Worker Rights and Low Wage Industrialization: How to Avoid Sweatshops

TLDR

Global labor practice disputes center on accusations that multinational enterprises exploit workers in developing countries, while some economists argue such criticisms are naive and view sweatshops as inevitable for development. The paper argues that theoretical and empirical evidence refutes defenders’ claims that sweatshops are inevitable. The authors show that adhering to local labor laws and providing decent conditions and fair wages is feasible for multinational corporations. The study concludes that ethical and strategic incentives support multinational corporations adopting voluntary codes of conduct.

Abstract

Disputes concerning global labor practices are at the core of contemporary debates regarding globalization. Critics have charged multinational enterprises with the unjust exploitation of workers in the developing world. In response, some economists and "classical liberals" have argued that these criticisms are grounded in a naïve understanding of global economics. They contend instead that sweatshops constitute an inevitable and essential feature of economic development. To the contrary, we argue that there are persuasive theoretical and empirical reasons for rejecting the arguments of these defenders of sweatshops. In particular, we argue that respecting workers entail an obligation to adhere to local labor laws, and we demonstrate that it is feasible for multinational corporations (MNCs) to provide decent working conditions and fair wages to workers. The main conclusion of this essay is that there are compelling ethical and strategic reasons for MNCs to embrace voluntary codes of conduct.