Globalization & Labor
Global labor stratification is a hierarchical condition existing between countries with different access to resources, power, and social development. On one level, this situation is linked to economics. However, the practices of more developed countries (in particular outsourcing and off shoring) can contribute to the problem. This situation becomes particularly egregious when a developed country trades in goods produced in poor countries through the use of sweatshops. Many observers criticize such labor arrangements as violations of human rights and the laws of social justice. However, as valid and important as these concerns are, they are only part of the problem. Social scientists and economists continue to address complex questions related to global inequality and unequal opportunity.
Keywords Class; Economic Development; Globalization; Harassment; Human Rights Movement; Interview; Norms; Off shoring; Outsourcing; Poverty Line; Scientific Management; Social Justice; Social Stratification; Society; Sweatshop
Global Stratification: Globalization
The United States is often referred to as the land of opportunity. Stories of poor immigrants who came from other countries with no money in their pockets only to become millionaires have been popularized for generations through works of television, film, and literature. The idea of being able to get ahead on individual merit, through hard work and perseverance, is deeply ingrained in American culture. However, it is likely that workers in the Western world take for granted the various provisions that governments have put in place to protect them from unscrupulous management, economic downturns, and other disasters. These provisions include labor unions, minimum wage guarantees, occupational safety standards, health regulations, and unemployment insurance. However, it is not this way in every country in the world.
Just as social stratification establishes a fixed hierarchical organization within a society in which entire subgroups are organized into social class with varying economic standards, global stratification creates hierarchical systems between countries. This phenomenon arises from fluctuations in the global economy. In a highly competitive global marketplace, myriad businesses work to earn market share and outlast their competitors. In support of this goal, they look for better ways to both reduce costs and increase profits. There are a number of ways that this can be done, including through the development of more efficient production processes and practices, reducing workforce size, or through innovation. Innovation is the process by which an organization systematically analyzes various indicators of customer needs and industry trends and leverages these into cutting edge products and services that allow them to maintain a competitive edge. However, as the marketplace for many industries has become globalized, many organizations turned to outsourcing and off shoring to help them remain competitive. Outsourcing is the practice of contracting work to another company, instead of doing that work “in-house.” For companies in developed economies, outsourcing can eliminate costs associated with hiring and training new workers. The term outsourcing refers to the practice of contracting work out to an external organization.
Off-Shoring / Outsourcing
Sometimes outsourcing means that the work takes place on foreign soil where costs can be significantly lower. When this is done, the practice is called off shoring. This refers to any of the organization's activities that take place in another country. Off shoring can take place within a company’s larger organizational structure. Just because work is off shored does not mean it is outsourced. Off shoring is a particularly attractive option when labor rates in a foreign country are significantly lower than domestic labor rates, and the concomitant employee credentials appear — at least on paper — to be the same as those of the domestic workforce.
Critics of off shoring contend that it allows organizations to reduce costs by exploiting foreign workers at the expense of the domestic labor market. Some observers argue that the foreign workers earn more than they would from local companies competing only in local markets. This means that although foreign workers are paid less than workers doing comparable work in developed countries, they have an opportunity to raise their standard of living. Further, the improvement of infrastructure needed to compete for outsourced jobs can help developing countries better compete in the global marketplace and achieve economic development. Other observers argue that the foreign workers are being exploited and low wages provided by companies in the developed world act to restrain economic development.
Bernstein, Shari, and Malkin (2000) discuss some of the problems associated with the practice of off shoring. Although some organizations are careful to enforce standards for workers that will ensure their human rights and safety, many do not. Further, the implementation of mechanisms to ensure the rights of workers (e.g., collective bargaining) can be hampered by the lack of appropriate legislation in countries that lack government regulation and oversight. It has been estimated that there are thousands of sweatshops in Asian and Latin America. Some sweatshops have been found to force employees to work 16-hour days and find ways to cheat workers out of wages. As retailers in the home countries attempt to reduce costs in order to increase or maintain profitability, in many cases it is the workers in the offshore facility that suffer.
Sweatshop conditions persist in many outsourced and off-shoring facilities worldwide. Many multinational corporations outsource or offshore manufacturing processes to factories in other countries where the labor is cheaper and the labor laws are often more lenient. From a purely economic perspective, this makes sense to the corporation's bottom line. Goods can be made more cheaply, enabling the corporation to undersell its competition and gain a larger share of the marketplace and make more profits and benefit its shareholders. However, this practice brings up questions of human rights when wages and working conditions are unfair or exploitative.
Arguments have also been advanced that such practices increase social stratification within the home countries of large corporations, as smaller countries may go out of business. According to some critics, a situation develops in which the rich become richer and the poor become poorer. Further, in many cases, the company to whom the manufacturing work was off shored may be a sweatshop — a shop, factory, or other business establishment where employees are forced to work long hours under poor or hazardous working conditions for minimal or survival wages. Although the practice may appear on the surface to benefit individuals living in conditions of poverty in economically developing countries, it poses complex about questions of human rights, social justice, and corporate responsibility.
To address the problem of sweatshops, a number of companies have developed corporate codes of conduct to help ensure that employees in outsourced or offshore factories receive fair wages and are afforded safe working conditions. Corporate codes of conduct are common in textile, clothing, footwear, toy, and food and beverage industries. These codes articulate labor, human rights, environmental standards to which suppliers need to adhere (Yu, 2007). In addition, many of these codes also specify the norms and rules by which the labor practices of suppliers will be evaluated. Typically, these codes include prohibitions on child labor, forced labor, and discrimination as well as statements to protect freedom of association, collective bargaining, and similar principles to protect the health, safety, wages, and the hours of the employees in general, and female employees in particular.
Yu conducted research during the period between 2002 and 2005 of a large supplier factory for Reebok located in China. Data were collected through observation, interviews, and review of existing documents. Reebok had instituted a corporate code of conduct in 1988. However, the company was publically criticized in 1992 for subcontracting to suppliers who violated the human rights of its workers. In response, Reebok wrote a document of standards for human rights of production workers, including stipulations concerning forced labor, child labor, freedom of association, non-harassment, wages, working hours, workplace safety, and non-retaliation. Yu examined the impact of this corporate code of conduct on the labor standards in Reebok's second largest footwear supplier in China. The company had 16 production lines, over...
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