International Business Policy Global labour markets: exploitation or development?

What would you say about child labor? You are Phil Knight, CEO of Nike, and a journalist is coming to your office. You know you will be asked questions about child labor. What are you going to say?

First Question to P. Knight Labor standards of workers producing Nike products are on average much lower than those of US factories. Such standards would not be considered acceptable in the US. Does this raise an ethical issue to you?

Second Question You have factories producing Nike shoes in Indonesia, a brutal military dictatorship based on corruption. Don’t you mind supporting such a regime? and being supported by it?

Third Question Why Nike soccer balls are often stitched by children, in particular in Pakistan?

Fourth Question You say that in your Indonesian factories, the minimum age is 14. Does this bother you?

Back to yourself Are you sure you can formulate the extent to which employing children is a dilemma? Are you sure you can formulate the extent to which exploiting workers is a dilemma? Can you avoid the temptation of justification?

A Business Ethical Dilemma More Profit Less profit Employing children Not employing children Would any multinational company intentionally let children work in its factories if it was more costly? This is how you can distinguish a justification from a reason to act

Another Formulation Lower wages Higher wages Exploiting workers Empowering workers Human resources engender costs that must be minimized in order to maximize profit

Common Justifications There is no real problem I act within the law If I don’t employ them, they are worse off There are better in my factories than in others’ It is a historical necessity It is the path to development It is beyond my control I have no choice (because of competition) These are no reasons to act, but excuses that prevent ethical action.

What could you say about child labor? You are Paul Pressler, CEO of Gap. You are determined to abolish any form of child labor in your company and to improve workers’ condition. What are you going to say?

First Question to P. Pressler You know there are persistent violations of wage, health and safety standards in your factories in most regions where you do business. They go from improper protective equipment to physical abuse and psychological coercion. There are even instances of child labor. Do you admit it?

Second Question You have taken steps to tackle the issue but you know these steps are insufficient. Do you admit it publicly?

Third Question Some activists don’t believe your commitment is genuine. Do you invite them to say precisely this in your own annual report?

Fourth Question You know the only solution to diminish exploitation of workers is to empower them individually and collectively (e.g. through unions and global standards). Do you promote the formation of unions knowing that this will necessarily result in paying higher wages?

Transparency and Credibility Actions with corrections Lack of ethics in actual behavior Ethical issues faced by the company To build credibility, you should not communicate only to the extent you have taken corrective actions

Some Conclusions Beware of the temptation of denial and justification! It does not help to act and hardly help to feel better. To know if an ethical argument is a reason to act or merely a justification, look at whether you would sacrifice some interest for it! The many things you don’t want to be known are already known. If they are spelled out, they give you an opportunity to show your improvement.