Nike is a global corporation with factories all around the world. Nike’s footwear is manufactured abroad by independent contract manufacturers and Nike is supplied by 150 footwear factories in 14 countries. Most of Nike’s contract factories are in Vietnam, China, Indonesia, Cambodia, and Pakistan. One of the most worrisome issues impacting Nike is the company policies and actions concerning utilizing child labor in Nike factories abroad. This unethical practice begs for further exploration into the legality and morality of child labor polices and cases outside of the United States. Nike as a corporation has a social responsibility to protect the environment and well being of others. A utilitarian ethical perspective states that what is morally right is determined by doing the greatest amount of good for the greatest amount of people. After employing an analysis of this perspective, it becomes apparent that Nike is operating its corporation on the bedrock of unethical child labor. This is an injustice and an immoral practice that must end.
Webster’s dictionary defines child labor as “the employment of a child in a business or industry especially in violation of state or federal statutes prohibiting the employment of children under a specified age.” Globally there are many children who are affected by child labor abuse and enslavement. Child labor violations effect more than 168 Million children worldwide accounting for more than 11% of the child population (World Report on Child Labor ILO 2013.) The magnitude of child labor abroad is due to extreme poverty in developing countries. The scale of child labor abroad is substantial, resulting in debilitating consequences for children who voluntarily enter into the child labor market and grave consequences for children who are forced into labor.
One of the most damaging effects of child labor is the sacrifice of education and educational opportunity. This factor is aggregated with the risk of developing long-term health effects that can shorten the life-span of children resulting from risk of exposure to hazardous work conditions daily (World Report on Child Labor ILO 2013.) Many children who enter into the child labor market abandon their pursuits of education. With the median age of entry being 15 years of age and as young as 6 years old, it becomes difficult to escape harsh labor practices and poverty because many of these children lack the education to obtain better jobs in the future. Some of the other risk factors associated with child labor include work environments with high chemical exposure, high heat, and work practices that result in loss of limbs or loss of life.
Nike as a company has long been criticized for their use of child labor in their factories abroad. With an industry that has heavy machinery and has toxic chemicals/ solvents, it is impractical that any of the labor practices abroad would be allowed in the U.S. however, by moving factories abroad Nike has been able to sustain its corporate facilities (which have been regarded as “sweat shops”) for a fraction of the cost. In addition to gaining the economic benefits of the low cost to run factories abroad, Nike can avoid the stringent regulation and oversight that prevents children from working in deplorable conditions. Nike has more than 150 factories with locations spanning across 14 countries abroad. Most of Nike’s factories are based in Asian countries where less stringent policies and oversight for child labor perpetuates abuse.
In 1938 the Fair Labor Standards Act (FLSA) was promulgated in the United States and became the regulatory body known as “child labor laws”. This set of law and policy was created to ensure that children in the United States who entered into the labor market engaged in work that was safe, did not jeopardize their health or interfere with their educational opportunities (Department of Labor 2018). Unfortunately, the protections and policies that have been in place in the United States for hundreds of years do not extend themselves to the vast majority of developing countries beyond U.S. boarders. The Department of Labor has clearly defined regulations and policies that protect young workers, prioritizes educational opportunity and makes the law clear and consequences apparent. Additionally, it is easy to make a claim for FLSA violations and there are strict sanctions for violations of child labor laws which deters a lot of corporations from engaging in child labor abuse within the United States.
Unlike the Unites States of America, regulating unfair child labor practices becomes more in less developed countries. The lack of stringent guidelines and enforcement of policies is exacerbated by politics, lack of awareness, and the corruption of local governments. Despite the factors mentioned previously, there are laws in place to help eradicate the practice that leaves millions of children exposed to unsafe work environments.
The Bureau of International Labor Affairs (ILLAB) is a program that was created in 1993 as a response to congressional concerns of the horrific incidence of child labor and human trafficking around the globe (Department of Labor 2018). On June 12, 1999, an executive order was signed to help further the goal of eradicating detrimental child labor. The Executive Order 13126 on the “Prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor,” was created to make certain that U.S. agencies did not produce goods that were rendered through forced child labor (Department of Labor 2018.) The executive order came with many requirements and oversight. One of the most notable components of the executive order was the establishment of consultation between the Department of Labor, Department of State and Homeland Security. Through these integral organizations and their diligence, a published list of products was created categorized by country of origin. The list contained products that have been manufactured, produced, or mined utilizing forced/ indentured child labor. Based upon the requirements of the executive order, companies who have products on the list must make a “good faith” effort to ensure and certify that they have determined whether forced child labor was employed to produce the items (Department of Labor 2018.) This executive order was supposed to create a sense of accountability and tighten the reigns on corporations who import goods produced by forced child labor. However, as seen with Nike many corporations have been able to skirt pass these laws and policies for decades.
Before the executive order was enacted, Nike in 1998 through their Chairman and Chief Executive Officer Philip H. Knight, made a pledge to implement U.S. standards and practices in its factories abroad and allow the labor department and human rights group to assess the working conditions of the factories in Asia (Cushman 1998.) Although this pledge was taken to make diligent efforts to adopt U.S. laws and policies abroad, much of Nike’s practices remained virtually the same even after the executive order went into effect in 1999. Nike attempted to enact a series of company laws and initiatives to raise the standards of their factories and practices as controversy continued to plague the organization during those early years of new legislative mandates. One of the first initiatives that Nike implemented was raising the age requirements to work in its footwear factories to 16 and a minimum of 18 in its apparel factories (Lichtig ;Wesley 2015).
In addition to raising the minimum age requirement Nike also stated that it would began an initiative to provide educational courses for its workers. The courses offered would allow them to earn something like a GED equivalency so that when they are not at work they can obtain an education for free. At this point, Nike appeared to be heading in a positive direction to adhere to regulations and policies that would end child labor in its factories. Unfortunately, after further investigation, it was discovered that many of the promises were made with loopholes in mind that would allow Nike to circumvent application of the laws and policies that prohibit the inhumane act of forced child labor. For example, Nike used its own auditors to conduct site visits to its factories and report the working conditions and compliance with regulations (Lichtig ;Wesley 2015). Additionally, Nike offered education program however, it was discovered that much of the programmatic structures were for persons in the corporate operation and not workers of the factories. Therefore, Nike on the surface made a public appeal towards following the rules and covertly violated the laws.
Currently, the United States Supreme Court after gathering a plethora of evidence is seeking justice against Nestle Corporation for using child slaves to harvest cocoa for production of goods in Africa. This landmark case where a corporation is being held accountable for child labor practices abroad will establish new legal precedence concerning such occurrences. Nike may have been able to utilize loopholes to escape accountability, sanctions, and liability for its actions abroad however, it is highly probable that the era of violating child labor regulations abroad and not receiving heavy penalties is coming to an end. Nike will suffer stiff penalties soon if it does not continue to actualize the promises made in 1998 and should continue to work towards adherence to law and policy to lessen the impact of its unethical behavior.
Utilitarian Ethical Theory
The utilitarian ethical principal is an ethical theory that is generally premised on the fact that what is morally right is measured by whether it is something that is done for the greater good of the greater amount of people (Encyclopedia). According to the text, however, this ethical principal is more clearly defined as an ethical principal based on consequences (Cavico and Mujtaba 2010). This theory is one that measures the reasonableness or unreasonableness of the consequences of an action (Cavico and Mujtaba 2010). It is hard to foresee the consequences of an action that we take because sometimes the consequences thereof may take long periods of time to manifest. As a result, businesses must employ a utility calculation to weigh the consequences of an action before deciding to engage/move forward with its undertaking. By using a utility calculation business can have a better understanding of potential consequences before they occur, and measure potential affects of business decisions before they manifest.
Consequently, the distribution of “good” outcomes could potentially be overestimated or underscored. This results in a debate as to whether the focus of a business should lend itself to the distribution of the good benefits of an action or the quantity of an action (aggregate principal versus distributive principle). For instance, is it better to quantify the “good” based on measuring how many people are affected by the “good” (distribution) components of a business decision or should we quantify “good” by the greater amount of “good” decisions that are made even if the impact is narrowed (aggregate). This component in the ethical theory is ambiguous as utilizing it can result in a slippery slope. Therefore, Utilitarian’s use a measurement of quantities of the pleasure versus the pain of an action. This is a simple calculation of determining how much pleasure is potentially derived from and action and subtracting the measure of pain. Which ever action has the lowest amount of pain essentially produces the greatest amount of good (Cavico and Mujtaba 2010.)
Application Utilitarian Analysis
Applying this analysis to Nike, the ethical question becomes is it moral for Nike to use child labor to produce various products in its factories abroad? To take this question of morality into consideration it is important to consider all the stakeholders directly and indirectly affected by the decision to use child labor abroad. The key stakeholders affected by Nike’s decisions are the children in the countries abroad who actively seek employment or are forced into child labor, the board directors for Nike’s corporation, and society as a whole. As for the children in the countries where Nike operates its factories, there are foreseeable pleasures that are derived from having a Nike factory in your city or community. The opportunity for economic gain in the cities are much needed as many of these places are third world countries and do not afford many opportunities to earn wages as many of the citizens live in extreme poverty.
Additionally, employing younger children would enable youth to work and earn wages on behalf of parents or grandparents who may not be able to physically work in the factories. Although, these pleasures exist and afford children and the economy of these cities to thrive there is some pain associated with child labor abroad. There are low wages paid to the children in these factories as low as 3 dollars a day. In addition, children are being exposed to hazardous materials, factories with inadequate A/C to prevent heat exhaustion and long hours. Children are also sacrificing educational opportunities to work in the factories providing limited chances of possible escape from poverty and hard labor. When applying the analysis to the board of directors and CEO of Nike corporation, the pleasures associated with having factories abroad and utilizing child labor are clearly measurable. Nike saves millions of dollars by having its factories oversees and using very cheap labor. The cost to produce shoes and apparel is significantly less than what it would cost to have the items made in the U.S. this enables Nike to meet the manufacturing need for its product with virtually an extremely large profit in return. The other benefits to the factories is being able to provide economic opportunities to those who live in less developed countries. Nike is boosting economies worldwide by providing opportunities to work in areas where not many opportunities were present before the factories arrived. Although there appears to be some good resulting from child labor in factories abroad, the pain associated with this is more drastic. Children are suffering long term health effects resulting g in death. Communities are being destroyed because of an inability to depose of hazardous materials and eco systems are being ruined. We are fostering generations of uneducated people which keeps third world countries third world and minimize growth potential to harsh factory labor due to lack of education.
Therefore, the implications of the societal impact become grim. Allowing child labor in Nike factories sets the tone for what is viewed as acceptable and leads to abuse in other countries where U.S. corporations have followed Nike’s lead and taken their factories abroad. There are corporations like Nestle who have been discovered using child slaves to harvest cocoa in Africa. In taking this into consideration, there is no pleasure in child labor resulting in enslavement as well as human trafficking. The societal pleasure of child labor is supposed to be an opportunity for world hunger to end and economic value however, death and enslavement are inevitable pains that can’t be ignored. Conclusively, to quantify whether Nike’s use of child labor is ethical we can derive that the pleasure +5- minus the pain -8 results in a -3. Thus, the pain associated with Nike’s action outweighs the good which mean Nike is unethical for using child labor in its factories abroad as the amount of good is not greater than the bad or negatives associated with their actions.
Kantian Ethical Theory
The Kantian ethical principal is an ethical theory that is based on the notion that what is right or wrong does not depend on the consequences of the action but whether the action fulfills our duty (Cavico and Mujtaba 2010.) In addition, this theory is premised on the idea that there is an ultimate principal of morality which determines what our moral duties are. This supreme principal is the categorical imperative. There are three formulations to the categorical imperative. The universal law; act only to the maximum of which you can will the action to become universal law, the kingdom of ends; an autonomy of treating others as a means to an end in establishing universal law and the agent receiver; contemplating an action from the prospective of not knowing if you are going to be the agent or but rather the receiver. If on the receiving end of the action would you still desire the action to be done. This last formulation is a classic “do unto others as you would have them do unto you” examination (Cavico and Mujtaba 2010.)
Application of Analysis
Applying the formulations to Nike and their action the first thing we must consider is if the practice of using child labor abroad is an action that would be a universal law or norm. Because there are laws already established that prohibit child labor and society las long-identified child labor as being a practice that we must work to eradicate, it is evident that the practice of using child labor would not be a universal law. When considering the kingdom-ends formulation, it can be noted that this test concludes an action is immoral if it is disrespectful and demeaning. If the action treats someone like they are a mere means to an end even if there are positive consequences the action is ruled as immoral. Applying this to Nike, it is evident that treating children as a means to an end is immoral. Nike need cheap labor to mass produces the large quantities of its products. Because the act of exposing children hazardous materials and not providing them with safe working conditions or fair compensation is demeaning and degrading to child, Nike’s actions are immoral according to this component of the test. The last formulation of the three-test factor is the agent -receiver test. The question is whether Nike would be willing to perform the action if they did not know if they were the agent or the receiver. Nike moved its corporations across the boarder for economic benefits but also because the United States laws did not support child labor any longer. Additionally, forcing someone into labor for little to no wages is not an action that anyone would agree with or appreciate. If the board members and CEO had their children be forced to work in the factories it is highly probable that they would be outraged. Therefore, it is probable that Nike would not agree with their own actions making them immoral. Under every categorial imperative analysis Nike has failed each test. In conclusion, the actions they have taken oversees must be regarded as unethical.
Ethical relativism theory is an ethical principal that states that societal norms are what determines morality. An action is immoral if it society believes the act to be immoral. Taking this ethical principal into consideration, it follows similar guidelines as it pertains to Nike. Currently, there are global initiatives to eradicate the practice of child labor and enslavement in the industrial industries abroad. The incidence of child labor, human trafficking for the purposes of labor and enslavement has been regarded as a global crisis. Thus, it is clearly apart that in no sector of society is child labor that is not fair and equitable acceptable. Because Nike is not offering child workers educational opportunity, fair wages, and safe working conditions, the reality of their actions points to immorality. Nike as a corporation has a responsibility to protect the people who work for them. After close examination, it appears that the only protections Nike has provided have been for their corporation, not adhering to any duties of social responsibility.
Social Responsibility Ethical Analysis
Corporate responsibility can be defined as a corporation’s initiatives to take responsibility for the company’s impact on the environment as well as the social well-being of others ( Ivestepedia.com). The initiatives should endeavor to create a long-term positive impact that benefits the community, the environment and society as a whole. The initiatives should also be sustainable and transcend the test of time. One of the first steps to corporate responsibility is transparency, this includes being honest about the impact of the actions the corporation and any detrimental impact those actions have had in society. Although Nike has struggled for years with the ethical practices of their corporation, becoming a company that is socially responsible has been a strong initiative in recent years.
In 2005 Nike made history when it became the first company of its caliber to be transparent about the status of its corporation by publishing a corporate social responsibility report. In the report Nike listed all of its factories and data from its factories that in the past would have been classified (Newell 2015.) Nike took a proactive stance to change the dialogue surrounding its brand and be a company that is transformational in having a positive impact in the world. In 2012, Nike started an initiative with an environmental focus on water. This initiative led to a development that would allow Nike to create a product without using water or harsh chemical. Not only was this initiative creating safer working conditions for employees but also creating an opportunity to save 3 billion gallons of water that Nike previously used during its production process. Currently, you can access all of the corporate responsibility initiative Nike has established directly on their website. As of 2016 , Nike has managed to sustain many of the initiatives dated back to 2005 (Newell 2015.) In summation, Nike has done a better job at acknowledging its corporate flaws in recent years and taking small steps to make some changes. Although the magnitude of the changes has not fully extended themselves to child labor, practices, it can be concluded that Nike is actively practicing corporate responsibility and endeavoring to have sustainable positive impacts.
Nike is engaging in an immoral unethical practice of child labor abroad which often leads to violations of company policies and child labor abuse. There is no guaranteed way to ensure that children who are being paid are not overworked or working in harsh conditions. By using agencies of Nike’s choice to audit its corporate practices, Nike is able to circumvent the perimeters of law and policy that protect against child labor. If Nike wants to take corporate responsibility for their impact in this world they should start my changing their manufacturing and supply chain standards and following law and policy concerning this issue. More probable solutions to help achieve this goal are enforcing mandatory age requirements, allowing auditors from the ILO to enter its facilities, make decisions that have a real impact instead of those that look good in the media or on paper and give back to the communities of its factories beyond the scope of industrialization.
Based upon recent efforts, I predict that Nike will ultimately be a corporation that has holistic ethical practices that can pass the muster of the majority of ethical test. However,
If Nike is using the publications of its corporate responsibility reports to highlight minimum efforts of good that it is doing while taking attention away from the pain of its actions than the crux of its immorality will never be fixed. It is my hope that cases such as the Nestle case will establish new precedence to hold U.S. corporation like Nike responsible. I hope the actions of U.S. Supreme Court forces corporation to reconsider and change their practices to appeal to the greater good of the greatest amount of people. One day soon this will be true for Nike and its practice of using Child Labor in its factories abroad.