Business Ethics 101: Ethics and International Business - Labor Standards ILO Core Conventions Child Labor Sweatshops

Labor Standards: ILO Core Conventions, Child Labor, Sweatshops

What This Is

Labor standards are the minimum protections for workers, including fair wages, safe conditions, and freedom from exploitation. They matter because unethical labor practices harm workers, damage brand reputation, and create legal/financial risks. Example: Nike faced boycotts in the 1990s after reports of sweatshops in Indonesia (child labor, 14-hour days, $0.14/hour pay). The scandal forced Nike to overhaul its supply chain, proving that ethical labor practices are both a moral and business imperative.

Key Theories & Frameworks

• Utilitarianism (Bentham/Mill): Maximize overall well-being. Relevance: Companies may justify low wages in poor countries as "better than no job," but this ignores long-term harm (e.g., child labor stunting education, perpetuating poverty).
• Deontology (Kant): Duties matter more than outcomes. Relevance: Child labor is inherently wrong, regardless of economic benefits—it violates the duty to respect human dignity (Kant’s "ends in themselves").
• Virtue Ethics (Aristotle): Focus on moral character. Relevance: A "good" company doesn’t just comply with laws; it cultivates virtues like fairness and compassion (e.g., Patagonia’s living-wage policies).
• Justice as Fairness (Rawls): Protect the most vulnerable. Relevance: Sweatshops exploit workers behind a "veil of ignorance"—if executives didn’t know their own position, they’d reject such systems.
• Care Ethics (Gilligan): Relationships and empathy matter. Relevance: Brands like Ben & Jerry’s prioritize supplier relationships built on trust, not just contracts.
• Stakeholder Theory (Freeman): Balance all affected parties. Relevance: Closing a sweatshop hurts workers (job loss) but keeping it harms reputation—stakeholder theory demands creative solutions (e.g., transition programs).
• ILO Core Conventions: 8 fundamental labor standards (e.g., no forced/child labor, freedom of association). Relevance: Global baseline for ethical labor; violations trigger sanctions (e.g., Uzbekistan’s cotton industry banned for forced labor).
• UN Guiding Principles on Business & Human Rights (Ruggie Framework): "Protect, Respect, Remedy" for corporate human rights duties. Relevance: Companies must audit suppliers and provide grievance mechanisms (e.g., Apple’s Supplier Responsibility Reports).

Step-by-Step Decision Process

Use the PLUS Ethical Decision-Making Model (adapted for labor issues):
1. Policies: Check company code of conduct, ILO standards, and local laws. Example: Does the supplier violate ILO Convention 138 (minimum age for work)?
2. Legal: Are practices illegal in the host country or your home country (e.g., U.S. Trafficking Victims Protection Act)? Example: Volkswagen’s use of forced labor in Brazil (1970s–80s) violated both Brazilian and German laws.
3. Universal: Apply ethical frameworks. Example: - Deontology: "Is child labor inherently wrong?" (Yes.) - Utilitarianism: "Does this maximize long-term well-being?" (No—harms education, health, and economy.)
4. Self: Would you accept this if it were your child? Example: Would you let your 12-year-old work 12-hour shifts in a factory?
5. Stakeholders: Map impacts on workers, communities, shareholders, and customers. Example: H&M’s 2018 wage theft scandal in Bangladesh hurt its reputation but also left workers unpaid.
6. Action: Choose the least harmful option. Example: - Short-term: Terminate the supplier (but workers lose jobs). - Long-term: Work with the supplier to improve conditions (e.g., Levi’s "Improvement Required" program).

Common Ethical Traps

• Trap: "It’s just business" rationalization
• Prevention: Ask: "Would I defend this in a public hearing?" (e.g., Enron’s "rank-and-yank" system created toxic workplaces—later exposed as unethical).

• Why: Compartmentalizing ethics leads to systemic harm (e.g., Foxconn’s suicides linked to 70-hour workweeks).

• Trap: Ethical relativism ("It’s their culture")

• Prevention: Distinguish between cultural practices (e.g., dress codes) and human rights violations (e.g., child labor). ILO standards are universal.

• Why: Relativism was used to justify apartheid and slavery—universal principles (e.g., no forced labor) override local norms.

• Trap: Slippery slope (gradual normalization of exploitation)

• Prevention: Set clear red lines (e.g., "No supplier may employ workers under 15"). Example: Rana Plaza collapse (2013) started with small safety violations.

• Why: Small compromises (e.g., "just one overtime shift") escalate into disasters.

• Trap: Moral disengagement (dehumanizing workers)

• Prevention: Use care ethics—visit factories, meet workers. Example: Nike’s turnaround began when executives toured Indonesian sweatshops.

• Why: Distance enables abuse (e.g., "They’re just numbers on a spreadsheet").

• Trap: "Everyone does it" (industry norms)

• Prevention: Benchmark against best practices, not average ones. Example: Uniqlo’s 2019 forced labor scandal in China showed even "ethical" brands cut corners.
• Why: Industry norms can be unethical (e.g., fast fashion’s reliance on sweatshops).

Legal & Compliance Notes

• ILO Core Conventions (1998): 8 fundamental standards, including:
• No. 138 (Minimum Age): Sets 15 as the general minimum age for work (13–14 for "light work").
• No. 182 (Worst Forms of Child Labor): Bans slavery, trafficking, and hazardous work for children.
• U.S. Trafficking Victims Protection Act (TVPA): Prohibits forced labor; companies can be liable for supplier violations.
• UK Modern Slavery Act (2015): Requires companies to report on supply chain slavery risks.
• California Transparency in Supply Chains Act (2010): Mandates disclosure of anti-slavery efforts for retailers with $100M+ revenue.
• EU Corporate Sustainability Due Diligence Directive (CSDDD): Coming in 2024; will require companies to audit human rights risks in supply chains.

Quick Case Scenarios

1. Dilemma: Your company sources cocoa from West Africa, where 40% of child labor is used. A competitor claims, "We can’t afford to audit every farm—it’s too expensive." What do you do?
2. Answer: Use stakeholder theory—balance costs with long-term risks (reputation, legal). Partner with NGOs (e.g., Fair Labor Association) to create a phased audit system.

3. Justification: Ignoring the issue harms children and the brand (e.g., Hershey’s 2012 child labor lawsuit).

4. Dilemma: A supplier in Bangladesh pays workers $68/month (below living wage) but argues, "If we pay more, we’ll go bankrupt." Do you cut ties or work with them?

5. Answer: Use justice as fairness—negotiate a gradual wage increase tied to productivity. Example: H&M’s "Fair Living Wage" program.
6. Justification: Sudden termination hurts workers more; collaboration drives systemic change.

Last-Minute Cram Sheet

1. ILO Core Conventions: 8 standards; focus on No. 138 (child labor) and No. 182 (worst forms).
2. Sweatshop definition: Workplace with low wages, long hours, unsafe conditions, and no labor rights.
3. Child labor vs. youth employment: ILO allows light work at 13–14; hazardous work is never allowed under 18.
4. Ethical relativism trap: "It’s their culture"-"It’s ethical." ILO standards are universal.
5. Nike 1990s: Sweatshop scandal-supply chain transparency became industry norm.
6. Rana Plaza (2013): 1,134 dead-Bangladesh Accord (legally binding safety inspections).
7. Foxconn suicides (2010): Linked to 70-hour workweeks-Apple forced reforms.
8. Utilitarianism vs. deontology: "Greatest good" vs. "duty" (e.g., child labor is always wrong, even if it "helps" the economy).
9. Stakeholder theory: Workers are primary stakeholders, not just shareholders.
10. Legal red flags: TVPA (U.S.), Modern Slavery Act (UK), CSDDD (EU)—know your jurisdiction’s supply chain laws.