Ethical Problems in Organizations

Ethical Problems in Organizations

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We live in a very globalized society today, and the effects of globalization are widely observed in our daily life especially if to refer to material goods. We export olive oil from Spain and Italy, buy electronics manufactured in China, Japan, and South East Asia, purchase clothes of different brands which are being produced anywhere in the globe.

Globalization gave unlimited opportunities for transnational companies today: they can locate their production forces in third world developing countries to get extra profits from small wages and small taxes. But together with extra benefits, such unequal commodity distribution creates a lot of additional problems of ethical character. They are typical for human resource management of third world countries or developing countries, especially countries of Pacific region where principles of democracy are often not realized in practice even in western companies as most of the personnel are natives.

In such countries as China or Indonesia situation with labor in subcontractors of Adidas, Nike, Puma and other brands is very uncommon for Europeans and European understanding of production, as prisoners widely used as cheap labor. Besides, unfair labor legislation and loyalty of local companies’ representatives to local labor laws create more problems of ethical character for workers, who don’t have any rights. According to China Labor watch: “Ten sweatshop workers in China jailed for protesting unpaid salaries have been freed, with seven having their prison terms commuted to suspended sentences, a rights group said Sunday.” http://business.nmsu.edu/~dboje/nike/china.html

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Such situation is very typical for the most of China and other countries (Indonesia and India for example) today. Extremely cheap labor force, unprotected by local legislation and unfair labor regulations create a lot of space for exploitation of common workers and receiving huge profits: “The conditions that many of these workers face today are no better than the conditions that Marx described in ‘Das Kapital’” (Mr. He Workers’ Rights Suffering as China Goes Capitalist August 22, 2001, NY Times)

In the western world, it’s a severe problem with ethical problems referring to goods manufactured in China, uniquely excellent and original sportswear such as Nike or Addidas. Today it’s often said that before buying their product, one should first think about children or poor workers who are paid approx. 0.1% of sneakers store retail price for their labor. The most tragic reality in this story is that there is very little expectation to change the situation for better in future. China and other developing countries of Pacific region are members in the most influential global trading organizations (for example WTO), and they are the integral members of the global goods exchange market. It’s challenging to force those countries to change labor legislation, and from the other side, it’s impossible to force international companies to relocate their production to countries with higher level of labor protection.

The only way to reduce ethical issues in the production of such sports giants as Nike, Adidas, Reebok or Puma is to continue intensive inspection of plants owned by these companies in the third world. To change HRM practices and build it on the base of European principles, also, it’s crucial to replace internal regulations on these plants which refer to labor relations and protection of labor.