Module 2 Case Study: Nike's Sweatshops, Ethics, and Labor Practices

This case study delves into the ethical complexities surrounding Nike's historical use of sweatshops in developing countries. It examines the debate over whether Western-based companies should standardize labor rights, minimum wage, and unionization in their overseas operations. The analysis explores the feasibility of such standards, considering the differing conditions in developing nations and the potential consequences of implementing these measures, such as job losses and the adoption of technology to reduce labor costs. The study also investigates the expectations of consumers and the impact of boycotts. The conclusion suggests that while standardization may seem like a form of fair trade, its practical application is challenging and could have unintended negative effects on developing economies. The paper references relevant literature and provides insights into the ongoing ethical considerations for multinational corporations.

Running head: MODULE 2 CASE
Module 2 Case: Sweatshops and Ethics
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Introduction
Nike was once accused of running sweatshops in developing countries. There was a lot of
public backlash that forced Nike to redefine its international operation strategy and improve the
working conditions. However, the question as to whether Western-based companies should
standardize the labor rights and laws in their branches located within developing nations still
remain controversial. Whereas it is a fair trade for companies like Nike to standardize the labor
rules and conditions, there are other factors that renders it unethical. The paper will explore this
question in details and give possible response based on evidences from the past.
Feasibility of labor rights in developing nations
The company should not advocate for labor rights, minimum wage and unionization in
developing countries because the conditions are different in developing countries than developed
countries and even if the goal is to improve trade, the effects may be negligible. The intentions of
this movement are noble: people opposed to sweatshops are rightly outraged by the terrible
working conditions. However, those who express their protest by refusing to produce goods
produced in this way make a mistake or do not think about what would otherwise have
happened. We believe that if people refuse to buy products of sweatshops, then these enterprises
will not stand the competition and will close, and people will find a better job. But this is not so.
A sweatshop factory is a good option for citizens of developing countries. The alternatives are
usually even worse - exhausting and low-paid labor in the field, garbage collection or
unemployment. In 1993, Iowa Senator Tom Harkin introduced Congress to prevent child labor,
which would make it illegal to import goods into the United States from countries where child
labor is used. At that time, in Bangladesh, a lot of children were engaged in the sweatshops
production of finished clothes. The factories, fearing that the bill would be passed, immediately

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fired 50 thousand child workers. According to the US Department of Labor, these children did
not go to school and did not find a better place: “It is believed that most of them found work in
other sewing factories, in smaller, unregistered subcontracting sewing workshops, or in other
industries.” Considering, that transnational corporations usually pay much more than local
owners of sweatshops, most likely, the lives of these children have become worse. Indeed:
UNICEF found out that many of the dismissed underage seamstresses took desperate measures
for a piece of bread, for example, engaged in prostitution (Mintz, 2012).
Expectations for Western-based companies in developing nations
The company should just advice their foreign contractors to improve the working
conditions of their employees. Often workers work 16 hours 6-7 days a week. Sometimes they
are forbidden to take a break for lunch or go to the toilet. Air conditioners are rare there, so it can
be very hot in the shops. Health and safety care are largely neglected. It happens that employers
also pester their employees. This means that they should advice their contractors to reduce
weekly working houses, allow workers to have breaks, adopt occupational health and safety
standards and avoid pestering employees (Bryars and Stanberry, 2018).
Expectations of consumers
Consumers just have to support the companies because even if they boycott, the
consequences would not be good. Even though the working conditions of sweatshops are not
good, boycotting their products would mean that poor employees may have to be laid off. This is
evidenced in the Bangladesh case.
Feasibility of universal workplace standards

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Companies should not adopt universal workplace standards about working conditions and
employee protections because of two reasons. First, such standards will force some companies to
opt for alternative means such as artificial intelligence. Secondly, sweatshops are essentials for
developing countries even if the conditions are not good. Sweatshops are enterprises in poor
countries, usually Asian and South American, that produce goods for rich countries like textiles,
toys, and electronics and have truly terrible working conditions. Often workers work 16 hours 6-
7 days a week. Sometimes they are forbidden to take a break for lunch or go to the toilet. Air
conditioners are rare there, so it can be very hot in the shops. Health and safety care are largely
neglected. It happens that employers also pester their employees. Many advocated a boycott of
sweatshops, and several rapidly growing organizations (such as United Students Against
Sweatshops and No Sweat Apparel) arose to end the use of slave labor. For this reason, there is
considerable hostility in society toward Nike, Apple and Disney, and other large companies
based on sweatshops (Bain, 2017). A clear indicator that work in a sweatshop is a relatively good
option for residents of developing countries is the huge demand for it. Almost all workers work
there voluntarily, and some make serious efforts to get a place. At the beginning of the 21st
century, many Bolivians illegally go to Brazil to work in sweatshops. The average annual income
at such an enterprise in Brazil is 2 thousand dollars. By our standards, this is not so much, but it
is $ 600 a year more than the average income in Bolivia, where people work mainly in
agriculture or in mines. Since the conditions of sweatshops are terrible, it's hard for us to imagine
how people could risk deportation just for the sake of work. But this is because the extremes of
world poverty are almost unimaginable.
Conclusion

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The analysis has demonstrated that while it is a form of fair trade for western-based
companies to standardize the working conditions and wages, the feasibility of this proposal is
poor. Standardization of rights, laws and rules may force companies in developing nations to
dismiss many employees who have no other means of survival. It may also force western-based
companies to opt for technology as a strategy to cut labor cost. In the end, poverty, hopelessness
and other social ills will rise in the developing nation affected. This shows that sweatshops are
essential for developing nations.

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References
Bain, M. (2017). Nike is facing a new wave of anti-sweatshop protests. Quartz. Retrieved from
https://qz.com/1042298/nike-is-facing-a-new-waveof-anti-sweatshop-protests/
Bryars, S. and Stanberry, K. (2018). Impact of Culture and Time on Business Ethics, Chapter 5.
Business Ethics. Rice University, OpenStax.
Mintz, S. (2012). Social responsibilities of a U.S. company doing business abroad. Retrieved
from https://www.ethicssage.com/2012/05/social-responsibilities-of-a-uscompany-doing-
business-abroad.html