The term “sweatshops” has been used a lot by the American media or the media in developed nations at large. The sweatshops refer to subcontracting arrangements that big multinational firms like Nike and Adidas have with subcontractors in third world countries like Bangladesh.

The provisions are made to exploit the low cost of labor present in these countries.

The argument made by people against sweatshops is that the working conditions there are horrific and instead of providing employment, they are actually causing mayhem.

Since the multi-nationals themselves do not perform most of the work, there is no reliable data available for these sweatshops.

Many feel that this is actually a conspiracy by the multi-nationals who do not want to perform the dirty tasks themselves but would rather outsource it to contractors.

This article argues that the so-called miserable working conditions are the best alternative for the workers. In a world where every social group and every person are influenced to feel sweatshops are bad, this article will take a contrarian viewpoint.

What Exactly are Sweatshops ?

Sweatshop is a vague term and does not have any precise meaning. The meaning inferred by most is that sweatshops provide very low wages to their worker.

These wages are not even enough to sustain a normal living with one job. Also, there is no job security at these sweatshops. The working conditions are deplorable, and in some cases, they are hazardous i.e. cause occupational illnesses in the long term. A lot of these sweatshops possibly involve child labor as well.

The definitions are vague, and no one can provide precise numbers as to what constitutes a sweatshop. In fact in most sweatshops wages are bad by western standards, but they are very good by local standards.

Long hours and poor working conditions seem to be a constant reality everywhere.

The Demands against Sweatshops

Social groups are demanding that sweatshops should be considered as extensions of the multinationals themselves. As a result, they want these sweatshops to be held to the standard of western laws. This would mean a huge increase in the wages paid out to these sweatshop workers.

Also, the cost of employment will rise if the hours are cut, and working conditions are improved. All this will lead to an increase in the cost of production for multi-national companies. Another demand to prevent employment of child labor is the only one that seems to be legitimate.

How Wages are Set ?

Merely imposing laws does not increase wages. In fact, in a globalized world, the imposition of such rules leads to movement of jobs to other countries. To increase jobs, the productivity of the worker will have to be increased.

The other alternative would be to make better opportunities available so that employers pay higher wages in competition. Forceful increment in wages often has detrimental consequences.

The Ulterior Motives for Lobbying

It is no surprise that most of the lobbying against sweatshops is being done by social groups in developed countries. They have an ulterior motive and are funded by unions.

If the wages are raised in sweatshops, the workers will become more expensive there. As a result, it would make sense to move jobs back home and pay the higher wages to the local population itself.

The apparent benevolence is an attempt to price the other workers out of the market.

Much Worse Outcomes

Imposition of laws proposed by the social groups would lead to worse consequences.

• Minimum Wage Causes Automation: A higher minimum wage would create a case for automation. This has happened in the United States and will happen in the third world countries as well.

  Most low wage jobs performed in sweatshops are also low skilled jobs. These jobs are easy to automate and the only thing preventing this automation is the low cost of paying these workers.

• Minimum Wage Creates Higher Skilled Jobs: As automation takes places, low skilled jobs change into high skilled jobs. Sweepers are replaced by technicians who can repair vacuum cleaners.

  As a result, sweatshops will no longer be required. The countries that have these sweatshops do not have any high skilled laborers.

  By raising the cost of low-skilled laborers, a demand of higher skilled workers will be created and multinationals will be forced to head back home to fulfill this demand.

• Minimum Wages Causes Migration to Agriculture: Sweatshops may seem like a bad alternative to the western laborer. However, in countries like Bangladesh and Thailand where they exist, sweatshops are relatively high paying jobs.

  If they were not so, it would make no sense for the workers in these arrangements to quit their farm jobs, migrate to cities and survive in deplorable living and working conditions to work on this job.

  The reality is that the alternative to these jobs is even worse than sweatshops. Agricultural labor in most of these countries involves more hard labor and pays far less money.

  The exploitation by multinationals is no comparison to the hardships that these workers will have to face when they work with local landowners.

To sum it up, sweatshops are not a menace at all! In fact, they may look ugly to Westerners but are an important source of employment for the people that work in them.

Raising wages and working conditions will create a condition that will lead these sweatshops to shut down and will leave the workers worse off.