Sweatshops
The term sweatshop refers to a factory that is guilty of some sort of labor abuse or violation, such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, abusive discipline, sexual harassment, or violation of labor laws and regulations. The U.S. Government Accounting Office defines a sweatshop as any manufacturing facility that is guilty of two or more of the above types of labor abuses. However, it is important to understand that the term sweatshop is not just a legally defined term but a word that is used broadly to refer to factories where labor abuses happen.
A Tragedy in Bangladesh: The Rana Plaza Collapse
One of the most horrendous examples of the dangers of sweatshops happened on April 24, 2013. At Rana Plaza in Bangladesh, a building containing apparel factories collapsed, trapping and killing more than 1,100 employees. It was not only the worst industrial disaster in the history of the garment industry, it was also the world’s most fatal industrial building collapse. Factory owners had ignored ominous warning signs, such as visible cracks in the wall, and had illegally added several stories to the top of the building, weight the building was not designed to hold. Many of the factories operating in the building were producing apparel for well-known Western brands, such as Walmart, Joe Fresh, and Mango.
Rescue workers struggled for more than a week to reach trapped survivors, while hospitals tended to the more than 2,500 workers who had escaped, many with severe injuries. Accusations and blame were directed at corporations and government officials.
Industry Response to the Rana Plaza Disaster
Within a few months, two major initiatives were announced, one American and one European, to increase safety and accountability in Bangladeshi factories. Instead of government regulations, large international buyers agreed to only buy goods from factories that met the safety standards in these voluntary agreements. The companies that participate in these agreements, pay for monitoring to enforce safety standards and terminate contracts if the standards are not met.[1]
Economic Impact and Ongoing Debate
Economist Benjamin Powell argues that the increased costs that Bangladeshi factories have due to following safety standards has slowed economic growth. Businesses shift production to other countries with relatively lower labor costs. At the same time, the Bangladeshi garment industry is a pathway out of poverty for many women so slower growth in this sector also translates into fewer opportunities for upward mobility.[2]
How Did Sweatshops Become So Widespread?
Thanks to international efforts to lower import tariffs, an outsourcing movement was born, and many companies saw the opportunity to lower their production costs by moving them overseas. Fashion and apparel companies were among the first to take advantage of the benefits of outsourcing—namely, gaining access to cheap foreign labor markets. Throughout the period from 1970 to the present, employment in American apparel factories dropped sharply as companies moved production to countries like Indonesia, Vietnam, China, Mexico, and the Dominican Republic.
Early Exposés and Saipan Scandal
The outsourcing movement was accompanied by increasing reports of sweatshop abuses. As a result, a number of nongovernmental organizations (NGOs), such as the National Labor Committee, became involved in anti-sweatshop activities. Throughout the 1990s, a number of sweatshop-related abuses came to light in factories used by American brands. Several of these involved the island of Saipan, a small American protectorate in the Pacific. Since Saipan is technically American territory, clothing produced in Saipan could enter the United States duty-free and carry the label “Made in America.” A number of these factories recruited Vietnamese and Filipino natives as factory workers. Upon their arrival in Saipan, some of these workers were exposed to flagrant human rights abuses and, in the worst of cases, outright slavery. In one notorious case, workers were literally imprisoned in the factory and forced to work without pay. Eventually, these abuses were revealed, and U.S. prosecutors filed charges against factory owners, some of whom were sentenced to substantial prison sentences.
Nike’s Response and Corporate Codes of Conduct
In the early 1990s, Nike also came under attack as reports emerged from Indonesia and Vietnam of worker abuse. In Vietnam, a young female factory employee was working on basketball shoes when her machine exploded and sent a bolt through her heart. At first, Nike refused to accept responsibility, pointing out that Nike had never manufactured its own footwear and apparel. Nike’s contracts with its sourcing factories required the factories to obey labor regulations. In Nike’s view, this meant that any abuses were the factories’ responsibility. However, by 1998, the continuing negative publicity influenced Nike to implement a strict code of conduct for its factories.
By 2000, most large apparel brands developed and publicized their own internal codes of conduct for suppliers. Such codes of conduct were contractually imposed on all suppliers and required that factories comply with all local labor laws, refrain from employing children, and maintain safety programs. In addition, most brands began to require that factories make themselves available for inspections to make sure that they were complying with the standards set forth in the codes of conduct. A number of inspection companies sprang up to service the needs of the corporations and groups of young inspectors soon scanned the globe, moving from factory to factory, checking them for fire violations, reviewing records to make sure that rules on overtime were respected, and so forth.
Ongoing Violations and Shifting Focus
Despite all these efforts, reports of violations continued to be heard. Companies like Walmart and Nike, which had often been accused of sweatshop abuses, saw their sales and stock valuations continue to rise. Many companies began to focus more on environmentalism and climate change issues, and a number of brands began to require that their supply factories obtain some sort of environmental certification.