Analysis of Sweatshops: Adidas, Labour Laws, and Recommendations

This essay examines the issue of sweatshops, focusing on the practices of Adidas within the garment manufacturing industry. It begins with an executive summary and table of contents, introducing the context of Adidas' alleged labor law violations, particularly in relation to child labor and poor working conditions. The paper delves into the reasons behind the use of sweatshops by multinational corporations, such as cost reduction through outsourcing and the exploitation of low-skilled labor in developing economies. The study explores the economic factors that contribute to these practices. The essay also includes recommendations for addressing and mitigating the negative impacts of sweatshops, including stricter regulations, improved worker rights, and increased transparency in supply chains. The paper concludes by emphasizing the need for ethical business practices and the protection of workers' rights within the globalized economy. The essay includes references and an appendix.

Running head: Victims of Sweatshops
Victims of Sweatshops
Name of the Student
Name of the University
Author Note
Course ID:

1Victims of Sweatshops
Executive Summary
The paper is a description of the sweatshops and child labour used in garment manufacturing
industries. The study begins by providing a brief outline about Adidas accused of violating
labour laws. Later, the study includes various reasons for using sweatshops by Multinational
Corporations. In addition to this paper includes a recommendation to eliminate the use of
sweatshops in industries.

2Victims of Sweatshops
Table of Contents
Introduction................................................................................................................................3
Adidas’ history of exploiting labour laws..................................................................................3
Reason behind sweatshop labour...............................................................................................4
References..................................................................................................................................7
Appendix....................................................................................................................................9

3Victims of Sweatshops
Introduction
A sweatshop is known as the factory or employer organisation that tends to destroy
the right of the workers. According to the Department of labour of the United States, any
organisation or a factory that are found violating labour laws more than two are categorised
under sweatshops. These kinds of organisations tend to employ workers either in contractual
agreements or for providing a final addition to the product (Flanigan, 2018). Sweatshops are
common among the clothing and fashion industry. These companies’ use outsourcing method
and violates labour laws to increase profitability. Adidas has been accused of violating labour
laws and using sweatshops to reduce the cost incurred on employees and increase overall
profits from sales. Therefore, this report highlights the laws violated by companies like
Adidas and the reason behind using sweatshop labour. In this regard, the study tries to
incorporate appropriate recommendation to reduce such violation of labour laws.
Adidas’ history of exploiting labour laws
Adidas is a German-based multinational corporation that manufactures as well as
designs shoes, accessories and garments. It is one of the largest and popular sportswear-
manufacturing organisation in the world. Adidas is well known for its high-quality sports
shoes all around the world and is extensively popular among sportspersons. However, the
leading apparel company has been accused of using sweatshop labours to increase its name
and fame in the world. Before the inception and introduction of this European company in the
top list of producing garments and shoes, it started using child labour with poor working
conditions. The longer work hours and critical techniques involved in the process of making
high-quality Adidas shoes are against the laws of labour rights. The leading sportswear
company has been criticised for operating sweatshops in Indonesia. In addition to this, the
process of outsourcing carries forwarded by Adidas has been subject to penalisation in the
same country as well. Several theories and evidence suggest that large Multinational
Corporations from a manufacturing background uses sweatshop or outsourcing techniques to
reduce labour costs. Outsourcing is one of the attractive section for any MNC like Adidas. As
a result, they tend to employ a large amount of labour with low wages. In the year 2000,
Indonesian workers manufacturing clothes and footwear for Adidas blamed the MNC for
forced labour time, physical humiliation, below minimum wages and abusing behaviour
(theguardian.com, 2000). Several Norn-Governmental Organisations (NGOs) supported the
claim of the workers.

4Victims of Sweatshops
Apart from low wages and poor working conditions, Indonesia has filed a complaint
against Adidas for ill-treatment with workers in the factory. There were sexual harassment
cases against the company. In addition to this, Adidas has been blamed for threatening
employees regarding filing complaints against the renowned employer. Not only for violating
labour laws, but the company has also been accused of using child labour in its factories. This
created headline in the world news, as employing children below the age of 14 years is a
complete violation of human rights. Thus, for violating labour laws, the US department
restricted Adidas subcontracting supplies in the US. However, the company has turned down
all allegations by mentioning the allegations as unreal. Despite this denial by Adidas, the War
on Want Report indicates the labour exploitation in Bangladesh, which accuses companies
like Nike and Adidas (War on Want.org, 2020). This is because Bangladesh has the cheapest
source of labour and one of the best places for outsourcing labour. The average wage of
workers in Bangladesh for MNCs are about 0.5 dollars (The World Counts. Com, 2020). As a
result, companies find Bangladesh an attractive place for providing a final change to their
product. As a result, the profits of companies like Adidas increases by employing outsourced
and sweatshop labours.
The reason behind sweatshop labour
Several reasons together form the reason behind the existence of sweatshops
operating in the world. MNCs is one of the topmost reason behind the existence of sweatshop
labour. Advanced economies like the US, the UK, Saudi Arabia and Australia have high-
skilled labour. Hiring such labour is a costly endeavour for such profit-maximising
companies. In addition to this, trained labours demand high salaries compared to unskilled or
unorganised labours. The high knowledge of such skilled and educated employees makes
them aware of their rights and laws. As a result, big companies cannot take undue advantage
of such daunting workforce. Hence, the profit motive of the employers induces them to hire
low-skilled and relatively illiterate labour force (Bartley & Egels‐Zandén, 2015). Companies
engaged in manufacturing like clothing and footwear uses such unskilled workers to for
stitching or knitting purposes. Evidence suggests that developing or poor countries have a
greater share of providing outsourcing help to large MNCs like Nike, Adidas, H&M, GAP,
Tommy Hilfiger, Converse, Forever 21 and many others (Phau, Teah & Chuah, 2015). These
developing or emerging economies include Bangladesh, Honduras, Indonesia, El Salvador,
Costa Rica, Dominican Republic and many others. In addition to this, China is well known
for its cheap labour inputs as well. The sweatshop labourers are provided about 3 cents an

5Victims of Sweatshops
hour, which is again delayed by the employer. The worker in these countries has recorded
severe workplace accidents, which sometimes leads to death. Not only they employ low-
skilled workers but also children under the age of fourteen years.
World Report indicates that in the outskirts of Bangladesh, worker, as well as
children, are a victim in the hands of the deadliest garment manufacturing industries. The
famous Rana Plaza building collapse indicates the fatal activities and low-cost hubs of the
well-known organisation of the world. Therefore, the garment factories are known for their
worldwide hiring of low-skilled as well as low-cost labours. They are known for their labour
right violation activities. This labour law violation includes hiring pregnant workers, denial
for leave, threatening labours, sexual harassment, increased overtime, child labour and
extremely lower wages (cato.org, 2014).
Moreover, such sweatshop workers are restricted from worker or employee benefits as
well. The reason behind issuing subcontractors or outsource labours include better movement
of the supply chain. In addition to this, developing economies have lower rates of taxation,
low input costs and fewer restrictions of the government, which renders benefits to the
MNCs. The main motive behind such a violation of labour rights includes profit
maximisation, global market dominance, reduced competitiveness and low cost. However, in
certain cases poor and unskilled workers are better off from sweatshops (adamsmith.org,
2015). Because in this modernised era, the demand for high-skilled labours is increasing.
Hence, unemployment among the poor is high.
Recommendation to reduce sweatshop labour
Sweatshop labours are harmful to the rights as well as living standards of the people
living in developing economies. This is because sweatshop labours are prominent in
developing economies like Indonesia, Bangladesh, El Salvador and many others. The low
skilled and uneducated workers are victimised regularly at the hand of the large MNCs.
Therefore, the Human Development Organisations (HDO) and the International Labour
Organisation (ILO) have together imposed strict measures to reduce the use of sweatshops
and child labour (Williams, 2016). In the year 2016, the Human Rights collaborated with
eight international labour right protecting groups and global unions to protect the workers
from the unscrupulous actions of the garment industry. This collaboration was performed to
induce or increase transparency in the garment or apparel industries. As a result, the coalition
introduced a “Transparency Pledge” to provide a report to organisations regarding the sources

6Victims of Sweatshops
of production of different items (hrw.org, 2018). Additionally, all the companies were
directed to provide or publish a report of the authorised production places, processing
stations, information regarding the parent companies and listing the address of the sites to
remove discrepancies in production.
Apart from these laws, the government and the ILO together imposed several strict
laws against sweatshop labours. Moreover, child labour is completely against the rules of
HDO. Therefore, there are global organisations and NGOs that works or operates anti-
sweatshop campaigns to reduce forced labour, unfavourable working hours and child labour
(Sethi & Rovenpor, 2016). In addition to this, such campaigns incorporate several big brands
to join their movement and enhance the workplace environment. The students are against
sweatshop activities as well (Robbins, 2013). However, this not the end to reducing such
sweatshop labours, laws should be aimed at boycotting products made from sweatshops.
Workers in developing companies need to increase their education and self-awareness to
restrict and oppose working in such bad conditions. Government of developing nations
should impose strict guidelines against sweatshop factories and should regularise inspection.
Conclusion
Thus, to conclude the study, this can be implied that sweatshop is a common attribute
of the garment industry. Companies like Adidas are accused of violating labour laws and
human rights. During the growth years of Adidas, the leading sportswear company used
sweatshops to increase productivity at a low cost of manufacturing. Similar to this MNC,
several other transnational organisation uses sweetshops to increase profitability. Moreover,
profit motive and urge of gaining market power induces companies to look for low-cost
labour, which is widely available in developing economies. Therefore, developing economies
are threatened by the poor as well as fatal working conditions. However, government and
international organisations are working to restrict the misuse of labour. The local government
should take steps to restrict the sweatshops as well.

7Victims of Sweatshops
References
adamsmith.org, (2015). Bowman, S., & Bowman, S. (2015). Sweatshops make poor people
better off — Adam Smith Institute. Adam Smith Institute. Retrieved 29 February 2020,
from https://www.adamsmith.org/blog/international/sweatshops-make-poor-people-
better-off
Bartley, T., & Egels‐Zandén, N. (2015). Responsibility and neglect in global production
networks: the uneven significance of codes of conduct in Indonesian factories. Global
Networks, 15(s1), S21-S44.
cato.org, (2014). A Case against Child Labor Prohibitions. (2014). Cato Institute. Retrieved
29 February 2020, from https://www.cato.org/publications/economic-development-
bulletin/case-against-child-labor-prohibitions
Flanigan, J. (2018). Sweatshop regulation and workers’ choices. Journal of Business
Ethics, 153(1), 79-94.
hrw.org, (2018). World Report 2018: Rights Trends in “Soon There Won’t Be Much to
Hide”. (2017). Human Rights Watch. Retrieved 29 February 2020, from
https://www.hrw.org/world-report/2018/essay/transparency-in-apparel-industry
Phau, I., Teah, M., & Chuah, J. (2015). Consumer attitudes towards luxury fashion apparel
made in sweatshops. Journal of Fashion Marketing and Management.
Robbins, A. (2013). The Future of the Student Anti-Sweatshop Movement: Providing Access
to US Courts For Garment Workers Worldwide. Am. U. Labor & Emp. LF, 3, i.
Sethi, S. P., & Rovenpor, J. L. (2016). The role of NGOs in ameliorating sweatshop‐like
conditions in the global supply chain: The case of fair labor association (FLA), and
social accountability international (SAI). Business and Society Review, 121(1), 5-36.
The World Counts. Com, (2020). Theworldcounts.com. Retrieved 29 February 2020, from
https://www.theworldcounts.com/challenges/people-and-poverty/slavery-and-
sweatshops/sweatshop-workers-conditions
theguardian.com, (2000). Osborn, A. (2000). Adidas attacked for Asian 'sweatshops'. the
Guardian. Retrieved 29 February 2020, from
https://www.theguardian.com/world/2000/nov/23/andrewosborn#maincontent

8Victims of Sweatshops
War on Want.org, (2020). War on Want. Retrieved 29 February 2020, from
https://www.waronwant.org/
Williams, M. S. (2016). Strategic innovation in US anti-sweatshop movement. Social
Movement Studies, 15(3), 277-289.

9Victims of Sweatshops
Appendix

10Victims of Sweatshops