Exploitation of Oversees Labor by Multinational Companies - Research Paper Example

Exploitation of oversees labor by multinational companies In undeveloped countries, the level of unemployment is very high which is making it hard for the government to rule its people as it must first create employment opportunities. These governments have opened doors for foreign investors who might be interested in setting up their businesses in the country as this could create employments for the locals. It will also benefit from tax revenue that will be levied to these companies. As a result government will use these resources to improve the basic infrastructure that will help in creating employment. It is therefore not appropriate to say that the companies move to undeveloped countries to exploit their cheap labor as the country also benefit largely from new employment opportunities created and revenues that help the countries to develop (Drusilla K. Brown, Alan V. Deardorff, &Robert M. Stern, 2002) Nevertheless, businesses are bided by a code of ethics which are moral values that determine how individual, group organization and business transact their businesses. These can be applied to all form of businesses as they are universal and business must follow them in order to respect human dignity during transaction. Business being unethical means that it operates against the universal code of ethics which prevent it from immoral ways of gaining profits through exploiting human recourses. With the main objective of the business being making profits, it must ensure that it contributes and respect human dignity despite their states of need (Flanagan & Robert 2006, p.118). Labor in US has become so expensive for many companies to operate at a profit. As a result, many companies have moved its operations to other countries to countries where there are high levels of unemployment. Their move can be looked in two dimensions. One is that the companies are doing favor to the local society through providing them with labor. But, on the other hand it can be perceived as exploiting cheap labor. Cheap labor can be perceived to be labor which can be obtained at a low cost and is worth of no respect (Drusilla K. Brown, Alan V. Deardorff, &Robert M. Stern, 2002) One of such companies that exploit cheap labor overseas through opening up of production branches in developing countries is IBM. This is a company that mainly deals with software development which is an expensive sector when it is operated in United States. This has forced the company to open its branches in India as the level of running such a business is low. Due to high population the government has found it hard to be able to support the high population making majority of them to live below the poverty level. Some of the skilled personnel who have the same qualifications as those in United States are unemployed therefore; when such an opportunity arises they are ready to offer their labor despite being paid lowly. Despite the undeveloped countries having many employment challenges that hinder them from putting up laws and regulations that would prevent United States companies from exploiting overseas labor, the companies should not use this as an opportunity to make enormous profits on behalf of the poor citizens. This is because the company will be increasing the poverty levels in the country as after exploiting the resources, the money obtained is then transferred back to United States. Instead the company should participate in corporate social responsibility through involving itself with maters that would improve the welfare of that country or the society. Mainly, the companies that are involved in using overseas labor are those whose operations cannot be easily mechanized therefore; need a lot of labor to run its processes. Clothing industry is one of those sectors that have established their companies overseas. This has enabled the company to be able to utilize both the available cheap labor and raw materials. With the advanced technology due to globalization, management of these branches have been decentralized in United states with the branch managers having very little to do with the management. Other unethical issues that have arose is the overworking the workers as citizens in these countries are perceived to be desperate. Business ethics is against such behaviors by business corporations as there is supposed to be a mutual relationship between the employees and the company. Instead company uses the financial superiority to advance against the employees who are left in the mercies of their employers. Such cases can only be avoided through setting up of labor unions which would be airing the grievances of the poor employees to the outside world (Drusilla K. Brown, Alan V. Deardorff, &Robert M. Stern, 2002) Products that the multinational companies produce are of high quality for the developing countries to afford. The companies also put restrictions on the company not to sell the products outside its premises and the products are returned back to these countries as second hand products. One of the examples of a company that have been exploiting cheap labor is Wal-Mart. The company is based in United States but have branches in Honduras and Bangladesh. In the previous days alarm has been raised on the company exploitation of citizens from these poor countries through poor pay and overworking them without benefits that are entitled to them e.g. health insurance benefits, housing benefits etc (Gross, Compa, 2009). The company has even gone further to incorporate children in its workforce in order to retrieve more profits. The products that are made in these countries e.g. clothing are sold in United States at a lower price in order to attract more customers and also to keep up with increased competition in the market. This is unethical as the business is exploiting the resources of other country and benefits its own interests without considering the impact that the action has to the local community and society at large. This action instead of helping the society, it is making the society to become poor as the money earned cannot spearhead any development activity in that area (Drusilla K. Brown, Alan V. Deardorff, &Robert M. Stern, 2002, p.5) In exploiting cheap labor in developing countries there are some advantages and disadvantages. One advantage is that the company is able to reduce unemployment rate in the undeveloped countries which makes the countries to have high crime rates and poor living conditions of the people. People are able to afford basic needs through working in these companies. On the other hand companies are able to make immense profits from these countries. Cheap labor that is offered in these companies also play a crucial role in sustaining the country’s economy. These companies pay taxes which help the governments of the countries to provide basic necessities to its people. On the other side, the companies exploitation of cheap labor in developed countries leaves the citizens in deep poverty as the money they obtain cannot be used to get them out of poverty. They therefore live a day at a time. Another disadvantage is that cheap labor is expensive. This means that majority of the products that are produced in these areas are of low quality. This is because these workers are not skills and lack the appropriate experience to produce products that can fetch high prices in the market. This is the reason why companies such as Wal-Mart sell its low products at lower prices in order to attract the customers to its products. Another disadvantage of using cheap labor is that when these companies are exposed by media they risk losing their customers as majority of the people are against use of cheap labor (Flanagan, Gould, p.61) Companies can give advantage to their competitors who use this information as a competition tool through tarnishing the other company’s products. This is the reason why companies that use cheap labor keep it as their secret. This was what happened to Wal-Mart Company when people discovered that it was using cheap labor to produce cheap goods. Customers refused to purchase the products that were produced by Wal-Mart Company (Gross, 2006). As a result, the company faced a financial crisis that made it unable to pay its employees in United States e.g. sales people. Another disadvantage that outsourcing have is reduction of jobs in America. When many companies seek cheap labor overseas Americans are left without employment. This has contributed in increasing crime rate in the country. The ethics that govern business entails that a business should ensure that the business plays a role in the success of the surrounding community. Paying the employees low wages is going against these rules and there is no favor that people from this region are getting as they are not paid money that compensate the labor they offer to the company. Although it is not requested that these companies pay the employees from developing the same amount that they would pay an individual in USA, it is important for the company to pay the employees a descent pay that will help the individual move from extreme poverty (Drusilla K. Brown, Alan V. Deardorff, &Robert M. Stern, 2002, p.12) Mainly the multinational companies are exploiting the labor in developing countries such as Africa and some Asian countries. This is because they are taking advantage of desperation of people in these areas. There are two types of exploitation that occur when multinational companies invest in undeveloped countries i.e. discretionary and structural exploitation. Discretionary exploitation is the one in which the employees are free to choose if they will work with low wages and under difficult circumstances. In such condition the employees are not desperate as they have other alternatives most of them which are in agricultural sector, day labor or scavenging. On the other hand, structural exploitation is less exploitative. This is mainly organized through free trade laws or different market settings and competitions. Multinational companies are paying as low as $10 in day. This is little money that cannot sustain these employees together with their family. They therefore, work only for survival but the cash cannot be used to improve their economic status. Majority of these workers live below the poverty line and are not able to afford descent houses and good food. This has led to eruption of shanties in areas where these multinationals have set their companies (Rowan 2011). No worker will get satisfied if his/her needs are not taken care of. This is still the case with employees that have been employed by the multinational companies. Despite some average workers having the necessary skills they are exploited through being paid less wages and overworked for long hours (Compa, Lance A, Diamond, Stephen, 1996, p. 142). Nevertheless, there are no other opportunities therefore; they offer their labor out of desperation. On the other hand, governments of these countries lack the policies that would see improved working conditions of the people. In United States there is an outcry as the number of unemployed people is escalating each day as many multinational companies are looking for cheap labor overseas. As a result, it is clear that the companies are being unethical as they are unable to satisfy the interest of the local community and they even go further to exploit the labor from overseas. The benefits obtained from these countries end up in the pockets of few Americans. As a result, this trend is increasing the differences between the rich and poor. This has an effect also to the American economy as the government lacks funds to distribute to its citizens leading to poor distribution of resources (Blanpain 2007) The multinational could be doing favor to the local people in undeveloped countries if they could be paying the local people adequate wages that could improve the living conditions of the local people. In addition to this the companies could be ensuring that government gets taxes that could enable it to improve the living conditions of the common people. Failure to do so indicates that the companies’ main aim is to enrich themselves at the expense of other local people and the available resources. Instead of doing favor to the local people it is doing harm to them as the local people continue to live in extreme poverty. In conclusion, companies that are seeking cheap labor in oversees must ensure that although the payment they offer to the local people of undeveloped countries are low; it must ensure that the payment is adequate to cater for the local people’s needs. They must also ensure that they improve the living condition of the local people. References Blanpain Roger. The Global Workplace: International and Comparative Employment Law: Cases and Materials, Cambridge University Press, 2007. Brown, Drusilla K. Deardorff, Alan V., Stern, Robert M., The Effects of Multinational Compa, Lance A, Diamond, Stephen F. Human Rights, Labor Rights, and International Trade, University of Pennsylvania Press, 1996. Flanagan, Robert J. Globalization and Labor Conditions: Working Conditions and Worker Rights in a Global Economy. New York: Oxford University Press, 2006. Flanagan Robert J., Gould William B. International Labor Standards: Globalization, Trade, and Public Policy, Stanford University Press, 2003. Gross, James A. Workers' Rights as Human Rights, Cornell University Press, 2006. Gross James A., Compa Lance A. Human Rights in Labor and Employment Relations: International and Domestic Perspectives, Cornell University Press, 2009. Production on Wages and Working Conditions in Developing Countries. Retrieved from http://www.fordschool.umich.edu/rsie/workingpapers/Papers476-500/r483.pdf, 2002. Rowan Exploitation or Opportunity? , retrieved from http://www.uncommonthought.com/mtblog/archives/2011/06/12/exploitation-or.php 2011 Read More