Multinationals, Poverty and Exploitation

How profit hungry companies exploit their workers to meet the unattainable standards of the fast fashion industry.


Hazel Gandhi, Managing Editor

Illustration by Suryansh Deo Srivastava

The scene here is an old room. A room so old and dingy with the cracks on the walls deepening and spreading like growing roots of a tree. Cobwebs have now occupied the corners of this room and have transformed into a giant plethora nesting spiders and other insects. Amongst all this, the only sound audible is of a child. Jamal, just shy of 12 years, has not set foot outside this dungeon-like place. Smoke has filled the room, made his eyes glassy and bloodshot from coughing. His spindly hands have never held a pencil but are used to the cuts and blisters from working 13 hours a day. Drained of all possible energy, he struggles to straighten the hunch in his back and the drooping in his shoulders and continues his work locking away the thoughts of a better life in a deep corner of his heart.

Just like Jamal, the state of strenuously working in sweatshops and factories is nothing but usual for millions of children, men and women around the world. Their only fault? Being born in a third world, war-prone state. According to the US Department of Labour (DOL), a sweatshop is a factory that violates two or more than two labour laws. This is inclusive of all violations like underpaying your workers, making them work in unhygienic conditions, not taking safety precautions, and the list goes on.

Sweatshops are usually found in countries where labour is inexpensive in order to reduce the cost of production. The concept of sweatshops is not very old. It started in the 1880s and has gained momentum in more and more countries ever since. The growth and need for industrialization led to the establishment of these factories by European countries in nations like Bangladesh, Vietnam, El Salvador, to name a few. Major places that harbour such sweatshops include India, Central America, South America, Costa Rica and China.

The reason why most multinational companies resort to this evil practice is simple. Workers in less developed countries can work for longer hours at a cheaper rate which helps companies increase their profit margin or even make a supernormal profit. This method of production fits perfectly with the fad of fast fashion that has grappled the industry for a while now. Buying clothes for extremely cheap rates, and discarding them almost immediately has adverse effects not only on the environment but the supply chain too. Workers are subjected to extreme forms of exploitation to meet the increasing demand and are paid poorly to compensate for the discounts that have been passed on to the consumer. The perfect example for supernormal profit is when a worker making your favourite NBA jersey is paid a meagre 24 cents for it and it actually ends up being sold for $140.

Why workers don’t unionize despite these circumstances would be a valid question. However, attempts in the past made by any factory to unionize have been shunned even before their manifestation. In a country like India, with no systemic rules and policies that protect workers, it becomes easy to shut down any voice of activism. In a similar incident, 1200 workers of a factory producing clothes for H&M were laid off in Srirangapatna, Karnataka. Management claims that this was merely done to cut down on costs because of the effects of the coronavirus. However, factory workers claim that the pandemic is a mere excuse for the factory to close down amidst talks of possible unionization.

So, the next time you manage to get your hands on a Zara top for a very low price or land a huge bargain on your new Nike kicks, think about the supply chain and the degree of damage it has done to someone’s childhood just for an extra fraction of discount provided to you.

Have you ever wondered how your favourite brands sometimes manage to sell you their products for so cheap? According to John Oliver, host of HBO’s Last Week Tonight, clothes have become highly affordable. Trendy clothing is cheap and cheap clothing is now trendy. So no one can blame the consumer for being attracted to cheaper products. Not just cheap, ridiculously cheap. Dresses are sold at H&M for a whopping $4.95. What sane person is ever going to say no to that? So, the next time you manage to get your hands on a Zara top for a very low price or land a huge bargain on your new Nike kicks, think about the supply chain and the degree of damage it has done to someone’s childhood just for an extra fraction of discount provided to you. I do not use the term ‘fraction of discount’ loosely here. Studies show that a labourer’s wage could increase two-fold if the price of the product would increase by only 1.8%. Yes, that is the amount of money it takes to make or break someone’s life. The fact that companies are not willing to charge us that extra 1.8% but instead resort to the exploitative treatment of their workers tells you a lot about them.

The question is, what can we as mere consumers do? There are numerous applications available for consumers to download for free like GoodGuide, Free2Work, Shop Ethical! and aVOID. The functioning of these applications is quite similar. They are tools to check if the product you are buying is made ethically or otherwise. All you have to do is simply scan the barcode on the label of the product and voila! The entire history of the process of production is right there for you to see. Several brands have registered with these applications and are graded from A to F using self-reporting.

So, what do economists and experts have to say about the increasing dominance of sweatshops? You would be surprised to learn that some of them actually consider such establishments to be a necessity for a developing economy. According to economist Joan Robinson, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” This statement definitely comes as a great shock. But we have serious expert opinion backing the claims of this statement. According to the New York Times, sweatshops contribute towards the development of underdeveloped countries, provide employment to otherwise unskilled labourers and boost the economy by providing business opportunities. Another economics professor, Mrs. Vidya Hegde from St. Xavier’s College, Mumbai further adds that China is the prime beneficiary of sweatshops due to two reasons: the sheer size of their population and the fact that they are a communist state. The Chinese government actively supports sweatshops and pretends to be unaware of their existence. No one knows the truth behind the actual statistics revealed by China but the Chinese themselves. She also mentions how in the end, it all comes to a case of job versus no job; little money or no money at all. And let us face the fact that a poor person would always choose to be heavily exploited over absolute famish.

GAP and H&M have constantly come under the radar over accusations of establishing sweatshops. However, the competition to be the prime exploiter is still running quite close.

What makes it even worse is that their exploitation schemes have no bounds. A large number of female workers are forcefully put under oral contraceptives and forbidden to conceive so that they do not take maternity leaves. If this started, the sweatshops would be in a lot of trouble as 85-90% of their worker population consists of women. In developing countries, around 168 million children between the ages of 5 to 14 years work in sweatshops. 168 million. That is more than 4 times the population of Canada and 2 times the population of the United Kingdom. And this is just the children. Add the adults to this number and it becomes even more staggering.

These were just the social effects of these sweatshops and the economic benefits they render to the company. Talking about the medical effects, Bangladesh has seen the death of more than 400 workers since 1990 due to ill health and poor medical facilities. These sweatshops have no medical treatment plans whatsoever. They simply fire workers and put them out of work once they start faltering in their performance.

Ignorance is not the only issue here. Hypocrisy also plays a major role in the functioning of these companies. GAP and H&M, who have always been in the news for their inhumane treatment of workers are also part of many sustainable development projects. They have constantly been promoting their goodwill causes and environment-friendly agendas.

However, do not let these facts make you cynical. The world is not all bad. Various organizations have been working towards this cause and have actually made a difference. With 27,000 active members, the National Garment Workers Federation, an organisation in Bangladesh has been very successful. So far, they have implemented child care centres in each garment factory, provided women with the right to maternity leave, festival bonuses to all workers and a weekly holiday for rest. They resolved 81 workers’ issues that led to a compensation of $24,933. India is one of the founding countries of the International Labour Organisation (ILO) that works to protect the rights of labourers and encourages freedom of association and collective bargaining power of the worker’s union. India has ratified 6 out of 8 fundamental conventions of the ILO regarding the abolition of forced labour, equal remuneration and no discrimination between men and women in the workplace. It isn’t that everyone is purposely trying to worsen the conditions of the workers but wouldn’t it be wonderful if they went out of their way to do the exact opposite? The system is not entirely corrupt. Sluggish, perhaps, Hopefully, this inefficiency in the system will come to an end. If that happens, there is hope for kids who wouldn’t consider themselves delusional for dreaming of a good life and if not good, then at least better than the one they are forced to live now. Let us hope that this change is not just a fragment of some innocent child’s imagination but a reality for millions of men, women and children who are victims of this social and economic evil.


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Hazel is a journalism student at St. Xavier's College, Mumbai. She likes to write pieces on social causes, gender and the environment. Her Instagram handle is @hazelgandhi.