Maitland argues against the critics claim that international sweatshops widen the gap between the rich and the poor in the countries that host sweatshops. Wi

Ethical Issues in International Business 597

SWEATSHOPS AND BRIBERY

T h e G r e a t Non-Debate over International Sweatshops

I n r e c e n t y e a r s , t h e r e h a s b e e n a d r a m a t i c g r o w t h in t h e c o n t r a c t i n g o u t of p r o d u c t i o n by c o m p a n i e s in t h e i n d u s t r i a l i z e d c o u n t r i e s to suppliers i n developing countries. This glob- alization of p r o d u c t i o n has l e d to a n e m e r g – i n g i n t e r n a t i o n a l division of l a b o r in footwear a n d a p p a r e l in which c o m p a n i e s like Nike a n d R e e b o k c o n c e n t r a t e o n p r o d u c t d e s i g n a n d m a r k e t i n g b u t rely o n a n e t w o r k of contractors in I n d o n e s i a , China, Central America, a n d t h e like, to b u i l d shoes o r sew shirts a c c o r d i n g to exact specifications a n d deliver a high-quality g o o d a c c o r d i n g to p r e c i s e delivery s c h e d u l e s . As Nike's vice p r e s i d e n t for Asia has p u t it, "We d o n ' t k n o w t h e first t h i n g a b o u t m a n u f a c t u r – i n g . We a r e m a r k e t e r s a n d designers."

T h e c o n t r a c t i n g a r r a n g e m e n t s have d r a w n i n t e n s e fire f r o m c r i t i c s — u s u a l l y l a b o r a n d h u m a n rights activists. T h e s e "critics" (as I will r e f e r t o t h e m ) h a v e c h a r g e d t h a t t h e c o m p a – nies a r e (by p r o x y ) e x p l o i t i n g w o r k e r s i n t h e p l a n t s (which I will call " i n t e r n a t i o n a l sweat- s h o p s " ) of t h e i r s u p p l i e r s . Specifically t h e c o m p a n i e s s t a n d a c c u s e d of c h a s i n g c h e a p l a b o r a r o u n d t h e g l o b e , failing to p a y t h e i r w o r k e r s living wages, u s i n g c h i l d labor, t u r n – i n g a b l i n d eye t o a b u s e s of h u m a n r i g h t s , b e i n g c o m p l i c i t w i t h r e p r e s s i v e r e g i m e s i n d e n y i n g w o r k e r s t h e r i g h t t o j o i n u n i o n s a n d failing to enforce m i n i m u m l a b o r s t a n d a r d s in t h e w o r k p l a c e , a n d so o n .

T h e c a m p a i g n against i n t e r n a t i o n a l sweat- s h o p s has largely u n f o l d e d o n television a n d ,

Ian Maitland

t o a lesser e x t e n t , i n t h e p r i n t m e d i a . W h a t seems like n o m o r e t h a n a h a n d f u l of critics has m o u n t e d a n aggressive, media-sawy cam- p a i g n w h i c h h a s p u t t h e publicity-shy r e t a i l giants o n t h e defensive. T h e critics h a v e or- c h e s t r a t e d a s e r i e s of s e n s a t i o n a l " d i s c l o – s u r e s " o n p r i m e t i m e television e x p o s i n g t h e terrible pay a n d working conditions in factories m a k i n g j e a n s for Levi's o r sneakers for Nike or Pocahontas shirts for Disney. O n e of t h e princi- pal scourges of the companies has b e e n Charles K e r n a g h a n who r u n s t h e National L a b o r Coali- t i o n ( N L C ) , a l a b o r h u m a n r i g h t s g r o u p in- volving 25 u n i o n s . It was K e r n a g h a n w h o , in 1996, b r o k e t h e news before a C o n g r e s s i o n a l c o m m i t t e e t h a t Kathie L e e Gifford's c l o t h i n g l i n e was b e i n g m a d e by 13- a n d 14-year-olds working 20-hour days in factories in H o n d u r a s . K e r n a g h a n also a r r a n g e d for t e e n a g e workers from sweatshops in C e n t r a l A m e r i c a to testify b e f o r e c o n g r e s s i o n a l c o m m i t t e e s a b o u t abu- sive l a b o r practices. At o n e of these h e a r i n g s , o n e of t h e workers h e l d u p a Liz Claiborne cot- ton sweater identical to ones she h a d sewn since s h e was a 13-year-old w o r k i n g 1 2 – h o u r days. A c c o r d i n g to a news r e p o r t , " [ t ] h i s i m a g e , ac- cusations of oppressive c o n d i t i o n s at t h e fac- tory a n d the Claiborne logo played well o n that evening's n e t w o r k news." T h e result has b e e n a circus-like a t m o s p h e r e — a s in R o m a n circus w h e r e Christians were t h r o w n to lions.

K e r n a g h a n has shrewdly t a r g e t e d t h e c o m – p a n i e s ' carefully cultivated p u b l i c imag es. H e

From Ian Maitland, "The Great Non-Debate Over International Sweatshops," British Academy of Management Annual Conference Proceedings, September, pp. 240-65, 1997. Reprinted with permission of the author.

598 Ethical Issues in International Business

has explained: "Their image is everything. They live and die by their image. That gives you a certain power over them." As a result, he says, "these companies are sitting ducks. They have no leg to stand on. That's why it's possible for a tiny group like us to take on a giant like Wal-Mart. You can't defend paying someone 31 cents an hour in Honduras.. . ."1

Apparently most of the companies agree with Kernaghan. Not a single company has tried to m o u n t a serious defense of its contracting practices. They have judged that they cannot win a war of soundbites with the critics. In- stead of making a fight of it, the companies have sued for peace in order to protect their principal asset—their image.

Major U.S. retailers have responded by adopting codes of conduct on h u m a n and labor rights in their international operations. Levi-Strauss, Nike, Sears, J.C. Penney, Wal- Mart, Home Depot, and Philips Van-Heusen now have such codes. As Lance Compa notes, such codes are the result of a blend of hu- manitarian and pragmatic impulses: "Often the altruistic motive coincides with 'bottom line' considerations related to b r a n d name, company image, and other intangibles that make for core value to the firm."' Peter Jacobi, President of Global Sourcing for Levi-Strauss has advised: "If your company owns a popular brand, protect this priceless asset at all costs. Highly visible companies have any number of reasons to conduct their business not just re- sponsibly but also in ways that cannot be por- trayed as unfair, illegal, or unethical. This sets an extremely high standard since it must be applied to b o t h company-owned businesses and contractors. . . ." And according to an- olher Levi-Strauss spokesman, "In many re- spects, we're protecting our single largest asset: our brand image and corporate reputation." Nike recently published the results of a gen- erally favorable review of its international op- erations conducted by former American U.N. Ambassador Andrew Young.

Recendy a truce of sorts between the critics and the companies was a n n o u n c e d on the White House lawn with President Clinton and Kathie Lee Gifford in attendance. A presi- dential task force, including representatives of labor unions, human rights groups and ap- parel companies like L.L.Bean and Nike, has come u p with a set of voluntary standards which, it hopes, will be embraced by the entire industry. Companies that comply with the code will be entitled to use a "No Sweat" label.

OBJECTIVE OF THIS PAPER

In this confrontation between the companies and their critics, neither side seems to have judged it to be in its interest to seriously engage the issue at the heart of this controversy, namely: What are appropriate wages and labor standards in international sweatshops? As we have seen, the companies have treated the charges about sweatshops as a public relations problem to be managed so as to minimize harm to their pub- lic images. The critics have apparently judged that the best way to keep public indignation at boiling point is to oversimplify the issue and treat it as a morality play featuring heartless ex- ploiters and victimized Third World workers. The result has been a great nondebate over in- ternational sweatshops. Paradoxically, if peace breaks out between the two sides, the chances that the debate will be seriouslyjoined may re- cede still further. Indeed, there exists a real risk (I will argue) that any such truce may be a col- lusive one that will come at the expense of the very Third World workers it is supposed to help.

This paper takes u p the issue of what are appropriate wages and labor standards in in- ternational sweatshops. Critics charge that the p r e s e n t a r r a n g e m e n t s are exploitative. I proceed by examining the specific charges of exploitation from the standpoints of b o t h (a) their factual and (b) their ethical sufficiency. However, in the absence of any well-established

Ethical Issues in International Business 599

c o n s e n s u s a m o n g business ethicists ( o r o t h e r t h o u g h t f u l o b s e r v e r s ) , I s i m u l t a n e o u s l y u s e t h e investigation of sweatshops as a s ettin g for trying to adjudicate b e t w e e n c o m p e t i n g views a b o u t w h a t t h o s e s t a n d a r d s s h o u l d b e . My ex- a m i n a t i o n will pay p a r t i c u l a r a t t e n t i o n to ( b u t will n o t b e l i m i t e d to) l a b o r c o n d i t i o n s a t t h e p l a n t s of Nike's s u p p l i e r s in I n d o n e s i a . I have n o t p e r s o n a l l y visited any i n t e r n a t i o n a l sweat- s h o p s , a n d so m y c o n c l u s i o n s a r e b a s e d e n – tirely o n s e c o n d a r y analysis of t h e v o l u m i n o u s p u b l i s h e d r e c o r d o n t h e t o p i c .

WHAT ARE ETHICALLY APPROPRIATE LABOR STANDARDS IN INTERNATIONAL SWEATSHOPS?

W h a t a r e ethically a c c e p t a b l e o r a p p r o p r i a t e levels of wages a n d l a b o r s t a n d a r d s i n i n t e r – n a t i o n a l sweatshops? T h e following t h r e e pos- sibilities j u s t a b o u t r u n t h e g a m u t of s t a n d a r d s o r p r i n c i p l e s t h a t h a v e b e e n s e r i o u s l y p r o – p o s e d to r e g u l a t e s u c h policies.

1. Home-country standards: It m i g h t b e ar- g u e d ( a n d in r a r e cases has b e e n ) t h a t inter- n a t i o n a l c o r p o r a t i o n s have a n ethical duty to pay the same wages a n d provide t h e same labor s t a n d a r d s r e g a r d l e s s of w h e r e t h e y o p e r a t e . However, the view t h a t h o m e – c o u n t r y standards s h o u l d apply in h o s t c o u n t r i e s is r e j e c t e d by most business ethicists a n d (officially at least) by t h e critics of i n t e r n a t i o n a l sweatshops. T h u s T h o m a s D o n a l d s o n argues t h a t "[b]y arbitrar- ily establishing U.S. wage levels as t h e b e n c h – m a r k for fairness o n e eliminates t h e role of t h e i n t e r n a t i o n a l m a r k e t in establishing salary lev- els, a n d this in t u r n e l i m i n a t e s t h e i n c e n t i v e U.S. c o r p o r a t i o n s h a v e to h i r e f o r e i g n work- ers."3 Richard D e G e o r g e makes m u c h t h e same a r g u m e n t : If t h e r e w e r e a r u l e t h a t said t h a t "that A m e r i c a n MNCs [multinational corpora- tions] t h a t wish to b e ethical m u s t pay t h e same wages a b r o a d as they d o at h o m e , . . . [ t h e n ]

MNCs would have little incentive to move their m a n u f a c t u r i n g a b r o a d ; a n d if they d i d m o v e a b r o a d they w o u l d d i s r u p t t h e local l a b o r mar- ket with artificially h i g h wages t h a t b o r e n o re- lation to t h e local s t a n d a r d o r cost of living."6

2. "Living wage" standard: It has b e e n p r o – p o s e d that an international corporation should, at a m i n i m u m , pay a "living wage." T h u s De- G e o r g e says t h a t c o r p o r a t i o n s s h o u l d pay a liv- i n g wage "even w h e n this is n o t p a i d by local firms." However, it is h a r d to pin down what this m e a n s operationally. A c c o r d i n g to D e G e o r g e , a living wage sh o u ld "allow t h e worker to live in dignity as a h u m a n being." I n o r d e r to r e s p e c t t h e h u m a n rights of its workers, h e says, a cor- p o r a t i o n m u s t pay "at least subsistence wages a n d as m u c h above t h a t as workers a n d t h e i r d e p e n d e n t s n e e d to live with r e a s o n a b l e dig- nity, given t h e g e n e r a l state of d e v e l o p m e n t of t h e society."8 As we shall see, t h e living wage s t a n d a r d has b e c o m e a rallying cry of t h e crit- ics of i n t e r n a t i o n a l s w e a t s h o p s . A p p a r e n t l y , D e G e o r g e believes t h a t it is p r e f e r a b l e for a corporation to provide n o j o b at all t h a n to offer o n e t h a t pays less t h a t a living wage. . . .

3. Classical liberal standard: Finally, t h e r e is what I will call t h e classical liberal s t a n d a r d . Ac- c o r d i n g t o this s t a n d a r d a p r a c t i c e (wage o r l a b o r p r a c t i c e ) is ethically a c c e p t a b l e if it is freely c h o s e n by i n f o r m e d workers. F o r exam- ple, in a r e c e n t r e p o r t t h e World B a n k invoked this s t a n d a r d i n c o n n e c t i o n with w o r k p l a c e safety. It said: "The appropriate level is therefore t h a t at which t h e costs are c o m m e n s u r a t e with the value t h a t i n f o r m e d workers place o n im- p r o v e d working conditions a n d r e d u c e d risk."9

Most business ethicists reject this s t a n d a r d o n t h e g r o u n d s t h a t t h e r e is s o m e sort of m a r k e t failure o r the "background conditions" are lack- i n g for m a r k e t s t o w o r k effectively. T h u s for D o n a l d s o n full (or near-full) e m p l o y m e n t is a p r e r e q u i s i t e if w o r k e r s a r e t o m a k e s o u n d choices r e g a r d i n g workplace safety: " T h e aver- age level of u n e m p l o y m e n t in t h e d e v e l o p i n g c o u n t r i e s today e x c e e d s 40 p e r c e n t , a figure

600 Ethical Issues in International Business

that has frustrated the application of neoclas- sical economic principles to the international economy on a score of issues. With full em- ployment, and all other things being equal, mar- ket forces will encourage workers to make trade-offs between job opportunities using safety as a variable. But with massive unemployment, market forces in developing countries drive the unemployed to the jobs they are lucky enough to land, regardless of the safety."10 Apparently there are other forces, like Islamic funda- mentalism and the global debt "bomb," that rule out reliance on market solutions, but Donaldson does not explain their relevance.11

DeGeorge, too, believes that the necessary con- ditions are lacking for market forces to oper- ate benignly. Without what he calls "background institutions" to protect the workers and the re- sources of the developing country (e.g., en- forceable minimum wages) a n d / o r greater equality of bargaining power exploitation is the most likely result.12 "If American MNCs pay workers very low w a g e s . . . they clearly have the opportunity to make significant profits." DeGeorge goes on to make the interesting ob- servation that "competition has developed among multinationals themselves, so that the profit margin has been driven down" and de- veloping countries "can play one company against another."14 But apparently that is not enough to rehabilitate market forces in his eyes.

THE CASE AGAINST INTERNATIONAL SWEATSHOPS

To many of their critics, international sweat- shops exemplify the way in which the greater openness of the world economy is hurting workers.. . . Globalization means a transition from (more or less) regulated domestic economies to an unregulated world economy. The superior mobility of capital, and the es- sentially fixed, immobile nature of world labor, means a fundamental shift in bargaining

power in favor of large international corpora- tions. Their global reach permits them to shift production almost costlessly from one loca- tion to another. As a consequence, instead of being able to exercise some degree of control over companies operating within their bor- ders, governments are now locked in a bid- ding war with one another to attract and retain the business of large multinational companies.

The critics allege that international com- panies are using the threat of withdrawal or withholding of investment to pressure gov- ernments and workers to grant concessions. "Today [multinational companies] choose be- tween workers in developing countries that compete against each other to depress wages to attract foreign investment." The result is a race for the bottom—a "destructive downward bidding spiral of the labor conditions and wages of workers throughout the world… ,"15

Thus, critics charge that in Indonesia wages are deliberately held below the poverty level or subsistence in order to make the country a desirable location. T h e results of this com- petitive dismantling of worker protections, living standards and worker rights are pre- dictable: deteriorating work conditions, de- clining real incomes for workers, and a widening gap between rich and poor in developing countries. I turn next to the specific charges made by the critics of international sweatshops.

Unconscionable Wages

Critics charge that the companies, by their proxies, are paying "starvation wages" and "slave wages." They are far from clear about what wage level they consider to be appropri- ate. But they generally demand that compa- nies pay a "living wage." Kernaghan has said that workers should be paid enough to sup- port their families and they should get a "living wage" and "be treated like human beings."16

. . . According to Tim Smith, wage levels should be "fair, decent or a living wage for an

Ethical Issues in International Business 601

e m p l o y e e a n d his o r h e r family." H e has said t h a t wages in t h e m a q u i l a d o r a s of Mexico av- e r a g e d $35 to $55 a w e e k (in o r n e a r 1993) which h e calls a "shockingly substandard wage," a p p a r e n t l y o n t h e g r o u n d s t h a t it "clearly does n o t allow a n e m p l o y e e to feed a n d c a r e for a family adequately." 1 7 I n 1992, Nike c a m e in for h a r s h criticism w h e n a magazine p u b l i s h e d t h e pay s t u b of a w o r k e r at o n e of its I n d o n e s i a n suppliers. It s h o w e d t h a t t h e w o r k e r was p a i d at t h e r a t e of $1.03 p e r day which was r e p o r t – edly less t h a n the I n d o n e s i a n g o v e r n m e n t ' s fig- u r e for " m i n i m u m physical n e e d . " 1 8

I m m i s e r i z a t i o n T h e s i s

F o r m e r L a b o r Secretary R o b e r t Reich has p r o – p o s e d as a test of t h e fairness of d e v e l o p m e n t p o l i c i e s t h a t "Low-wage w o r k e r s s h o u l d b e – c o m e b e t t e r off, n o t worse off, as t r a d e a n d in- v e s t m e n t b o o s t n a t i o n a l i n c o m e . " H e h a s w r i t t e n t h a t "[i]f a c o u n t r y p u r s u e s p o l i c i e s t h a t . . . limit to a n a r r o w elite t h e benefits of t r a d e , t h e p r o m i s e of o p e n c o m m e r c e is per- v e r t e d a n d d r a i n e d of its r a t i o n a l e . " A key claim of t h e activists is t h a t c o m p a n i e s actu- ally i m p o v e r i s h o r i m m i s e r i z e d e v e l o p i n g c o u n t r y workers. T h e y e x p e r i e n c e a n absolute d e c l i n e in living s t a n d a r d s . T h i s thesis follows f r o m t h e claim t h a t t h e b i d d i n g war a m o n g d e v e l o p i n g c o u n t r i e s is d e p r e s s i n g wages. . . .

W i d e n i n g G a p B e t w e e n R i c h a n d P o o r

A r e l a t e d c h a r g e is t h a t i n t e r n a t i o n a l sweat- s h o p s a r e c o n t r i b u t i n g to t h e i n c r e a s i n g g a p between rich a n d poor. N o t only are t h e p o o r b e i n g absolutely impoverished, b u t trade is gen- e r a t i n g g r e a t e r i n e q u a l i t y w i t h i n d e v e l o p i n g countries. A n o t h e r test that Reich has p r o p o s e d to establish t h e fairness of i n t e r n a t i o n a l t r a d e is t h a t " t h e g a p b e t w e e n rich a n d p o o r s h o u l d t e n d to narrow with development, n o t widen." Critics c h a r g e t h a t i n t e r n a t i o n a l s w e a t s h o p s

f l u n k t h a t test. T h e y say t h a t t h e i n c r e a s i n g GNPs of s o m e d e v e l o p i n g c o u n t r i e s simply mask a w i d e n i n g g a p b e t w e e n rich a n d poor. "Across t h e world, b o t h local a n d foreign elites are g e t t i n g richer from t h e exploitation of t h e m o s t v u l n e r a b l e . " A n d , " T h e major adverse c o n s e q u e n c e of q u i c k e n i n g global e c o n o m i c i n t e g r a t i o n has b e e n w i d e n i n g i n c o m e dispar- ity within almost all n a t i o n s . . . ,"22 T h e r e ap- p e a r s to b e a tacit alliance b e t w e e n t h e elites of b o t h first a n d t h i r d worlds to exploit t h e m o s t v u l n e r a b l e , to r e g i m e n t a n d c o n t r o l a n d con- script t h e m so t h a t they can create t h e material c o n d i t i o n s for t h e elites' extravagant lifestyles.

C o l l u s i o n with R e p r e s s i v e R e g i m e s

Critics c h a r g e that, in t h e i r zeal to m a k e t h e i r c o u n t r i e s safe for f o r e i g n i n v e s t m e n t , T h i r d World r e g i m e s , n o tab ly C h i n a a n d I n d o n e s i a , h a v e s t e p p e d u p t h e i r r e p r e s s i o n . N o t o n l y have these countries failed to enforce even t h e m i n i m a l l a b o r r u l e s o n t h e b o o k s , b u t t h e y h a v e also u s e d t h e i r m i l i t a r y a n d p o l i c e t o b r e a k strikes a n d repress i n d e p e n d e n t u n i o n s . T h e y h a v e stifled political dissent, b o t h to r e – tain t h e i r h o l d o n political p o w e r a n d to avoid any instability t h a t m i g h t scare off f o r e i g n in- vestors. Consequently, critics c h a r g e , c o m p a – n i e s like N i k e a r e p r o f i t i n g f r o m p o l i t i c a l r e p r e s s i o n . "As u n i o n s s p r e a d in [Korea a n d T a i w a n ] , Nike shifted its s u p p l i e r s p r i m a r i l y to I n d o n e s i a , C h i n a a n d T h a i l a n d , w h e r e they c o u l d d e p e n d o n g o v e r n m e n t s to s u p p r e s s in- d e p e n d e n t u n i o n – o r g a n i z i n g efforts."

EVALUATION OF THE CHARGES AGAINST INTERNATIONAL SWEATSHOPS

T h e critics' c h a r g e s a r e u n d o u b t e d l y a c c u r a t e o n a n u m b e r of p o i n t s : (1) T h e r e is n o d o u b t t h a t i n t e r n a t i o n a l c o m p a n i e s a r e c h a s i n g

602 Ethical Issues in International Business

c h e a p labor. (2) T h e wages p a i d by t h e inter- n a t i o n a l s w e a t s h o p s a r e — b y A m e r i c a n stan- d a r d s — s h o c k i n g l y low. (3) S o m e d e v e l o p i n g c o u n t r y g o v e r n m e n t s have tightly c o n t r o l l e d o r r e p r e s s e d o r g a n i z e d l a b o r i n o r d e r t o p r e – v e n t it from d i s t u r b i n g t h e flow of f o r e i g n in- v e s t m e n t . T h u s , i n I n d o n e s i a , i n d e p e n d e n t u n i o n s h a v e b e e n s u p p r e s s e d . (4) It is n o t u n – u s u a l i n d e v e l o p i n g c o u n t r i e s for m i n i m u m wage levels to b e lower t h a n t h e official poverty level. (5) D e v e l o p i n g c o u n t r y g o v e r n m e n t s h a v e w i n k e d a t violations of m i n i m u m wage laws a n d l a b o r rules. However, m o s t j o b s are in t h e i n f o r m a l s e c t o r a n d so largely o u t s i d e t h e s c o p e of g o v e r n m e n t s u p e r v i s i o n . (6) S o m e suppliers have e m p l o y e d c h i l d r e n o r have sub- c o n t r a c t e d w o r k to o t h e r p r o d u c e r s w h o have d o n e so. (7) S o m e d e v e l o p i n g c o u n t r y gov- e r n m e n t s d e n y t h e i r p e o p l e b a s i c p o l i t i c a l rights. C h i n a is t h e obvious e x a m p l e ; I n d o n e – sia's r e c o r d is p r e t t y h o r r i b l e b u t h a d s h o w n steady i m p r o v e m e n t u n t i l t h e last two years. B u t o n m a n y of t h e o t h e r c o u n t s , t h e critics' charges a p p e a r to b e seriously inaccurate. And, e v e n w h e r e t h e c h a r g e s a r e a c c u r a t e , it is n o t self-evident t h a t t h e practices in q u e s t i o n a r e i m p r o p e r or u n e t h i c a l , as we see n e x t .

W a g e s a n d C o n d i t i o n s

Even t h e critics of i n t e r n a t i o n a l sweatshops d o n o t dispute that the wages they pay are generally h i g h e r t h a n — o r a t least e q u a l t o — c o m p a r a b l e wages in t h e l a b o r markets w h e r e they o p e r a t e . A c c o r d i n g to t h e I n t e r n a t i o n a l L a b o r Organi- zation ( I L O ) , m u l t i n a t i o n a l c o m p a n i e s often apply standards relating to wages, benefits, con- d i t i o n s of work, a n d o c c u p a t i o n a l safety a n d h e a l t h , w h i c h b o t h e x c e e d s t a t u t o r y r e q u i r e – m e n t s a n d those practiced by local firms." T h e ILO also says that wages a n d working conditions in so-called E x p o r t Processing Zones (EPZs) are often equal to o r h i g h e r t h a n j o b s outside. T h e World Bank says t h a t t h e p o o r e s t workers in de- veloping c o u n t r i e s work i n t h e informal sector

w h e r e they often e a r n less t h a n half what a for- m a l sector e m p l o y e e e a r n s . Moreover, "infor- m a l a n d rural workers often m u s t work u n d e r m o r e h a z a r d o u s a n d insecure conditions t h a n t h e i r formal sector c o u n t e r p a r t s . 2 5

T h e s a m e a p p e a r s to h o l d t r u e for t h e in- t e r n a t i o n a l sweatshops. I n 1996, y o u n g w o m e n w o r k i n g i n t h e p l a n t of a N i k e s u p p l i e r i n Serang, I n d o n e s i a , were e a r n i n g t h e I n d o n e – sian legal m i n i m u m wage of 5,200 r u p i a h s , o r a b o u t $ 2 . 2 8 e a c h day. As a r e p o r t i n t h e Washington Post p o i n t e d o u t , j u s t e a r n i n g t h e m i n i m u m wage p u t t h e s e w o r k e r s a m o n g h i g h e r – p a i d I n d o n e s i a n s : "In I n d o n e s i a , less t h a n half the working population earns the min- i m u m wage, since a b o u t half of all adults h e r e a r e i n farming, a n d t h e typical f a r m e r w o u l d m a k e only a b o u t 2,000 rupiahs each day."26 T h e workers in t h e S e r a n g p l a n t r e p o r t e d t h a t they save a b o u t three-quarters of their pay. A 17-year- o l d w o m a n said: "I c a m e h e r e o n e y e a r a g o f r o m c e n t r a l Java. I ' m m a k i n g m o r e m o n e y t h a n my father makes." This w o m a n also said t h a t t h e she s e n t a b o u t 75 p e r c e n t of h e r earn- ings b a c k t o h e r family o n t h e farm. Also i n 1996, a Nike s p o k e s w o m a n estimated t h a t a n entry-level factory worker in t h e p l a n t of a Nike supplier m a d e five times what a farmer makes. N i k e ' s c h a i r m a n , P h i l K n i g h t , likes to teas- ingly r e m i n d critics t h a t t h e average w o r k e r in o n e of N i k e ' s C h i n e s e factories is p a i d m o r e t h a n a professor at Beijing University. T h e r e is also plentiful a n e c d o t a l evidence from n o n – Nike sources. A worker at the Taiwanese-owned King Star G a r m e n t Assembly plant in H o n d u r a s t o l d a r e p o r t e r t h a t h e was e a r n i n g s e v e n t i m e s what h e e a r n e d in t h e countryside. I n B a n g l a d e s h , t h e c o u n t r y ' s fledgling g a r m e n t i n d u s t r y was p a y i n g w o m e n w h o h a d n e v e r w o r k e d before b e t w e e n $40 a n d $55 a m o n t h i n 1 9 9 1 . T h a t c o m p a r e d with a n a t i o n a l p e r capita i n c o m e of a b o u t $200 a n d t h e a p p r o x i – m a t e l y $1 a day e a r n e d by m a n y of t h e s e w o m e n ' s h u s b a n d s as day lab o rers o r rickshaw drivers. 3 1

Ethical Issues in International Business 603

T h e same news r e p o r t s also s h e d s o m e light o n t h e w o r k i n g c o n d i t i o n s in sweatshops. Ac- c o r d i n g to t h e Washington Post, in 1994 t h e In- donesian office of t h e international a c c o u n t i n g firm Ernst & Young surveyed Nike workers con- c e r n i n g w o r k e r pay, safety c o n d i t i o n s , a n d at- t i t u d e s t o w a r d t h e j o b . T h e a u d i t o r s p u l l e d workers off t h e assembly line at r a n d o m a n d a s k e d t h e m q u e s t i o n s t h a t t h e w o r k e r s answered anonymously. T h e survey of 25 work- e r s a t N i k e ' s S e r a n g p l a n t f o u n d t h a t 23 t h o u g h t t h e h o u r s a n d o v e r t i m e h o u r s t o o h i g h . N o n e of t h e workers r e p o r t e d t h a t they h a d b e e n d i s c r i m i n a t e d against. T h i r t e e n said t h e w o r k i n g e n v i r o n m e n t was t h e key r e a s o n they w o r k e d at t h e S e r a n g p l a n t while e i g h t cited salary a n d benefits.' T h e Post r e p o r t also n o t e d t h a t t h e S e r a n g p l a n t closes for a b o u t 10 days e a c h y e a r f o r M u s l i m h o l i d a y s . I t q u o t e d Nike officials a n d t h e plant's Taiwanese owners as saying t h a t 94 p e r c e n t of t h e workers h a d r e t u r n e d to t h e p l a n t following t h e m o s t r e c e n t b r e a k . . . .

T h e r e is also t h e m u t e testimony of t h e lines of j o b a p p l i c a n t s o u t s i d e t h e s w e a t s h o p s i n G u a t e m a l a a n d H o n d u r a s . A c c o r d i n g to Lucy M a r t i n e z – M o n t , i n G u a t e m a l a t h e sweatshops a r e c o n s p i c u o u s for t h e l o n g lines of y o u n g p e o p l e waiting t o b e i n t e r v i e w e d for a j o b . O u t s i d e t h e g a t e s of t h e i n d u s t r i a l p a r k i n H o n d u r a s t h a t R o h t e r visited " a n x i o u s o n l o o k e r s a r e always w a i t i n g , h o p i n g f o r a c h a n c e at least to fill o u t a j o b application [for e m p l o y m e n t at o n e of t h e a p p a r e l p l a n t s ] . "

T h e critics of sweatshops a c k n o w l e d g e t h a t workers have voluntarily t a k e n t h e i r j o b s , con- sider themselves lucky to have t h e m , a n d w a n t t o k e e p t h e m . . . . B u t t h e y g o o n t o d i s c o u n t t h e w o r k e r s ' views as t h e p r o d u c t of confusion o r i g n o r a n c e , a n d / o r t h e y j u s t a r g u e t h a t t h e w o r k e r s ' views a r e b e s i d e t h e p o i n t . T h u s , while "it is u n d o u b t e d l y t r u e " t h a t N i k e h a s given j o b s t o t h o u s a n d s of p e o p l e w h o w o u l d n ' t b e w o r k i n g otherwise, they say t h a t "neatly skirts t h e f u n d a m e n t a l h u m a n – r i g h t s

issue raised by these p r o d u c t i o n a r r a n g e m e n t s t h a t a r e n o w s p r e a d i n g all across t h e world." 3 5

Similarly t h e N L C ' s

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