Globalization of corporations has led to various pros and cons. Multinational corporations have proved beneficial for the economy and the company’s returns. However, there is more than just the economic perspective of globalization of firms. Most firms have been accused of eco-terrorism, child labor and other unethical issues. Most consumers benefit from cheaper products, but they do not understand what goes on in the production process.
The thesis of my essay is to analyze the unethical issues involved in globalization of companies. These issues include child labor, which is one of the most prevalent ethical issues surrounding the globalization of many corporations.
Pro’s of Globalization
First, globalization has led to increased competition by firms since the whole world participates in the global economy. This has benefited the consumers with better services and cheaper products. Furthermore, consumers can choose from a variety of goods provided in the global economy. Employment has also risen in developing countries where most multinational corporations seek labor. Consequently, developing countries benefit from access to technological advancements because of the entrance of new multinational corporations in their economies. This has led to growth and increased economic performance in the developing economies where the multinational corporations are based (Secondi, 2008).
Con’s of Globalization
Nevertheless, child labor has been the major unethical motive of most multinational corporations setting their manufacturing companies in developing countries. Increased competition in the global economy has led to various negative strategies by huge firms. When competition increases the commodity prices goes down, thus, companies now seek ways of reducing their production costs. This leads to most company’s shifting their manufacturing plants to developing countries. Developing countries offer cheaper labor, cheaper raw materials and the government restrictions in these countries are less restrictive than in the developed countries. Thus, these firms capitalize on the reduced production costs, and they are able to offer their products at a cheaper price in the foreign markets (Hindman, 2009).
Large multinational corporations such as the Coca-Cola Company and Nike Company have been accused of engaging in child labor, in developing countries. These companies take advantage of the poverty levels in these countries, and they hire child labor at low costs. For instance, the Nike Company has been previously accused of using child labor in the South East Asia countries. Further, the Coca-Cola Company has been linked to child labor in most developing countries all over the world.
These firms target the developing countries because there is a huge demand for employment. Therefore, they base their manufacturing plants in these companies to take advantage of the situation. There are many factors leading to children working for these companies. First, lack of education has led to early employment for children because they have no school to attend. Second, poverty has led made parents in these countries willing to let their children work for these firms. Moreover, the prevalence of diseases such as HIV/AIDS in the developing countries has made many children orphans. With no one to depend on, they are forced to work for these firms in order to afford their basic needs. For instance, in the sub-Saharan region HIV/AIDS has been a major problem leading to other problems such as child labor.
Multinational corporations have huge amounts of capital to support their manufacturing processes. For instance, in most developing countries, corruption is one of the major vices brought about by low levels of income. Thus, these corporations can easily bribe government agents to pave a way for their malpractices. This is one of the major reasons leading to the prevalence of child labor in developing countries. The government restrictions in the developing countries are less restrictive than in the developed countries. This limits the performance of multinational corporations in the developed countries. For instance, in most developed countries the government sets the minimum wage to be paid for all its citizens (Hindman, 2009).
What makes firm’s seek child labor
Thus, with increased competition maintaining the high wage bills and still providing goods at a cheaper price becomes a burden for these corporations. This leads the firms to shift their production to developing countries where there are low government restrictions, and there is a huge demand for employment. Therefore, the employment of child labor is a marketing strategy implemented by companies to counter competition (Secondi, 2008). However, what makes the situation more prevalent in developing countries is that the government does not strive to reduce child labor both through legal restrictions such as laws, and court procedures such as lawsuits for firms engaging in the practice.
Globalization has led to economic growth. This has portrayed globalization as a positive move by most firms. However, the effect of globalization only benefits the foreign markets where the firms are based. Thus, it is an exploitative measure to acquire cheaper labor in developing countries and selling the products cheaply to foreign markets. The countries that accommodate these multinational firms do not benefit economically from the firms. This scenario has made poor countries poorer.
Moreover, child labor does not improve the standard of living for the children involved. It makes their lives more miserable. This is after a research indicating that these children are subjected towards harsh working environments and low pay. Child labor is linked to deprivation of worker’s rights such as long working hours, poor pay and poor working conditions. What makes the situation worse is that the strength of labor unions in the developing countries is redundant. On the other hand, the firms engaging in child labor spend lots of money to ensure that labor unions do not succeed (Gifford, 2009).
Disadvantages of Child Labor
Child labor has more disadvantages than advantages to the children involved. Child labor reduces the chances of improvement of the poverty condition. This is because the children engaged in the child labor process miss school. Therefore, they do not build their future opportunities to improve their current situation. This creates a cycle of poverty where these children become caught up with the poor living condition for the rest of their lives. Consequently, child labor affects the children psychologically because they are forced to grow up at an early age. Long working hours affect the children’s health because they are left exhausted.
According to a survey conducted, child labor is one of the worst malpractices of the world. This is because it ruins the future of the children involved. Most children struggle to connect employment with education because of the poverty condition. This leads to school dropout as most of these children cannot maintain working and learning at the same time. On the other hand, if they succeed learning, they end up achieving poor grades, which will make them give up education. In addition, children who engage in early employment end up becoming lowly paid adults because they have no skilled labor. In some scenarios, children become malnourished because of working the fields for long hours with harsh working conditions (Stearman, 2010).
Why Child Labor Still Goes On
Most U.S companies based in developing countries engage in child labor. Despite the wide sensitization by human rights activists against child labor, the vice is still widely practiced. The developing countries suffer the most from this practice. This is because the resources used as raw materials are cheaply obtained from the developing country. Further, cheap labor and child labor brings about increased poverty since the long-terms productivity of the children is reduced.
The products gained in the production process are shipped to foreign countries with good markets where the firms get huge profits from the cheap sale of products. Thus, as many U.S citizens are happy living with quality standards of life and enjoying cheap products it is at the expense of the children engaged in child labor. The developing countries gain less or nothing and their economies are further worsened by the high levels of children dropouts. This insinuates an exploitative measure by rich countries over the poor countries. Measures set to counter child labor have widely failed because of poor cooperation by the firms and the governments in the developing countries (Hindman, 2009).
The U.S government has not done enough to ensure that the good supplied to their economy are not obtained illegally. The measures put in place to measure the legality of firm’s operations are low as major firms alleged to be involved in child labor are still in practice. The U.S government has made efforts to reduce the malpractices by multinational corporations to engage in exploitation of developing countries to improve their profit margins. For instance, in Massachusetts, the state government has recently tried formulating laws that restrict firms that violate human rights are barred from doing business within the state. However, a legal suit, by corporations operating within the state, terming the process as unconstitutional, ended the process (Gifford, 2009). This proves that a strong financial stand by the multinational corporations pave way for the increase in child labor.
Negative Effects of Globalization
Globalization of countries has not only caused child labor, but also the violation of other human rights for employees have been reported. For instance, long working hours and poor pay are also reported for adult workers. Further, environmental degradation has increased mostly in developing countries where there are less legal restrictions. Therefore, this pictures globalization as a negative strategy by developed countries to take advantage of the developing countries. Moreover, the engagement of multinational corporations in developing economies reduces the success of their local companies because of increased competition. In addition, poverty is not solved by globalization in developing countries (Stearman, 2010).
What Happens if Child Labor Goes On
If child labor is not stopped, the vice will increase to uncontrollable levels in the future. Corporations have widely violated human rights of children to the extent that some corporations are accused of shipping children to foreign companies for labor. This shows the poor codes of conducts that some corporations engage in. The foreign markets do not realize how legitimate the goods provided into these markets have been produced. It is with increased public sensitization that the issue has taken major concern.
Corporations are willing to make profits at all costs. It is with the huge public sensitization of what goes on in the production process by human right groups such as the UN that some corporations have reduced their levels of human rights violation. For instance, even in the U.S there are aspects of worker’s rights violation. For instance, the Wal-Mart scandal where workers were locked inside the premises during a fire break out to ensure they did not steal (Gifford, 2009). This shows a lack of concern for corporations towards the workers’ welfare. However, with the increased relevance of public relations, corporations have begun respecting human rights. Most corporations want to give the public a positive image of the firm to their customers to increase the customer’s preference for the company’s goods. Thus, most companies are not willing to be accused of child labor among other malpractices as it might reduce their customers’ preference for their goods.
Stop child labor
Child labor should be restricted by both by foreign governments, where the companies sell their products, and the developing countries where these companies base their manufacturing plants. Most developing countries have begun to feel the effects of child labor and other negative effects of globalization. Most developing countries have started formulating laws that give their local firms more advantage than foreign firms. Further, formulation of policies such as compulsory education has reduced the engagement of children in child labor. The rise of labor unions in developing countries is another positive move towards reducing the chances of child labor. Similarly, the media has been keen on investigating multinational corporations and widely criticizing malpractices. For instance, technology companies linked with human rights violation in China and other parts of the world have been widely criticized by the media.
Gifford, C. (2009). Child Labor. London: Evans.
Hindman, H. D. (2009). The world of child labor: An historical and regional survey. Armonk, N.Y: M.E. Sharpe.
Secondi, G. (2008). The development economics reader. New York, NY: Routledge.
Stearman, K. (2010). Child Labor. Chicago, IL: Raintree.