CPE Globalization Briefs Center for Popular Economics PO Box 785 Amherst MA 01004 413 545 0743 www PopularEconomics org Sweatshops T he term sweatshop was first used in the United States towards the end of the 19th century to describe working conditions characterized by long hours oppressively hard and often unsafe labor th and very low pay During the 20 century mobilization to improve employment conditions in industrialized countries drastically reduced but has not yet eliminated sweatshop practices During the past two decades however growing attention has been paid to exploitative labor practices in developing economies linked to large multinational corporations particularly in the labor intensive manufacture of clothing footwear and toys Increasingly sweatshops are seen as a global issue of basic human rights for both developing and developed economies One important trend behind the globalization of sweatshops is the changing composition of exports in developing economies In 1985 manufactured goods accounted for only 29 percent of all exports from developing countries By 1996 manufacturing exports comprised 77 percent of the total from these countries The growth of manufacturing in the developing world unleashes more competitive pressures among global producers Competitive pressures among manufacturing sectors can keep wages low and working hours long Sweatshops have been one by product of successful industrialization In the 1990s student and labor organizations primarily in industrialized countries have begun to organize campaigns to stop sweatshop practices These efforts have increased the profile of workplace abuses in countries around the world However critiques of the anti sweatshop movement have pointed out that better working conditions could come at the cost of fewer jobs In developing countries a decline in formal sector employment would force more people into the informal sector where pay and working conditions are often worse Do better employment conditions come at the cost of fewer jobs The answer is not straightforward For example clothing firms in Asia experienced the fastest growth in both employment and wages during the past Manufacturing Exports as a Percentage of Total Exports 1985 96 Industrialized countries Developing countries 90 80 70 60 50 40 30 20 10 0 1985 1990 1996 Source U N 1998 World Economic and Social Survey Table A 16 two decades Therefore having both more and better jobs is possible This is not to argue that there is no negative relationship between wages and employment but rather to point out that many other factors enter the picture One important variable is the retail price people pay Surveys of American consumers have revealed that people are generally willing to pay from 15 to 28 percent more for clothes that are not produced under sweatshop conditions Such price increases would more than pay for large improvements in working conditions Furthermore since retail prices increase with improvements in working conditions negative employment effects would be kept very small or even non existent Sources K A Elliot and R B Freeman 2000 White hats or Don Quixotes Human rights vigilantes in the global economy National Bureau of Economic Research Conference on Emerging Labor Market Institutions International Labor Organization 2000 Labor Practices in the Footwear Leather Textiles and Clothing Industries Geneva ILO Robert Pollin Justine Burns and James Heintz 2001 Global apparel production and sweatshop labor Can raising retail prices finance living wages Political Economy Research Institute Draft The Center for Popular Economics is a non profit collective of political economists that teaches economic literacy to activists for progressive social change CPE creates and communicates economic theories that challenge systems of oppression based on class race gender and nation Our programs and publications demystify economics and provide alternative to mainstream analyses 2
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