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Sweatshops, commonly defined today as workplaces violating multiple labor laws, have always been a part of the economic landscape, as have attempts to eliminate sweatshop conditions. Public outrage following the 1911 Triangle Shirtwaist fire in New York, for example, led to creation of a Factory Investigating Commission and the passage of thirty-six laws reforming the state labor code.
U.S. federal labor law is embodied in the Fair Labor Standards Act, originally passed in 1938. This act, too, responded to the prevalence of poor working conditions, calling for elimination of “conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers” (U.S. Department of Labor 2004, p. 1). Recent laws such as the U.S. Victims of Trafficking and Violence Protection Act of 2000 extend protection from exploitative practices.
Internationally, the 1998 United Nations Declaration on Fundamental Principles and Rights at Work provides the foundation for global labor standards. The Declaration defines four core types of labor standards: freedom from forced (trafficked) labor, nondiscrimination, abolition of child labor, and freedom of association/collective bargaining. Additional standards appear in the United Nations Anti-Trafficking Protocol, which recognizes that trafficked workers are victims of a crime and not illegal immigrants (United Nations 2000).
Despite these laws and agreements, violations of labor standards like those exposed by the Triangle fire persist and may well be increasing with globalization. In the United States sweatshop production is closely related to international flows of labor. Sectors such as agriculture, services, and clothing, in which immigrant labor constitutes larger shares of the workforce, are most likely to violate labor laws (Free the Slaves 2004).
While the extent of trade globalization as a new phenomenon is a subject of much debate (Sutcliffe and Glynn 1999), developing countries indisputably have only recently become major producers and exporters in such labor-intensive sectors as clothing and electronics. Companies in sectors that are very sensitive to wages and other costs of protecting workers may find relocation to low-wage countries a profitable response to global competitive pressure.
In developing countries, labor laws and enforcement are typically weak and labor is highly skewed toward the informal sector (Singh and Zammit 2003), defined by the International Labour Office (2002) as paid work not “recognized, regulated or protected by existing legal or regulatory frameworks” (p. 12). As a result, both wages and nonwage labor costs are lower than in rich countries. While labor costs are not always the only or even primary reason companies move out of developed countries (Chang 1998), for labor-intensive firms, moving offshore and subcontracting to informal producers clearly have become key elements of competitive strategy.
That sweatshop conditions still exist even in the United States is evidence that economic incentives for violating labor standards can be compelling to employers facing competitive threat. Opponents to sweatshops, recognizing the economic incentive to firms of low labor standards, have focused on raising the cost of using sweated labor. The International Confederation of Free Trade Unions and national trade unions emphasize ratification of and compliance with existing national and United Nations labor standards (International Confederation of Free Trade Unions 2006). Additional pressure comes from popular antisweatshop movements, often supported by trade unions, that target consumers. By exposing sweatshop producers and encouraging consumer boycotts, these movements hope to raise the cost of exploitative labor practices.
While the scope of consumer-based economic punishment of sweatshop producers is limited (Gibson 2005; Elliott and Freeman 2003), empirical evidence suggests that consumers in at least some sectors are willing to pay higher prices to support better labor conditions (Pollin,Burns, and Heintz 2004). In clothing, popular movements have had considerable success in gaining acceptance of codes of conduct designed to raise standards. Many agreements and partnerships specifying in detail acceptable working conditions have emerged between producers and antisweatshop organizations representing consumers, both in the United States and in Europe.
Negotiated agreements and codes of conduct mark a dramatic step forward in recognizing basic human rights at work. A similar change is occurring in economic analysis of labor standards, with leading international institutions now linking protection of core labor standards to democracy and therefore to economic development (International Labour Office 2004; World Bank 2007).
Despite considerable progress, significant challenges remain. Government policy can have a strong impact on compliance, but mainly in large formal-sector firms (Weil 2004). Given the high level of informal labor and the difficulty of monitoring even formal-sector small producers scattered throughout the world, enforcement of laws and agreements continues to be weak.
Countries themselves raise objections to externally imposed standards, fearing loss of sovereignty and competitiveness. As one telling example, the U.S. government has ratified only two of the eight ILO core labor rights: It has not ratified the convention on the right to organize, the convention on equal remuneration, or the convention on discrimination. For poor countries, the economic consequences are not insubstantial. Some standards, such as eliminating child labor and improving health and safety, can be prohibitively expensive in competitive export sectors. Even developing countries strongly in favor of raising labor standards may argue (with much evidence to support their case) that economic growth rather than outside intervention is the best path to sustainable improvement in wages and working conditions (Singh and Zammit 2003). Where intervention reduces competitiveness, growth is retarded and the intervention becomes self-defeating.
In any case, even complete compliance with existing laws and codes of conduct would not settle disagreements over sweatshops. Current laws define core standards but not cash standards (Elliott and Freeman 2003), which would mandate wage minimums designed to establish a living wage, considered by many a critical component of working conditions. Thus, although frameworks for higher labor standards are evolving rapidly, serious limitations persist. A narrow definition of sweatshops excluding cash standards and the difficulty of monitoring working conditions in an increasingly globalized economy both pose daunting obstacles to further progress. Poor countries urgently require international support to finance the improved standards that all too often they desire but cannot afford.
Bibliography:
- Chang, Ha-Joon. 1998. Globalization, Transnational Corporations and Economic Development: Can the Developing Countries Pursue Strategic Industrial Policy in a Globalizing World Economy? In Globalization and Progressive Economic Policy, ed. Dean Baker, Gerald Epstein, and Robert Pollin. Cambridge, U.K.: Cambridge University Press.
- Elliott, Kimberly Ann, and Richard B. Freeman. 2003. Can Labor Standards Improve under Globalization? Washington, DC: Institute for International Economics.
- Free the Slaves. 2004. Hidden Slaves: Forced Labor in the United States. Washington, DC: Free the Slaves, and Berkeley: University of California, Human Rights Center.
- Gibson, William. 2005. Monitoring Labor Standards in a Macroeconomic Context. In Interactions in Analytical Political Economy: Theory, Policy, and Applications, ed. Mark Setterfield, 67–104. Armonk, NY: M.E. Sharpe.
- International Confederation of Free Trade Unions. 2006. Internationally Recognised Core Labour Standards in the United States: Report for the WTO General Council Review of Trade Policies of the United States. Geneva, Switzerland: Author.
- International Labour Office. 2002. Women and Men in the Informal Economy: A Statistical Picture. Geneva, Switzerland: Author.
- International Labour Office. 2004. Organizing for Social Justice:
- Global Report under the Follow-up to the ILO Declaration on Fundamental Principles and Rights at Work. Geneva, Switzerland: Author.
- Pollin, Robert, Justine Burns, and James Heintz. 2004. Global Apparel Production and Sweatshop Labor: Can Raising Retail Prices Finance Living Wages? Cambridge Journal of Economics 28 (2): 153–171.
- Singh, Ajit, and Ann Zammit. 2003. Globalisation, Labour Standards and Economics Development. In The Handbook of Globalisation, ed. Jonathan Michie, 191–215. Cheltenham, U.K.: Edward Elgar.
- Sutcliffe, Bob, and Andrew Glynn. 1999. Still Underwhelmed: Indicators of Globalization and Their Misinterpretation. Review of Radical Political Economics 31: 111–131.
- United Nations. 2000. The Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, Supplementing the United Nations Convention against Transnational Organized Crime. Geneva, Switzerland: Author. U.S. Department of Labor. 2004. The Fair Labor Standards Act of 1938, as Amended (WH publication 1318). Washington, DC: Author.
- Weil, David. 2004. Improving Labor Standards in the Apparel Industry: Can Government Make a Difference? Working Paper, Boston University/Harvard Center for Textile and Apparel Research.
- World Bank. 2007. Global Economic Prospects: Managing the Next Wave of Globalization. Washington, DC: Author.
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