Two Faces of Economic Development: The Ethical Controversy Surrounding U.S.-Related Sweatshops in Developing Asian Countries

Many aspects of the average American’s material lifestyle can be attributed to trade relations between the United States and Asia. A significant proportion of the clothes they wear, the toys they grew up with, and even the technology they use, was produced somewhere in Asia. Commerce with major developing nations like China and Indonesia is reportedly crucial for America's own continued economic prosperity, since its overall manufacturing investments in developing nations are in tens of billions of dollars and huge numbers of plants there operate on a contract basis with American companies. However, many Americans are unaware that their appetite for consumerism fuels a deeply controversial industry, and just as foreign-manufactured goods are often more than meets the eye, the sweatshop debate is highly intricate.  


The definition of a sweatshop remains broad, describing any factory which may have unreasonably authoritative overseers, dangerous and unhealthy (both physically and psychologically) working conditions, and enforces long hours with low pay. The term also frequently describes a factory employing child labor. Many developed nations, including the United States, have at some point engaged sweatshop production facilities on a large scale, and a major segment of the world’s remaining sweatshops are located in Asia. As the West continues its long-standing tradition of fostering what many would liken to slave labor, an ethical examination of these business practices becomes increasingly important.  


From a business perspective, sweatshops are overwhelmingly lucrative since they capitalize on low-wage labor in developing countries and significantly reduce production costs. Many major clothing and footwear companies, for example, have been linked to sweatshops. Brands such as Nike, GAP, Converse and Levi’s, have all been guilty of numerous violations of requirements for reasonable working conditions in their production facilities. All of their headquarters and customer bases are located in the United States, while the manufacturing component of the production process is carried out in Asia. Such companies have been criticized as being complicit in the exploitation of workers because they fail to correct the manufacturers’ malpractices, of which they are aware but often claim are hard to correct. An internal report carried out by Nike, for instance, found that nearly two-thirds of the 168 factories making Converse (one of the company’s brands) products failed to meet Nike's own standards for manufacturing.


Sweatshops: The Ugly Face of Industrialization


One of the biggest hallmarks of sweatshop labor is that the workers are simply underpaid, especially considering the kinds of working conditions they endure. Minimum wage levels in countries such as Thailand, the Philippines, and China, are significantly lower than that of the United States. The federal minimum wage per hour in the United States is currently at 7.25 dollars, while it is 1.48 dollars in Thailand, 69 cents in the Philippines, and 67 cents in China. However, workers are frequently paid less than these estimates suggest—amounts barely enough to survive on even considering the lower cost of living in these regions. Many developing Asian countries have official minimum wage levels, but the lack of uniform and comprehensive regulations with nationwide coverage across all labor groups and industries remains a huge problem. For instance, minimum wage regulations are applicable in Cambodia only to the garment and shoe-sewing sector, and in Sri Lanka only to over 35 industrial trades. Furthermore, the lack of institutional regulatory effectiveness in enforcing compliance is an even greater problem.


Since turnover is extremely rapid, sweatshop workers are not guaranteed these meager salaries over the long term. For example, the International Textile, Garment and Leather Workers’ Federation (ITGLWF) investigated a factory in Indonesia and found that over 80% of their workers were on short term contracts. Such factories hire and fire workers as volatile production needs change, with little regard for their employees’ job security or welfare. These workers have no financial security to speak of, and also reported they did not get any sort of severance pay. In addition, these laborers are also subjected to violence, another common aspect of sweatshop operations in the developing world. Workers at a Converse plant in Sukabumi, Indonesia, reported that their supervisors threw shoes at them, slapped, kicked, and called them dogs and pigs. It is hard to measure the frequency and severity of physical and verbal abuse in these settings, as fear deters workers from reporting such cases and there is a characteristic lack of supervision. Furthermore, many sweatshop workers are children; roughly one in eight children in the Asia-Pacific is between the ages of 4 and 15 and works in a sweatshop. India has the highest rates of child labor of any country in the world, employing over 55 million children, many of whom were sold into labor by their families.

A Case for Sweatshops?


Despite the projected expansion of sweatshop operations, the harsh working conditions associated with it are frowned upon by the average person in the developed world. About a decade ago, a movement to boycott sweatshops became prominent in mainstream culture, with protests demanding that large U.S. corporations stop buying and selling goods that came from extraneous, dangerous, underage and under-paid labor. Kathie Lee Gifford’s clothing line for Wal-Mart is a prominent example; when it was discovered to be produced by sweatshops, activists in the United States expressed their disgust and Wal-Mart cut all ties with the manufacturers, essentially closing down the factories supplying that line. It appeared to be a victory for human rights, yet the Chinese immigrant workers who had been paid little or no wages for their 60-80 hours of toil each week, were outraged. Workers have consistently expressed concerns at the closing of even the most dismal sweatshops, and the constant and ready supply of sweatshop labor can be attributed to the fact that developing Asian countries and their peoples are in dire need of these economic opportunities, which outweighs their aversion to exploitative working conditions. Is the negative reaction in the developed world to sweatshops and their ethical violations essentially misinformed?


Some of the world’s leading economists have cited sweatshops as a necessary step in modernization and development. Jeffrey D. Sachs of Harvard and Paul Krugman of the Massachusetts Institute of Technology have asserted that sweatshop manufacturing—especially in the production of goods like clothing and shoes—for foreign markets are an essential preliminary move toward economic prosperity in developing countries. Many credit these labor-intensive industries for propelling the Asian Tigers (Hong Kong, South Korea, Singapore and Taiwan) into the economically developed world. A study on poverty relief and development by the University of Santiago de Compostela also suggests that such sustainable international investment in low income countries is important to economic progress. America’s sizeable investments in developing Asian countries represent not only investments in production facilities, but also add to the latter’s investible resources and capital formation, transfer production technology, skills, innovative capacity, organizational and managerial practices, as well as provide access to international marketing networks, all of which are exceedingly helpful to these developing economies.


Are sweatshops a necessary evil, and what should the governments of the United States and developing Asian countries do?


A Conflict of Interests


Having personally witnessed the conditions in sweatshops and despite opposing the exploitation of workers, Harvard economist Jeffrey Sachs still claims that many nations have no better hope for economic progress than such manufacturing facilities which pay mere subsistence wages. He asserts that these jobs were the stepping stone for Singapore and Hong Kong, and are necessary to alleviate rural poverty in places like Africa. Does this mean that the moral outrage at sweatshop labor is unfounded? More importantly: what are the morally acceptable limits to the various types of costs incurred by the pursuit of economic progress and material well-being? There are no easy answers, but the first step to addressing these concerns involves identifying the relevant moral agents and their respective goals. Three key groups include:

1.   The governments of the United States and developing Asian countries:

They are responsible for protecting the interests of their peoples, including but not limited to their fundamental human rights and material well-being.


2.  U.S. corporate businesses which employ sweatshop labor in developing Asian countries:

Their primary concern with profit maximization is—in the case of sweatshop labor—in conflict with the need to honor human rights such as those to fair and decent working conditions.


3.  People in developing Asian countries:

The need to satisfy the basic conditions for survival often motivates them to put up with exploitative treatment.


Our aim in examining the ethical challenges to U.S.-Asia relations is to determine the best course of action for the first group in its exercise of political authority to address affronts to the third group’s human rights, in relation to the second group’s profit-motivated activities. We must consider that most in the third group would prefer the meager benefits that accrue from toiling in sweatshops to the grim alternative of being without this means of subsistence which could, in many cases, consequently lead to starvation and death. Despite the ‘string of tragedies’--the latest of which involved the collapse of the Rana Plaza factory building and 190 deaths on 24 April—Bangladesh’s garment industry is still thriving. Workers there were paid as little as $37 a month, but Bangladesh’s garment manufacturing sector generated US$20 billion in exports in 2012 for the impoverished country. The practical problem revolves around the fact that sweatshops are mutually beneficial, making both employees and workers better off, even if the latter is not as much better off as critics think they ought to be, thereby making it more difficult to give force to the normative arguments against sweatshops.


Moral Decision-Making in the Contemporary Environment


The intuitive objection to sweatshops is based on notions of dessert; clearly, sweatshop laborers deserve better working conditions, and it is unfair where they are deprived of just compensation for their labor. John Rawls’ argument from the veil of ignorance would suggest that it cannot be fair for sweatshop workers to suffer under such appalling working conditions, precisely because even the very corporate business owners who fuel the demand for sweatshop labor cannot condone this from an objective and disinterested perspective. Considering the inequalities between the United States and developing Asian nations which have become more entrenched over the course of history, people in developing Asian countries are relatively worse off than those in the United States, with or without regulations against sweatshop labor. It therefore appears that sweatshop labor is an aspect of U.S.-Asia relations that is symptomatic of a systemic disadvantaging of the latter. Rawls would suggest that in circumstances like these, the only morally acceptable course of action is one in which the net benefits accruing to the least-advantaged people of developing Asian countries is maximized. In practical terms, this means that U.S.-Asia relations must pay special attention to these low-wage laborers and work toward better working conditions in production facilities so as to eventually eradicate their endemic exploitation.


On the other hand, the harsh realities of the existing economic environment suggest that the situation is more complicated. Despite the fact that workers in the developing world are in great need of help which sweatshops are well-positioned to provide, it cannot justify a special obligation on the part of business corporations or sweatshops to suffer a shift of burdens in the provision of higher wages, better working conditions, etc.  If U.S. companies had to incur greater production costs in this manner, there would be fewer economic initiatives for them to set up manufacturing facilities in developing Asian countries, which comparative advantage is low-wage labor. For instance, the Bangladeshi government, according to Scott Nova from the Worker Rights Consortium, understands that strict labor rights regulations would raise manufacturing costs and cause retailers to place orders elsewhere. The projected rise in minimum wage levels by up to 44% in Southeast Asia has left manufacturers in the region—who rely on hiring factory workers for less than US$200 a month—concerned about the possible exodus of investment that could dampen the region's continued competitiveness. Everyone suffers, but low-wage workers would be worst hit.


Companies are not charity organizations and are inevitably subjected to market mechanisms, but this does not mean that they can maximize their profits without regard for the well-being of sweatshop laborers. Immanuel Kant’s practical moral imperative asserts that human beings must be treated as ends in themselves and not merely as a means, and so sweatshops are inherently unacceptable from a deontological perspective since their workers seem to be treated as mere instruments in the amassing of business profits. Yet, if sweatshop labor was simply banned, people in developing Asian countries who are critically reliant on these jobs for survival would suffer even more, and this is all the worse for their Kantian right to self-determination. This suggests that in the real world—or at least in this case—ideas of absolute right vs. wrong are at best inadequate, and cannot be conflated with ideas of better vs. worse, which account, more importantly, for the relative outcomes of decisions.


The Kantian right to self-determination has great intuitive force and cannot simply be abandoned. Yet, if deontology alone is an unsatisfactory approach to evaluating the moral value of sweatshop labor, perhaps the existing conditions of the modern economic world call for a supplementary utilitarian approach. Utilitarianism—defined by the likes of Jeremy Bentham and John Stuart Mill—considers how everyone’s collective welfare may be maximized. Sweatshop workers are relatively better off than if they had no such work, as are the companies which benefit from lower production costs, and the governments of the United States and Asia, which further benefit from lucrative economic relations with each other. Normatively speaking, sweatshop labor is morally wrong and should be banned. Practically speaking, however, there are shades of gray representing better and worse outcomes of moral decision-making within the existing political and economic environment. Theoretically, the need to respect human rights is directly associated with deontology and not utilitarianism. Yet, the utilitarian relativization of outcomes appears—counter-intuitively—to support human rights in the case of sweatshop labor better than a strictly deontological approach which flatly denies that sweatshop labor could ever be morally acceptable.


U.S.-Asia Relations and Sweatshops: The Normative Picture


Relations between the governments of the United States and Asia form the bedrock of their economic dealings, and are indispensable to addressing the ethical issues surrounding sweatshop labor. From a broader perspective, it seems that the biggest ethical challenge facing US-Asia relations is that of negotiating between different moral obligations amid circumstances which render them incompatibilities. The issue of sweatshop labor is an instance of how the governments of these nations are confronted with tradeoffs between the short and long-term as well as other different aspects of their people’s interests. Developing Asian countries have a strong interest in attracting foreign investment from the United States in a bid to accelerate economic growth and transformation and have, in the past decade, begun liberalizing governmental policies. Yet, this also encourages sweatshop labor, and the governments of developing nations appear guilty of condoning human rights violations. Alternatively, banning sweatshops leaves all parties worse off, especially in the longer run and more critically impacting people in these developing Asian countries.


The broader ethical question is whether the U.S. economy is progressing at the expense of their Asian counterparts, and what determines if this situation is morally acceptable. So far, this article has shown that given today’s circumstances, sweatshop labor is at least morally ambiguous and at best permissible, especially if one is purportedly concerned about the interests of Asian sweatshop workers. Despite the fact that sweatshop workers are relatively better off with rather than without this means of employment, the fact remains that their present working conditions are affronts to human rights and can never under any circumstances be encouraged. Consequently, sweatshop labor—even in the current context—may be practically but never normatively permissible. This acute distinction between practical and normative perspectives can never be overlooked; ethical issues operate at both levels, while each may generate very different recommendations as in the case of sweatshop labor. Even while sweatshops are conceived in practical terms as the lesser of two evils, their moral value remains questionable at best.


Sweatshops must be eradicated, but not in isolation from the systemic conditions which gave rise to its pervasiveness in the first place. Meenakshi Ganguly from the Human Rights Watch suggests that consumers could help pressure retailers to bring about change. She cites the example of blood diamonds, where the industry was forced to change when consumers became more aware and avoided purchasing diamonds that were not properly sourced. The governments of the United States and Asian countries need to take active steps to eliminate the underlying causal factors supporting the demand for sweatshop labor without worsening the present condition of sweatshop workers. Besides raising awareness, they could work towards developing minimum wage regulations and labor laws, having these enforced on both sides, while simultaneously developing closer economic and political ties and additional economic incentives (besides low-wage labor) and infrastructure to continue attracting U.S. companies to engage in mutually beneficial business partnerships. The materialization of positive developments could span decades, but these initiatives remain crucially important.


In conclusion, the controversy surrounding sweatshop labor is indicative of the ethical challenges facing U.S.-Asia relations, highlighted by the need to negotiate incompatibilities between the relative costs and advantages that result from their interactions, and more broadly, between the practical and normative perspectives on such issues. What must be done is not always congruent with what should be done, although we cannot afford to lose sight of the latter. Human persons are the essential units that constitute and give meaning to nations and economies. Even as U.S.-Asia relations aim at boosting overall economic progress, these countries cannot overlook the moral obligation of respecting and defending fundamental human rights, and must continuously work at reconciling these divergent concerns.




Annabelle Wong

National University of Singapore



Benjamin Adam Schorr

University of Oregon


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