dynamics: The case of mining
in Katanga (DRC)’, Childhood, vol. 21, no.2, pp.161-174
Butler, S 2017, H&M factories in Myanmar employed 14-year-old workers, viewed 4
October 2019,< https://www.theguardian.com/profile/sarahbutler>.
Carroll, A.B & Buchholtz, A.K 2014, Business and society: Ethics, sustainability, and
stakeholder management, Nelson Education.
El Kassar, A.N., Yunis, M & Tarhini, A 2017, CSR, corporate ethics, and OCB,
Elena, S 2014, ‘Socioeconomic impacts of child labour’, In Proceedings in GV-Global
Virtual Conference (No. 1).
H&M Group, 2019. Market overview. [online]. Available at:< https://hmgroup.com/about-
us/markets-and-expansion/market-overview.html > [Accessed on 4 October 2019].
Hendriksz, V 2017, Child Labour & Low Wages: The Real Cost of Producing Fashion in
Myanmar.< https://fashionunited.uk/news/fashion/child-labour-low-wages-the-real-cost-of-
producing-fashion-in-myanmar/2017020623421> [Accessed on 4 October 2019].
Hitchings-Hales, J. 2018, Hundreds of H&M and Gap Factory Workers Abused Daily, Report
Says, viewed 4 October 2019, < https://www.globalcitizen.org/en/content/hm-gap-factory-
abuse-fast-fashion-workers/>
Islam, M & Sivasankaran, A 2014, ‘How does child labor respond to changes in adult work
opportunities? Evidence from NREGA’, In International Conference on MGNREGA Impact,
Indira Gandhi Institute of Development Research, Mumbai, October.
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Kumar, R. 2019, Research methodology: A step-by-step guide for beginners, Sage
Publications Limited.
Mackey, A & Gass, S.M 2015, Second language research: Methodology and design,
Routledge.
Nissen, A2017, A PIECE OF WORK: H&M’S TAKE ON CHILD LABOUR IN MYANMAR,
viewed 4 October 2019,< http://humanrightsinbusiness.eu/portfolio/a-piece-of-work-hms-
take-on-child-labour-in-myanmar/>.
Ortiz-Ospina, E. and Roser, M. (2013). Child Labor. [online]. Available at:<
https://ourworldindata.org/child-labor > [Accessed on 4 October 2019].
Reference for business 2019, Hennes & Mauritz AB - Company Profile, Information,
Business Description, History, Background Information on Hennes & Mauritz AB, viewed 4
October 2019,< https://www.referenceforbusiness.com/history2/65/Hennes-Mauritz-AB.html
>.
Sarkis, J & Dhavale, D.G 2015, ‘Supplier selection for sustainable operations: A triple-
bottom-line approach using a Bayesian framework’, International Journal of Production
Economics, vol.166, pp.177-191
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Appendices
Appendix 1
Data collection
Both primary and secondary data have been collected for analyzing the research
question to reach the aim in an justifiable answer. In order to collect the primary data, survey
method has been used because it bound the respondents to give their answer in boundary of
research question (Kumar 2019). However, the interview method is also suitable for
conducting the research on social phenomena but it can deviate the researcher from the actual
aim of question (Mackey & Gass 2015). Thus, survey method is suitable for conducting the
exiting research. Further, the questionnaire has been also created that contain the 10 close-
ended questions related to the research topic. Thus, the survey method for collecting primary
data through closes-ended questionnaire is used in the present research.
Sampling
The primary data for the child labor case of H&M has been collected from the
members of different NGO who works for child labor. It is because this sample can give the
appropriate answer of research question because they have high level of involvement with
topic under consideration. Further, sample size will be 10 people of NGO because the
collection of data from the large is not justifiable in terms of finance whereas small sample
size can reduce the quality of data (Mackey & Gass 2015). Thus, 10 NGO members are
selected as sample.
Appendix 2
Questionnaire
1. According to your opinion what factor motivates businesses like H&M to promote the
use of child labor?
 Profitability
 Ease labor
 Exploit worker
 Poor knowledge of worker for their right
Options Response
Profitability 40
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Ease labor 30
Exploit worker 10
Poor knowledge of worker for their right 20
Total 100%
2. Do you believe that H&M has positive contribution in promoting child labor?
 Yes
 No
Options Response
Yes 70
No 30
Total 100%
3. To what extent, do you agree that H&M uses the child labor for increasing the
profitability of business?
 Strongly agree
 Agree
 Disagree
 Strongly disagree
Options Response
Strongly agree 30
Agree 50
Disagree 10
Strongly disagree 10
Total 100%
4. What is the main consequences of child labor on the society?
 Adversely affects the economic growth
 Lack of technological advancement
 Perpetuating the poverty
 Poor mental health of children
Options Response
10

Adversely affects the economic growth 30
Lack of technological advancement 20
Perpetuating the poverty 20
Poor mental health of children 30
Total 100%
5. According to your perception what are the main reasons that affect their physical and
mental growth of working children?
 Depression
 Involvement in illegal activities
 Poor working condition
 Lack of education
 Sexual abuse
Options Response
Depression 20
Involvement in illegal activities 20
Poor working condition 20
Lack of education 30
Sexual abuse 10
Total 100%
Appendix 3
Triple bottom line
Triple bottom line model proposed by the Elkington in 1997 to enhances the focus of
organization on the bottom lines that is significant for the growth of business (Alhaddi,
2015). This model makes the environment and society as a major concern together with the
profitability. In this context, economic, social and environmental aspects are the three basic
line which needs to be considered by the business which are discussed below.
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 Economic line-The economic line reflects on the impact of business practices on the
economic system (Sarkis and Dhavale, 2015). It defines the impact of business on the
economic growth of country and its supports in the growth of future generation.
 Environmental line- Increasing business activities consume the large amount of
natural resources that negatively affects the environment. For this purpose, the
environmental lien forces the organization to engage with those practices that save the
natural resources for future generation (Alhaddi 2015). It positively influences the
sustainability of business and provides the growth opportunity because the key
stakeholders such as government, trade union and NGOs support the sustainable
organization (Sarkis & Dhavale 2015). This, it is significant for the companies to
consider the conservation of environment in strategies.
 Social line- It reflects on fairness of trade policy in the context of society. This line
forces the business to give back to the society for the development in living standard.
It motivates the employer to be good for society by increasing the attention on
corporate social responsibility (Alhaddi 2015). In the contemporary era, business
increases the focus on the social line for providing benefits to the society which
consequently improves the brand image. It shows that the social line provides the
dual benefits by enhancing brand reputation and societal development.
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