12.5 Global Business Operations and Labor

Labor and child labor are topics that we have already discussed in this book. Chapter 5 had a case study on modern labor laws, for example, and both chapters 3 and 5 discussed other ethical issues involved in labor.

These challenges take on a new form when viewed from a global perspective. The primary ethical problem here is a specific instance of conflict between cultures: in some countries, labor practices differ from those in the United States such that it is possible to legally require employees in those countries to work much longer hours at much lower rates of pay. It may also be possible to force them to work long hours of overtime with few breaks in dangerous conditions that are not meaningfully regulated. And on top of it all, some countries may have few laws governing child labor, or may otherwise not enforce existing laws, making it possible for children to be forced to work.

It is not difficult to see the ethical issues involved in this cultural clash. Any American company that uses foreign labor of this kind—in production, manufacturing, or other operations—is exploiting existing differences in labor practices. The primary motivation for doing so is financial: it is simply much cheaper to hire foreign and pay foreign labor, both because wages tend to be lower but also because there are fewer overhead and regulatory costs. But is a financial benefit significant enough to outweigh the possible harms brought on by labor practices in global business?

We will see an example involving the Chinese company Foxconn shortly. For now, let’s appreciate a few nuances to this question. First, it is difficult to say exactly when regional differences in labor practices stop being just cultural differences and transform into ethical problems. Suppose a foreign country’s laws stipulate that overtime pay must be awarded to wage workers after 45 hours in a week, for example, instead of after 40, as is usually the case in the United States. This would be a fairly small difference, well within the limits of reasonable disagreement over what constitutes fair labor practices between different countries. On the other hand, perhaps the exact line between cultural differences and ethical problems is not of such great importance. Suppose again that another country never paid overtime, and only gave employees one or two days off per month. From an ethical perspective that would be a totally different story. Those practices would clearly cross the line into being wrong, even if we can’t say exactly where the ethical line is.

Another nuance to appreciate is that, in some places, laborers working for American companies may receive greater pay and better benefits than they would receive working elsewhere in their country, even if those forms of compensation are much worse than those laborers would be required to receive if they were working in America. In other words, it may be that, despite differences in labor practices, workers in other countries are still better off than they would be otherwise. Note that, while this point does not justify exploiting workers, it does acknowledge that some good may be done by locating jobs in other parts of the world.

We can incorporate these nuances into our thinking by seeking an ethical principle that could guide our practical conduct in issues of globalized labor. One possibility is the following: when American companies employ workers within the boundaries of other countries, those companies ought to treat their foreign employees according to the labor laws of the United States, rather than the laws of the place they work. A principle like this one would effectively eliminate the ethical problem, or would at least reduce it to the problem already faced by American workers, since the treatment would be the same.

This principle may have some initial appeal, but it faces many challenges. First, while it makes sense that an American company’s labor would necessitate American labor practices, those practices are neither optimal in themselves nor necessarily workable in other countries. Second, enforcing this principle among companies from many countries would lead to a very uneven and potentially unjust labor landscape in the country, where workers are treated very differently depending on their company’s country of origin. Third, obligating employers in a particular country to pay wages on a par with typical American wages might just make it impossible for American companies to do business there, or to employ foreign labor; the costs might be too high.

Of course, we may also look at that third challenge and say, that’s right—if a company can’t pay fair wages in a certain region, it should not be allowed to operate there. That is a legitimate point. But it neglects the realities of economic differences between countries and the potential economic benefits of foreign labor, both for the contracting companies and for the laborers themselves.

If that ethical principle can’t guide us for labor issues in globalization, then what principle can? We could come up with others and test them against various challenges, but it could also be that this is a situation where what’s needed is enforced local laws, rather than universal ethical principles. Fair labor laws in each country and region will probably be able to do more than any philosophical principle, since those laws would obligate companies to treat workers according to regionally acceptable standards. Some ethical problems would still remain, but an important part of the issue would be solved. From a practical perspective, that would be a big win.

Thus we see that the issue of globalization and labor involves many other issues as well, and it can be difficult to disentangle them all. At the root we find what we have already seen in this chapter: the conflict between cultural values and ethical values, which is playing itself out yet again in a different form.

In light of this conflict, what ethical responsibilities do companies have when employing or contracting labor in other parts of the world? And to what extent are they liable for how their laborers are treated? We’ll consider this question in the following case study.

Foxconn, formally known as Hon Hai Precision Industry Co., is one of the largest electronics manufacturers globally, serving clients such as Apple, Microsoft, and Sony. Its factory in Chengdu, China, plays a critical role in producing key products like the iPhone and iPad. Despite its significance in the global supply chain, numerous labor rights violations have been documented at Foxconn Chengdu, raising serious ethical concerns.1

Workers at Foxconn Chengdu often exceed China’s legal monthly overtime limit of 36 hours, working up to 87 hours during peak production periods. Overtime is frequently mandatory, with refusal resulting in penalties or loss of benefits. During the COVID-19 pandemic, workers were required to live on factory grounds, enduring half-month shifts without breaks.

Approximately 50% of Foxconn Chengdu’s workforce comprises dispatch workers—temporary employees contracted through third-party agencies. These workers face precarious employment conditions, lack social insurance, and are often deceived about promised bonuses. Unlike regular employees, dispatch workers receive fewer benefits and less job security.

The factory environment is marked by verbal abuse, sexual harassment, and punitive measures for minor infractions. Line leaders frequently reprimand workers for tardiness and mistakes, creating a hostile workplace culture. Sexual harassment training is minimal and ineffective, further exacerbating the issue.

Employees live in overcrowded dormitories and endure long shifts with minimal breaks. Although Foxconn provides meals and accommodations, the associated costs are deducted from workers’ already low wages. Workers report insufficient leisure time and inaccessible recreational facilities.

Foxconn’s practices highlight the ethical dilemmas of globalization. Multinational corporations like Apple benefit from outsourcing production to countries with cheaper labor and less stringent regulatory environments. While this reduces costs and increases profits, it often comes at the expense of workers’ rights and well-being.

Apple’s Supplier Code of Conduct emphasizes safe working conditions and respect for workers’ rights. However, repeated violations at Foxconn reveal a gap between corporate policies and on-the-ground realities—the facility once installed nets along the roofs of all its buildings, for example, in order to prevent workers from jumping to commit suicide. This raises questions about the extent of Apple’s responsibility to ensure ethical practices within its supply chain.

What ethical responsibilities do companies like Apple have to ensure fair labor practices in their supply chains? How can they enforce these standards effectively?
How does globalization influence labor practices in developing countries? Are the economic benefits to local economies worth the social and ethical costs?
What role should consumers play in advocating for ethical practices? Should companies be held accountable by their customers for labor violations in their supply chains? If so, how?
How can governments and international organizations address the exploitation of workers in global supply chains? What policies could be implemented to ensure compliance with labor laws?
To what extent are companies like Apple liable for how employees are treated at their production facilities in other countries?
How can multinational corporations balance respect for local customs and laws with the need to uphold universal labor standards?
Are there ethical alternatives to outsourcing production to countries with less stringent labor regulations? What might these alternatives look like?

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