Child Labor in U.S. Import Industries

Eric Reynolds [email protected] IB 8180 April 15, 1999 In recent years, there has been an increased awareness of working conditions around the world, particularly the use of sweatshop and child labor. Several large companies such as Nike and others have faced public condemnation over labor practices used to manufacture some of the products they sell. Even though they may not be directly responsible for the working conditions, their purchase and resale of materials manufactured in these conditions make them indirectly liable in the minds of some consumers. Possible loss of market share due to purchases from ethically dubious sources has created a need for companies to have a greater awareness of the labor practices of their suppliers.

Of particular concern to many people is the use of children in the production process and the often unsafe conditions in which they work. Children are working in considerable numbers throughout many regions of the world. The International Labor Organization estimates that there are an estimated 250 million working children in developing countries worldwide.1 Actual statistics on child labor vary widely due to a number of factors. First of all, government statistics do not typically cover illegal work, home-based work, or work by refugee populations. Secondly, statistics are often based on responses to surveys, which opens the door for misreporting or no reporting at all. Statistics that rely on actual inspections of places of employment are often clouded by the inability to gain entrance to some facilities and the fact that violators are sometimes tipped off before an inspection.

Problems with data collection not withstanding, in 1994, the U.S. Congress directed the Secretary of Labor to undertake a review to identify foreign industry and their host countries that utilize child labor in the export of manufactured products from industry or mining to the United States. Working with UNICEF, the ILO, human rights and other non-governmental organizations, foreign governments, businesses, journalists, and academics, the Labor department produced the landmark report entitled “By the Sweat and Toil of Children”. Much of the information in this paper draws on that report. Where possible, data has been updated from subsequent volumes of the report, primarily volume V. This paper begins by focusing on the summary findings of the report, then details six of the countries studied, and concludes with an analysis of the causes of child labor and possible solutions.

Summary Findings

For the purposes of the study, the Labor Department used as its definition of child labor the international standard contained in the ILO’s Convention 138 on Minimum Age for employment (1973) which provides as follows:

The minimum age… should not be less than the age of compulsory schooling and, in any case, shall not be less than 15 years. Convention 138 allows countries whose economy and educational facilities are insufficiently developed to initially specify a minimum age of 14 years and reduce from 13 years to 12 years the minimum age for light work.2

It should be pointed out that only approximately five percent of child workers are employed in export industries in manufacturing and mining. The vast majority of child laborers are engaged in production for domestic consumption. The focus of the study, while relatively narrow in scope, serves as an illustration of the larger problem. The study also relied upon and reported information on child labor in other sectors of the economy outside the original scope of the assignment. The results revealed that more than 95 percent of child laborers live in developing countries, and more than 60 percent live in Asia. Africa has the

1 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/overview.htm. 2 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/summary.htm.

- 2 - highest percentage of children working at approximately 40 percent and in Latin America, an estimated 15 to 20 percent of all children work.3 The largest numbers are found in family-based agriculture, services (domestic servants, restaurants, and street vending), prostitution, and small-scale manufacturing (carpets, garments, furniture). Many of the children working in the formal economy are employed through subcontractors, which makes detection more difficult. The six countries chosen for more detailed analysis in this paper are Thailand, Portugal, Brazil, Nepal, Cote d’Ivoire, and Mexico. A discussion of each follows.

Thailand

Statistics4 Population 60,037,366 (1998) GDP $525 billion (1997) Population Growth 0.97% (1998) Per Capita GDP $8,800 (1997) Rate Fertility Rate 1.84 children Revenues $24 billion born/woman (1998) (FY 96/97) Literacy Rate 93.8% (1995) Expenditures $25 billion (FY 96/97) % of population 24% Unemployment 3.5% under 14 years of Rate age Major Religions Buddhism (95%) Military 2.5% (1998) (1991) Expenditures as % of GDP

Profile Estimates vary greatly for the number of child workers in Thailand. The International Labor Organization estimates one and a half million children working who are between the ages of 6 and 14.5 The main export industries that reportedly employ child labor are the garment, gem, leather bag, shrimp and seafood processing, and wood and rattan furniture industries.6 These children often work 15+ hours per day for six or seven days a week, making only a few dollars per week. Much of the work is paid on a piece rate. For example, in the garment industry, children are often paid as little as five cents for sewing 100 buttons.7 Conditions are very poor, with children being locked inside factories and sometimes beaten. In one instance, 19 people including three children were killed in a Bangkok leather purse shophouse when a fire broke out and the workers were trapped inside because the doors were locked.8

Current laws and efforts to address situation

3 Internal Labor Office Geneva and UNICEF. 1997. Strategies for eliminating child labour: Prevention, removal, and rehabilitation (synthesis document). Paper presented at the International Conference on Child Labor, Oslo.

4 The Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/factbook/th.html. 5 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/portugal.htm. DOL 6 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/portugal.htm. 7 Wright, R. 1994. World View: The Littlest Victims of Global Progress. Los Angeles Times, January 11. 8 Albright, . & Kuntsel, M. 1987. Stolen childhood: global report on the exploitation of children. Cox Newspapers June 21.

- 3 - The current legal minimum working age in Thailand is 13, with children between 13 and 15 permitted to perform “light work”.9 Children are not allowed to work between the hours of 10 p.m. and 6 a.m. There are proposals to decrease the number of legal working hours for children between 13 and 15 in commercial and industrial work to 36 hours per week and increase the penalty for employer violation to a maximum of 12 months imprisonment and a fine of approximately $9,000. Education is compulsory through grade six.

These laws suffer from a severe understaffing of labor inspectors as well as corruption. The problems are compounded by the fact that the laws only apply to factories employing 20 or more people. Additionally, factory doors are usually locked to outsiders, and a special warrant is required to enter factories during the hours children are prohibited from working. Only about 30 percent of eligible Thai children enter high school, and approximately 15 percent drop out before finishing primary school.

The official policy of the Thai government is elimination of child labor through a mass media campaign, registering child laborers, increasing the number of labor inspectors and local offices of labor protection, and increasing training for labor inspectors. Thailand is a party to the UN Convention on the Rights of the Child, but has not ratified ILO Convention No. 138 or No. 59 (Minimum Age for Admission to Employment in Industry).

Portugal

Statistics10

Population 9,927,5566 GDP $149.5 billion (1997) (1998) Population Growth -0.07% (1998) Per Capita GDP $15,200 (1997) Rate Fertility Rate 1.35 children born/woman Revenues $48 billion (1998) (1996) Literacy Rate 85% (1990) Expenditures $52 billion (1996) % of population 17% (1998) Unemployment Rate 7% (1998) under 14 years of age Major Religions Roman Catholic (97%) Military Expenditures as 1.9% (1998) (1991) % of GDP

Profile The number of child laborers in Portugal is estimated to be between 30,000 as cited by governmental sources and 200,000 as cited by non-governmental organizations.11 The footwear, garment, ceramics, and granite paving stone industries have all been documented to use child labor. These industries are primarily concentrated in the northern districts of Oporto and Braga. Many of these children work in illegal garage workshops and home production, where violations are much harder to detect. The conditions of labor are not as poor as in some countries; however, one union official stated that when children are found in a factory, they are paid 10 percent of an adult’s wages.12

9 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/portugal.htm 10 The Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/factbook/po.html. 11 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/thailand.htm. 12 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/thailand.htm.

- 4 - Current laws and efforts to address situation The minimum age for employment is 16 and education is free and compulsory up to age 14.13 Light work, which is not legally defined, is permitted for those 14 and older while hazardous work is prohibited for anyone under 18. The government’s efforts to curb violations are hampered by a lack of inspectors, corruption, and the increasing occurrence of child labor in home-based subcontracting.

The government has begun spending more on education and plans to increase compulsory schooling to nine years. Attempts to increase public awareness are aimed at changing old attitudes among parents, teachers, and the Church of acceptance of child labor. In addition, a program involving a coalition of private social welfare groups, local and national unions, municipal and school officials, and government authorities is being developed. Portugal has ratified the UN Convention on the Rights of the Child, but is not a party to ILO Convention No. 138 or No. 59.

Brazil

Statistics14

Population 169,806,557 GDP $1.04 trillion (1997) (1998) Population Growth 1.24% (1998) Per Capita GDP $6,300 (1997) Rate Fertility Rate 2.33 children born/woman Revenues $87.5 billion (1998) (1996) Literacy Rate 83.3% (1995) Expenditures $96 billion (1996) % of population 30% (1998) Unemployment Rate 7% (1997) under 14 years of age Major Religions Roman Catholic (nominal- Military Expenditures as 1.9% (1997) 70%) % of GDP (1991)

Profile A 1994 study by the Brazilian Institute for Geography and Statistics found that approximately two million (14.3 percent) of children between the ages of 10 and 13 are working, while the ILO estimates over four million children between the ages of 5 and 14 are working.15 The footwear, textile, garment, and tin industries have all been documented to use child labor, with the footwear industry being the best documented. Children between the ages of seven and fourteen have been found to be working for subcontractors in poorly ventilated work areas where they were exposed to toxic fumes of the shoe glue.16 Perhaps the most disturbing reports come from the charcoal industry, where many of the workers can reportedly be classified as debt-bonded or forced labor. The vice president of the National trade Union Congress stated in an interview that people who have tried to escape have been murdered and that 15 bodies were found by the military police in a hidden cemetery.17

13 Country Reports on Human Rights Practices for 1993 (U.S. Department of State, February 1994) retrieved from world wide web at www.state.gov/www/global/human_rights/hrp_reports_mainhp.html 14 The Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/factbook/br.html. 15 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/brazil.htm. 16 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/brazil.htm. 17 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/brazil.htm.

- 5 - Current laws and efforts to address situation The minimum age for employment is 14, with exceptions for those 12 and older who work under a regulated apprenticeship. Education is free and compulsory between the ages of seven and fourteen, but the primary school completion rate is only 22 percent.18 There is a shortage of labor inspectors, and inspections are relatively infrequent. Additionally, there is a lack of regulation of apprenticeship status.

Recent efforts to combat the problem have focused on collaborative efforts to raise public awareness of the risks involved with child labor and to pressure the government to maintain and advance child labor legislation. There are a large number of non-governmental organizations in Brazil that are concerned with the promotion of children’s rights, but there is a general lack of interest among the business community in addressing child labor. A joint effort by UNICEF and the ILO is focused on universal access and retention of children in primary schooling. Brazil has ratified the UN Convention on the Rights of the Child, but is not a party to ILO Convention No. 138 or No. 59.

Statistics19 Population 23,698,421 GDP $31.1 billion (1997) (1998) Population Growth 2.52% (1998) Per Capita GDP $1,370 (1997) Rate Fertility Rate 4.87 children born/woman Revenues $536 million (1998) (FY 96/97) Literacy Rate 27.5% (1995) Expenditures $818 million (FY 96/97) % of population 42% (1998) Unemployment Rate N/A under 14 years of age Major Religions Hindu (90%) Military Expenditures as 1.2% (1997) (1981) % of GDP

Profile There are an estimated three million children working in Nepal, primarily in the agricultural sector and the carpet industry, with child workers constituting up to 50 percent of the work force in the carpet industry (the government of Nepal places this figure at 0.76 percent).20 Most child workers are between the ages of 11 and 14 and are generally wool spinners and weavers. Children as young as five have been reported to work in some factories. Many of these children are recruited by labor contractors, who often pay their parents for a form of bonded labor. These children work an average of 15 hours per day and are paid a flat rate equivalent to $8 to $17 per month.21 Many of these children sleep in the factory, for which they have to pay rent. Health hazards include arthritis and lung disease, and sexual assault is reportedly frequent. Because these children are often bonded to pay off the debt of a relative, many render their services under constant threat of breach of contract and harassment.

18 UNICEF, “The state of the world’s children (1997)” retrieved April 1, 1999 from the world wide web at http://www.nincef.org/sowc97/report/ending.htm 19 The Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/factbook/np.html. 20 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/nepal.htm. 21 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/nepal.htm.

- 6 - Current laws and efforts to address situation The minimum age for employment is 14, and bonded labor is legally prohibited. Education is not compulsory, and is free only through grade three (grades four and five are also free in rural areas). Additionally, the cost of supplies is often a burden on families. Child laborers are also entitled by law to equal pay for equal work, 30 minutes break for every three hours worked, and one day off every week. Enforcement is spotty, and inspectors are often denied access to factories.

The government and the private sector, under fear of an international ban on carpets made by child labor, created a “child labor free” certification to be used in the carpet industry. The National Society for the Protection of the Environment and Children was formed to eliminate child labor in all sectors and rehabilitate child workers, as well as control industrial pollution. The non-governmental organization, Child Workers in Nepal, is also active in children’s rights. Nepal has ratified the UN Convention on the Rights of the Child, but is not a party to ILO Convention No. 138 or No. 59.

Cote d’Ivoire

Statistics22

Population 15,446,231 GDP $25.8 billion (1997) (1998) Population Growth 2.41% (1998) Per Capita GDP $1,700 (1997) Rate Fertility Rate 5.97 children born/woman Revenues $2.4 billion (1998) (1996) Literacy Rate 40.1% (1995) Expenditures $2.7 billion (1996) % of population 47% (1998) Unemployment Rate N/A under 14 years of age Major Religions Muslim (60%), Christian Military Expenditures as 1.4% (1997) (12%), Indigenous (25%) % of GDP

Profile Child labor in the export sectors of Cote d’Ivoire appears to be limited. There is documentation of children working in some small-scale gold and diamond mining operations, as well the fish canning industry and the government-owned sugar mills in the north.23 Children typically work along with their parents in the mining operations, and the average age of child workers is seven.24 The children are involved in all major aspects of the mining including digging, transporting, and cleaning the rocks. The children also fetch food, cigarettes, and tools for the adult workers. They often work in uncomfortable and dangerous positions, are not given regular meals by their employers, and drink from contaminated water sources.

Current laws and efforts to address situation The minimum age for employment is 14, except for domestic work, public performances, and girls working in street stalls or using pedal driven sewing machines. Children between 12 and 14 can engage in light agricultural work with parental consent. The minimum age for light underground work is 16 and the

22 The Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/factbook/iv.html. 23 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/cote.htm. 24 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/cote.htm.

- 7 - minimum age for hazardous work is 18. Education is compulsory for children up to age 16, but schooling costs including an entrance fee, books, uniforms, and supplies contribute to a drop out rate of 70 percent by age 13.25

Government policy is aimed more at protecting child laborers than eliminating child labor. Child labor is often seen as inevitable to avoid starvation. The main focus in relation to child welfare is on street children, which is viewed as a problem by the general public. There is a UNICEF funded program that places street children in apprenticeships for formal training. Some critics argue that the program should focus more on providing technical training and requires greater monitoring. Cote d’Ivoire has ratified the UN Convention on the Rights of the Child, but is not a party to ILO Convention No. 138 or No. 59.

Mexico

Statistics26 Population 98,552,776 GDP $694.3 billion (1997) (1998) Population Growth 1.77% (1998) Per Capita GDP $7,700 (1997) Rate Fertility Rate 2.91 children born/woman Revenues $92 billion (1998) (1997) Literacy Rate 89.6% (1995) Expenditures $94 billion (1997) % of population 36% (1998) Unemployment Rate 3.7% under 14 years of (urban 1997) age Major Religions Nominally Roman Catholic Military Expenditures as 0.3% (1997) (89%), Protestant (6%) % of GDP

Profile There are an estimated eight to eleven million children under the age of 15 working in Mexico.27 A relatively small number of children under the age of 14 and mostly female are reportedly employed in the maquiladoras in the border near the U.S. border. The majority of the maquiladoras are affiliates of U.S. companies. Children are also employed in the shoe and garment industries and in production of handicraft items. There are also children employed on farms under contract to export-oriented food processing firms.28 Conditions often include exposure to hazardous materials without adequate ventilation or use of protective clothing.

Current laws and efforts to address situation The minimum age for employment is 14, with special provisions for children between the ages of 14 and 16 prohibiting work that is dangerous or unhealthy. In addition, they may not work after 10 p.m. in an industrial plant, or work more than six hours per day or more than three hours without a one-hour break.

25 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/cote.htm. 26 The Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/factbook/mx.html. 27 U.S. Department of State, “Country Reports on Human Rights Practices” retrieved April 1,1999 from the Secretary of State web site at http://www.state.gov/global/human_rights/hrp_reports_mainhp.html.

28 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/mexico.htm.

- 8 - Children under 18 must have parental permission in order to work. Education is compulsory for primary and secondary school, and parents are legally liable for ensuring their children’s attendance.29 However, approximately 45 percent of students drop out before completion of the mandatory basic elementary and intermediate education.30

Enforcement of labor laws is the responsibility of state governments, except for certain industries such as textiles, chemicals, automobiles, and metals, which fall under federal jurisdiction.31 Enforcement is lax and fines are small. Under NAFTSA, the General Directorate of Inspection of the Labor Ministry will take over enforcement in the border region. Government initiatives generally take the form of informing children and parents of the benefits of education and providing various educational opportunities. Mexico has ratified the UN Convention on the Rights of the Child, but is not a party to ILO Convention No. 138 or No. 59.

Analysis

An analysis of the information previously presented reveals that the practice of child labor crosses religious and ethnic boundaries, and the countries profiled represented a relatively broad spectrum of demographic statistics. There are two factors that stand out as common to most of these countries— relatively low per capita GDP and low literacy rates. Poverty and education are often cited as the two primary influences on child labor practices, and are inextricably linked to one another. However, several exceptions stood out. One was Thailand, with a literacy rate of almost 94 percent. Another was Portugal, with a per capita GDP of $15,200. Cote d’Ivoire, which had one of the lowest per capita GDPs also seemed to have one of the lowest incidences of child labor. This is especially interesting considering the prevailing public attitude of most of its citizens regarding child labor. These exceptions point out that not any one factor can be isolated as the root of the practice. Some of the main contributing factors are discussed below.

Factors As previously mentioned, poverty is often pointed to as the main cause of the use of child labor. The struggle for survival often leads to the view of the inevitability of everyone, including children, working to support a family. Some people believe that children are better off working than living in abject poverty. At some factories, children are at least given one meal per day. Some sources suggest that working children contribute up to 25 percent of household income.32 Considering that poor households spend a significant portion of their income on food, child labor can be critical to survival. Others feel that this labor helps them to learn a trade and become better prepared for future employment. Of course, because these children do not complete their education and are rarely taught skills which enable them to enter higher-wage occupations, their actual future earnings prospects decrease. It becomes a vicious cycle.

Another factor is the lack of free and compulsory schooling (or inadequate enforcement and monitoring of school attendance), which leads to a lack of a meaningful alternative. Also, compulsory education increases the ability to enforce child labor laws. It is easier to monitor school attendance than the presence of children in the workplace. However, the costs of education are often prohibitive. Schools may also be too far away or too crowded, discouraging families from sending their children.33 Also, many people feel that education is not worthwhile because it will not prepare them for the labor market.

29 U.S. Department of State, “Country Reports on Human Rights Practices” retrieved April 1,1999 from the Secretary of State web site at http://www.state.gov/global/human_rights/hrp_reports_mainhp.html.

30 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/summary.htm. 31 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/summary.htm. 32 Internal Labor Office Geneva and UNICEF. 1997. Strategies for eliminating child labour: Prevention, removal, and rehabilitation (synthesis document). Paper presented at the International Conference on Child Labor, Oslo. 33 United Nation’s Children’s Fund (UNICEF). 1997. Education and child labour: background paper. Paper presented at the International Conference on Child Labor, Oslo.

- 9 - Public indifference and societal prejudice that views child labor among the less privileged as part of the natural is also partially responsible. Children are often working to pay the debts of their parents, or are employed in some form of bonded labor in exchange for an up-front payment to a relative. Additionally, it is argued that work at an early age helps children acquire good moral and ethical attitudes as well as avoid the dangers of vagrancy.34 Finally, inadequate resources devoted to prevention, education, and enforcement, as well as corruption in prevention and enforcement mechanisms all play a role.

The reasons that employers use child labor are usually associated with cost minimization. Sometimes, their small size is useful for particular types of work, such as in digging small tunnels and mine spaces in coal mining. Children are also easier to manage, generally being more docile than adults. They are generally considered efficient and motivated. They are also more easily manipulated and intimidated.

It should be pointed out that the U.S. is not immune to the use of child labor. An Associated Press special report documented underage children working in exhausting and hazardous jobs in the United States. Over a five-month period, AP reporters found 165 children working illegally in 16 states, from chili fields in New Mexico to garment shops in New York.35 A study conducted by Rutgers University labor economist Douglas Kruse (later called by Labor Secretary Alexis Herman more comprehensive than anything her department ever produced) estimated that as many as 290,200 children were employed unlawfully in the U.S. in 1997 including 59,600 under the age of 14.36

What will work?

Most advocates of children’s rights do not believe immediate abolition of child labor is realistic, and may in fact be contrary to the interests of the children. Most advocate abolition of the most abusive forms of child labor and close regulation of the remaining forms until comprehensive social, economic, and educational development eliminate the necessity for children to work. But how do we convince countries to make a change? Some people argue that it is often more a matter of political will than economic constraints. Some WTO members, notably the United States, want to link trade liberalization and labor standards.37 However, the WTO points out that labor standards are the domain of the ILO, which feels that labor standards should not be used for protectionist purposes (developing countries argue that linking the two would serve to protect industry in more developed countries).38 Sanctions can also have unintended negative economic consequences. Not only do sanctions fail to discriminate between violators and non- violators, they may also cause demand and production to fall to levels that force layoffs and wage cutbacks for adult workers as well, making everyone worse off. By the same token, free trade is often argued to improve the economic situation by creating more, better paying jobs. This in turn should decrease the dependence on the additional income of children.

What can companies do to initiate change? For most companies, it is not only a moral or ethical question, but also a matter of dollars and cents. Virtually no company argues that the use of child labor in their supply chain is justifiable. However, cost structures may encourage them to ask as few questions as possible. This “don’t ask/don’t tell” policy is currently viewed in a harsh light. Consumers are holding companies responsible for the actions of their suppliers, and as a result, lost market share can easily offset any cost savings they nay have achieved.

34 Bureau of Internal Labor Affairs, “By the sweat and toil of children” retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/overview.htm. 35 Hansen, Fay Compensation and Benefits Review v30n2 p8-9 March/April 1998 Child Labor violations still haunt the nation. 36 Hansen, Fay Compensation and Benefits Review v30n2 p8-9 March/April 1998 Child Labor violations still haunt the nation. 37 Lane, Patrick Economist v34n8088 ps25-s28 10/3/98 World trade survey: brothers up in arms. 38 Lane, Patrick Economist v34n8088 ps25-s28 10/3/98 World trade survey: brothers up in arms.

- 10 - In the United Kingdom in 1998, a government backed project called the Ethical Trading Initiative was launched to discover the best way of eliminating dangerous and anti-social working practices from the supply chain. Another development was the SA8000, which is a framework for ethical accreditation of company’s suppliers.39 In the U.S., approximately 80 percent of companies have an ethical code of conduct.40 One of the biggest challenges is deciding on an international code of conduct. Companies must decide what standard to use when there is a discrepancy between local and home country or international laws. Implementation of standards is also difficult. For instance, do you check on your supplier’s suppliers? If so, how do you do it and where do you draw the line? These issues necessitate the use of some type of monitoring system, either internal or external. Currently, most companies that have some type of working system, such as Levi and Reebok, have some form of internal auditing mechanism.41 It is necessary to collaborate with trade unions and local non-governmental organizations to maintain independence and verify results, as workers may not always be honest with internal auditors for fear of reprisals (it can be very difficult to convince workers of the independence of these functional units within an organization).

Reebok has implemented a communication system that allows workers in factories to write anonymously to the company to report any grievances. The company also makes unscheduled visits to factories. Their focus is on making suppliers make changes themselves. Of course, many smaller companies do not have the leverage to force such changes. One solution is collaboration among buyers. By pooling their resources and buying power, they can monitor conditions more efficiently and wield greater power over suppliers. Reducing the number of suppliers is another way to ease monitoring. The drawback is that smaller suppliers will tend to be squeezed out although they may have ethical labor practices. Accreditation systems such as the SA8000 also put the responsibility on suppliers. By telling companies that purchases will only be made from companies with accreditation, buyers can force suppliers to make changes. However, putting the entire onus on suppliers runs counter to the concept of long-term partnerships between buyers and suppliers.

Conclusion

The use of child labor is not only a moral and ethical question, but also a matter of economics for most companies. The public has begun to hold companies liable for the actions involved in all stages of the production process of their products. The responsibility is not only that of the local government, which is often unable or unwilling to initiate change, but also that of the international community. Education and economic development are the long-term solutions, but countries must often be prodded into taking the first steps. Inevitably, any solution will likely cause some short-term pain. Companies operating internationally have the responsibility of knowing who makes their product and how it is made. They must also take proactive steps in the procurement process. Monitoring alone is incapable of solving the problem. Buyers must work with local governmental and non-governmental officials. They must also understand the codes of conduct in various countries and be familiar with local labor codes as well as international standards.

39 Hancock, S. 1998. “Fair’s Fare”. Supply Management, 3 (22): 22-25. 40 Hancock, S. 1998. “Fair’s Fare”. Supply Management, 3 (22): 22-25. 41 Hancock, S. 1998. “Fair’s Fare”. Supply Management, 3 (22): 22-25.

- 11 - References

Albright, . & Kuntsel, M. 1987. Stolen childhood: global report on the exploitation of children. Cox Newspapers June 21.

Bureau of Internal Labor Affairs, “By the sweat and toil of children” (volume I with updates from volume V) retrieved March 15, 1999 from the U.S. Dept. of Labor web site at http://www.dol.gov/ilab/public/media/reports/sweat.

Central Intelligence Agency, "The World Factbook", http://www.odci.gov/cia/publications/nsolo/factbook.

- 12 - Hancock, S. 1998. “Fair’s Fare”. Supply Management, 3 (22): 22-25.

Hansen, F. 1998. “Child labor violations still haunt the nation”. Compensation and Benefits Review, 30 (2): 8-9.

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