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Unethical Production Practices Around the World

And some companies that do good as well.

22Sep

In the world of business and marketing I feel it's not a bad idea to have at least a very basic understanding of who's doing ethical business and who's not. At least for us small business owners and entrepreneurs to learn from.

If you keep your eyes open, you don’t have to look far for evidence of inhumane and immoral production processes. While labor laws are generally strictly enforced in developed nations such as the United States, some other countries are much more likely to turn a blind eye to the plight of their workers.

Some tech companies have faced bad publicity in the last few years because of their connection to certain eastern manufacturing companies such as Foxconn and Pegatron, which have been accused of poor employee working conditions, illegal mandatory overtime, and unlawful use of child labor.

For example, 40% of the countries in the world are now rated as “extreme risk” when it comes to child labor violations, according to a recent report by the Maplecroft analysis firm. In addition to the practices of conscripting children into the army to act as child soldiers, or forcing them into prostitution, many “supply-chain countries” use child labor in factories and other production-related work.

Sportswear companies have been accused of knowingly relying on underage workers in Pakistan factories. In fact, as a result of the 2008 economic downturn, child labor is increasing around the world. Many countries have begun to put less emphasis into primary education, and are depending on the revenue generated by child labor. Families are likewise reliant upon the added income that young children are able to generate. Even the United States ranks as a “medium risk” country, due to laws that specifically exempt agricultural laborers from minimum age requirements. This is done despite the difficult work, long hours, and possibly dangerous conditions that are routinely faced.

Likewise, sweatshops have been linked to major corporations around the world. Sweatshops will often make use of illegal child labor, and rely on the extreme exploitation of their employees. Sweatshop workers are often forced to work 60-80 hours a week, without any paid overtime or health benefits, and may be subjected to harassment, intimidation, and unsafe work environments.

Although sweatshops gained much of their infamy during the late 90s, when a series of scandals brought the problem into the light for the public, reforms have done little to curb their proliferation. Although most countries have laws against this kind of exploitation, loopholes and government inaction often work together to create environments where labor laws may be freely violated. Those who work in these conditions are intentionally kept ignorant of their rights, and may be threatened or even harmed if they try to affect change in the system. Sweatshops appear not only in underdeveloped countries, but can also exist in First World nations, relying on illegal “under-the radar” immigrant workers. Sweatshops have even been discovered in major U.S. cities such as Los Angeles and New York.

The sad truth is that many major corporations depend on unethical labor practices as part of their production process. There is an ever increasing demand for consumer electronics, and in order to produce these products quickly and inexpensively, costs must be cut elsewhere. Unfortunately, often the easiest way to save money is to take take the lowest outsourced bidder, who may have murky working conditions. 

But there is hope.

However, companies that are able to invest in more efficient practices such as state-of-the-art warehouse automation could possibly afford to treat their workers better without jeopardizing production quotas. This would allow them to show employee appreciation, which would help the company in the long run. Unhappy and abused workers, can become liabilities. Some may even attempt to compromise company resources, either as an act of revenge or for personal gain.

Furthermore businesses are finding that other organizations are inclined to work with companies that are known to be ethical and are moving toward green business model. Ethical and green business models have been shown to actually increase the bottom line. This is of course after a short term loss while implementing and changing how your business runs. But as more businesses report that doing ethical business is good for business, the more other businesses wont fear the short term pain on the road to ethical and profitable growth.

A quick google search can find tons of examples of small businesses reporting profit from ethical and green investments. A few examples below.

- Mega, an LED sign company changed wholesale partners to a more ethical supply chain, cut their waste and invested in recycling all their electronics. They did some bragging about it via social media and their newsletter. They reported a 12% increase in sales the next month. While they can't definitively say it was all due to becoming more ethical, the correlation tells a persuasive story none the less.

California Poolside based in San Diego simply communicated their recent switch to hybrid and natural gas vehicles. That change alone (along with some better design) saw a 30% increase in their response rate. 

- Tobacco Motorwear, produces kevlar attire and included promo material that all their denim is american made from wholesalers known for ethical practices in their most recent kickstarter campaign.

These are all small businesses you probably have never heard of. All have bootstrapped budgets and yet are showing that the investment to be ethical and green has had a positive ROI. If a small business can do it, shouldn't we expect the big players to play ball as well?

These are just a few examples of small businesses reporting higher profits and sales after going green. As the younger generation moves into the professional field I have high hopes that this trend will continue. 

Conclusions

Besides getting the message out that good ethical business can also be very lucrative, changes are going to have to be made on every level; governments will need to become more involved, management will need to accept inevitable tradeoffs, companies will need to take responsibility for the crimes committed in their names, and consumers will need to recognize the price of their cheap and easy-to-get goods.

However, as companies begin to adhere to legal and ethical practices, they’ll find that when they take care of their own employees, their employees will take care of them as well, through better work, corporate loyalty, and increased positive public perception.

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