Ashley Duffy

Michael White

English 1101

6 December 2020

The Ethics of Outsourcing

Outsourcing can be useful to businesses that want to make a product for a lower cost than

if the same product was to be made in the United States, however often the reason that the

product can be made for a lower price in another country is because the workers in these

countries are not paid fairly and often work in unsafe environments. Many of the countries that

the United States has strong trade deals with have reports of child labor, unsafe conditions, and

forced labor. In many countries, there are no labor laws that prevent workers’ rights from being

abused by their employers or even the government. The United States has labor laws that ensure

workers are treated fairly and are paid for their work, this is not the case for many other countries

however, the United States still outsources to these countries that abuse their workers. Many

developed countries, including the United States, fought for the abolition of slavery and workers’

rights throughout the industrial revolution however, these countries still support other countries

that don’t have fair labor laws such as Laos, Vietnam, and China. The United States should

create laws to prohibit companies from outsourcing to countries without fair labor laws because

workers in these countries are being treated poorly because of the lack of regulation, consumers

are willing to pay more for the products they purchase to be produced ethically and workers are

more productive when they are treated fairly.

Human factors in the global supply chain are the most important and also the most

difficult issues during outsourcing (Jones pp. 74). Not all countries have labor laws to protect
their workers’ basic rights, this causes many employers to abuse the rights of their workers.

Reports of workers being treated unfairly have emerged from countries such as Laos, Vietnam,

and China, these countries don’t have laws to prohibit employers from abusing the workers like

the United States and other, more developed countries do. Many companies use outsourcing to

cut down on costs of production however, this often comes at the cost of workers’ rights. There

are not any organizations that have the power to enforce labor laws. The International Labor

Organization (ILO) outlined the five basic labor rights in the 1998 Declaration of Fundamental

Rights at Work. These laws include freedom of association, the right to collective bargaining, the

abolition of forced labor elimination of child labor, and freedom from discrimination (Mattioli,

Sapovadia pp.61). Even with these basic rights outlined, it is very difficult for organizations to

enforce them, this causes many countries to abuse their workers’ rights without punishment

(Mattioli, Sapovadia pp.61). The World Trade Organization (WTO) does not govern labor

conditions (Dietrich pp.177). There is support for protecting workers' rights, but the World Trade

Organizations' existing regulations are not adequate with labor standards and are unintendedly

letting countries abuse workers' rights (Dietrich pp.177). In the 1998 International Labor

Organization Declaration, child labor and forced labor was eliminated; however, the legal age

limit is violated very consistently, and many children are forced to working under the legal age

limit (Mattioli, Sapovadia pp.62). According to the International Labor Organization, there are

about seventeen million children working in the Caribbean and Latin America. In Peru alone

there are almost two million children working between the ages of ten and fourteen. Studies have

shown a strong positive correlation between child labor and poverty (Mattioli, Sapovadia pp.62).

Many workers that are being abused at work have no choice but to stay. The organizational

punishment and industrial discipline theory found that employees that filed complaints,
experiences lower performance ratings lower promotion rates, and higher turnover rates than

employees that never file complaints (Yang pp.268).

Consumers are more aware now than ever, of the problems with labor laws in some

countries such as Vietnam, China, and Laos. In recent years, consumers have been becoming

more demanding that the products and companies they choose to support have ethics and values

similar to their own. The environment in which their products are being made in and the

conditions that the workers making the products are in is an important factor for many

consumers. A growing number of consumers are willing to pay more to receive a product that

was produced ethically and even “punish” companies that don’t meet their expectations of an

ethically sound company (Kolben pp.840). Consumers create a mental image of the people

producing the products they purchase even though they don’t know, and most likely will never

meet the people that produce the products they use. Even so, it is important to many consumers

that these people are treated fairly and are paid fairly for the work they do. Consumption choices

are often based on the ways that the consumer imagines the product was produced and the bond

that the consumer feels with the producers of the goods (Kolben pp.841). The law should

motivate consumers to improve labor conditions in the global supply chain (Kolben pp.841). One

example of the “consumer imaginary” affecting a business was, in 1996 reports of Nike

employing workers in Indonesia that were paid very little in violation of Indonesian law while

also creating abusive working conditions for workers. Nike began to have a bad reputation in

connection with these reports, causing share prices to drop. The Nike logo became a symbol of

salve-like labor conditions to some consumers This made Nike’s CEO realize that it is important

for companies to take into account the social and environmental context of the products they

produce (Kolben pp.842). Consumer's identities are often linked to the products they purchase
and the companies they choose to support. Many consumers believe they have a responsibility to

make ethical decisions about the products they purchase (Kolben pp.843). This has made many

people use their decisions to take social and political action (Kolben pp.843). The way that

consumers choose to purchase products could help change labor laws for the better.

Being treated fairly and with respect at work is something that many people in developed

countries like the United States, tend to expect, however, for many people around the world, that

is not the case. There have been many studies conducted to determine if workers treated fairly

are more productive than if they were treated poorly. According to these studies, oftentimes

workers are much more productive when treated with respect by the employer and when working

in clean and safe environments (Mattioli, Sapovadia pp.64). Labor standards have changed

dramatically over time. Originally, women’s and children’s safety was a major concern,

however; labor laws now deal with several more factors such as hours, working environments,

and pay (Dietrich pp.176). The International Labor Organization (ILO) has outlined eight

standards that should be upheld in global trade. These standards are, freedom of association,

right to organize collectively, prohibition on forced labor, the abolition of forced labor, the

prohibition of employment discrimination, equal pay among genders, minimum age of work, and

elimination of child labor (Dietrich pp.176). The standards are not enforced by the International

Labor Organization. If these standards are enforced, there is likely to be an increase in

productivity and an increase in economic activity (Dietrich pp.178). The implementation and

enforcement of fundamental labor standards and rights are very strongly connected to factors

such as legal and judicial stability, demand for goods and services both domestically and

internationally, and high-skilled workforce supply (Mattioli, Sapovadia pp.64). Labor is the sole

proprietor of production and also the way that producers benefit and contribute to the economy
(Dietrich pp.178). Healthy working conditions create a better life for workers which also

increases productivity. The more a country outputs, the more foreign direct investment is created

for that country (Dietrich pp.178). An improvement of labor standards would greatly improve

productivity and the economy. There are many benefits of higher labor standards on foreign

direct investment as countries try and avoid product boycotts and negative publicity (Mattioli,

Sapovadia pp.64). Implementing and enforcing labor rights will help countries achieve a stable

democracy, a stable legal and judicial power, and a skilled workforce (Mattioli, Sapovadia

pp.64). Globalization could lead to more countries not having fair labor laws, however, respect

for the core standards could help spread the benefits of globalization around the world.

In conclusion, the United States should outlaw companies from outsourcing to countries

without fair labor standards. There are many advantages to encouraging countries to create laws

to protect workers’ rights and make sure they have a safe environment to work in. Although

outsourcing can be useful often the price difference comes from sacrificing labor laws in other

countries. Workers in many other countries are treated poorly because the labor laws allow

employers to use forced labor and child labor to save money from labor costs. Many consumers

are becoming increasingly aware of the issues with labor laws and are more willing to choose

businesses that use ethical supply chains, even if it comes at a higher price. Many studies have

shown that workers are much more productive in their jobs when they are treated fairly and work

in a safe and clean environment. Outsourcing to countries without fair labor laws ultimately

encourages and rewards countries that mistreat their workforce. Without a change to the way that

countries outsource, there will likely not be a change in the labor laws these countries use.

Avoiding outsourcing to these countries would likely result in more labor laws to protect workers

instead of harming them and would create a better life for the workers. The United States could
greatly benefit from laws prohibiting outsourcing to countries without fair labor laws but most

importantly the workers that have been abused for so long will finally be treated fairly.
 Works Cited

Dietrich, Jamie. “Does the US Support Unfair Labor Practices Through Trade Negotiations?”

University of Tampa, Vol.27, n.1, 1 June. 2019.

Jones, Wendell O. “Outsourcing: The Enduring Mistakes.” University of Southern Nevada, 1

Oct. 2009, pp. 72-83. 

Kolben, Kevin. “The Consumer Imaginary: Labor Rights, Human Rights, and Citizen-

Consumers in the Global Supply Chain.” Vanderbilt Journal of Transnational Law. 1

Oct. 2019, vol. 52, pp. 839-898.

Mattioli, Maria C., and V.K. Sapovadia. "Laws of Labor: Core Labor standards and Global

trade." Harvard International Review, 2004, vol. 26, No. 2, pp. 60+. 

Yang, Duanyi. “Why Don’t They Complain? The Social Determinants of Chinese Migrant

Workers’ Grievance Behaviors” ILR Review, 2020, pp.366-392.