Multinational Corporations and Living Wage - Essay Example

Multinational Corporations and Living Wage Multinational Corporations and Living Wage In the recent past, labor and human rights activists have been triumphant at creating awareness on labor practices in both American and overseas production facilities. Bodies such as Human Rights Watch, United Students Against Sweatshops and Sweatshop Watch have accused Multinational Corporations of exploiting their employees. The recent violations of American and European labor legislations have gotten commendable attention. However, it is the multinational businesses with their origins in North America and Europe that have been the cause of much contention. This is mostly due to the fact that majoring of the labor practices in contention are allowed outside North America and Europe, or are entertained by crooked of authoritarian political administrations. Unlike the current immigrants who labor in the illicit sweatshops of North America and Europe, laborers in developing countries basically have no alternative to the law or social service agencies. Activists have been seeking for ways to improve the wellbeing of these employees by putting pressure on the multinational corporations to adhere to labor laws, prevent intimidation, better health and safety standards, and pay a living wage in their global sourcing operations (Varley, 2008). In this paper, I will explore the question of whether a multinational corporation conducting business in a developing nation is obligated to pay its employees a living wage. One test of a healthy ethical theory is its capability to bring to light ethical challenges. One of the ethical censures of Immanuel Kant’s ethical philosophy is that it is too theoretical and official to be of any value in practical decision making. In this paper I will argue that Kant’s idea of human dignity offers an explicit basis for grounding the duties of employers to workers (Bowie, 2004). In particular I will argue that respecting the dignity of employees demands that multinational corporations offer a living salary for employees. This paper will also address the protest by some analysts that offering a living wager is likely to bring about greater harm to the community than good. Respect for Persons Opponents of sweatshops often base their protests in calls to honor human dignity and human rights. Debatably, Kantian ethics offers a philosophical basis for such ethical calls. The main theory here is Kant’s second formulation of the definite imperative, which implores people to act so that they may treat humanity, whether in your own person or in that of another, always as an end and not as a means only (Hill, 2002). The popular meaning of this is that morality demands that ethics calls for the respect of other people. One important facet of the thought of respect for individuals is that its genesis and use can be reviewed autonomously of other rudiments of Kantian ethical philosophy. Compassionate readers do not necessarily have to have to all elements of Kant’s system of morality in order to grant the worth of Kant’s opinions for the second formulation of the categorical imperative. The reason for this is that the basis on which Kant bases his argument of respect for people is based in the widely acceptable view individuals have a gift of rational, self-governing activity (Bowie, 2004). Kant did not simply state that individuals have dignity, but he instead offered an explicit case for that conclusion. Individuals need to be respected because they have dignity. For Kant, any object that has self-respect is priceless. In supporting this point, he notes that workers have self-respect that not even the most sophisticated machine has. What brings this self-respect is their ability of ethical activity. As independent beings with an ability of self-rule they are responsible beings, since independence and self-rule are the prerequisites for responsibility. Independent responsible individuals have an ability of formulating and sticking to their own rules; they are not just at the mercy of the laws of nature. Any individual who is conscious that they are independent should also know that they are responsible (Hill, 2002). As an issue of constancy, an individual who realizes that he/she is an ethical being should accord dignity to anyone who, like him/herself, is an ethical being. Although it is the aptitude to act justly that gives individuals their self-respect, independence is crucial for an individual to be able to act in an ethical manner. For Kant, being autonomous goes deeper that just independence from causal need. This is unconstructive autonomy. Independence in its entire realization is the capability to guide an individuals action from laws that are self made. Independence is not merely an impulsive occurrence. Free actions are formulated but they are formulated by individuals acting from laws that they themselves have created. In his book titled, Metaphysics of the Morals, Kant points out that any individual who respects others cannot fail to be concerned about their welfare and the lack of concern to Kant is a clear sign for lack of respect. He also states that everyone has a duty to show concern for the welfare of individuals as well as on their wellbeing (Kant, 1990). With respect to the discussion in this paper, the question then that arises is how this knowledge can be used in the business setting. This knowledge can be applied effectively in the case of multinationals that have been trying to exploit the existing cheap labor in developing nations. For it to be possible to respect other individuals, it is imperative that their humanity is treated as an end. This is a responsibility that is relevant to each person whether in the private sphere or in the marketplace. There are of course limits to what multinational corporation managers can attain but despite this, such managers have a duty to respect the dignity of their employees (Kant, 1990). Living Wage One of the most controversial issues touching on sweatshops is the insistence that managers raise the wages of workers in order to offer a living wage. Employees from all over the globe complain about low earnings. In some cases, employees complain that they need up to $30 per week to buy the most basic food items needed by an industrial worker while their weekly salaries actually cost less than $25. While a living wage is hard to elucidate, one ideal approach is to use a method that is identical to that used by the U.S. government to define poverty. This technique incorporates calculating the cost of a market basket of food required to meet the minimum dietary needs and then incorporating the cost of other primary needs (Denton, 2000). At a minimum, the respect for workers demands that multinational corporations have a moral obligation to ensure that workers do not live in poverty by offering wages that meet all their basic needs. Give that both contracted and subcontracted workers are beings who are worthy of dignity, this discussion does not discriminate any of them. Doing so aids in guaranteeing the physical well-being and autonomy of workers, contributes to the development of their rational abilities, and presents them with opportunities for ethical development, and in effect, this allows for the development of self-esteem. It is hard to determine the number of workers that employees should function for them to receive a living wage. However, organizations should set reasonable hours that allow the employee to be productive in their personal lives as well as to the employer (Denton, 2000). The inability of most multinational corporations to meet the standards needed by the application of the doctrine of respect for individuals has not gone unchallenged. By way of consumer boycotts, letter writing crusades, opinion editorials and shareholder declarations, activists have been able to persuade some multinationals to implement some changes. Although there has been changes made in regards to the living wage, there is still more that multinationals can do for their workers. In the recent past, some analysts have criticized both the labor and human rights activists who have disparaged multinationals of failing to offer a living wage. In one such criticism, Ian Maitland (2001) criticizes both the activists and the multinational corporations for giving into the demands of the activists. In his analysis, Maitland claims that in the conflict between the organizations and their critics, neither side appears to have evaluated it to be in its interest to seriously engage the issue at the center of the debate, namely; What are the ideal wages and labor standards in global sweatshops? According to Maitland, the organizations have treated the accusations about sweatshops as a public relations issue to be managed so as to mitigate harm to their public images. On the other hand, the critics have clearly judged that the best approach to keep public resentment at boiling point is to generalize the issue and treat it as an ethical play depicting merciless exploiters and victimized third world employees. The result, Maitland notes, has been the great non-debate about global sweatshops (Maitland, 2001). Ideally, the opinions put across by Maitland seem to be ideal for the text book theory and are highly authoritative. This is because those who criticize multinationals fail to take into consideration the rudimentary economic theory, and the pessimistic corporate managers ignore the prevalent economic realities in order to maintain their brand images as well as corporate status. However, this does not mean that the analysis presented by these analysts is correct. To begin with, despite the ability that Maitland and his fellow analysts seem to have in multinational corporations to generate ethically acceptable living wage, the analysts do not seem to defend an unrestricted market approach (Varley, 2008). In their opinion, the only reason why managers do not fight back in the constant calls to increase the living wage is to protect their images. However, the analysts fail to take into consideration the fact that the reason why managers do this is because it is the thing that is most consistent with profitability. In addition to this, companies that do not as yet offer a living wage can learn from the example of other organizations that have done this and still maintained their profitability. This aspect is consistent with Kant’s observation that people should treat others exactly in the same manner that they would want to be treated. While Maitland and his contemporaries claim that improving the wages of workers would lead to job loses something that is not good for the economy, this is in no way true since there have been numerous organizations that have bettered the welfare of their workers without the resultant consequences (Varley, 2008). Finally, there is no proof that improving employee’s living wage will automatically lead to the serious repercussions that are predicted. According to analysts, there is always an increase in productivity as exceptionally low wages are raised either due to stimulated administration advancements or due to higher labor efficiency as a result of higher labor efficiency that is brought about by a reduction in wasteful labor turnover and industrial disputes. Ideally, if the living wage of employees is improved, they are able to take care of their needs and access the best health facilities something that reduces any absence from work because of diseases caused by fatigue. If the workers wage is reduced, the firm would become worse off due to decreased worker productivity (Varley, 2008). Conclusion As Kant points out, it is by way of acting in a manner that is consistent with human dignity that individuals are capable of putting themselves above all things. In reality, managers who underpay their employees renounce their own dignity and that of their employees, and in so doing, they lack respect for themselves and their employees. This moral consideration is not in any way undermined by economic contemplations. Most importantly, multinationals have better ways of honoring the humanity of their employees. This is due to the fact that multinationals have well established internal decision making processes, unlike personal moral agents, are not prone to weakness of the will. For this reason, a multinational corporation doing business in a developing nation is obligated to pay its employees, whether contracted or subcontracted, a living wage. References Bowie, N. (2004). Business Ethics: A Kantian Perspective. Maiden, Mass: Blackwell Denton, F. (2000). Close Look at Factory for Nikes. Wisconsin State Journal 16 (3): 106-109. Hill, T. (2002). Dignity and Practical Reason in Kants Moral Theory. Ithaca: Cornell University Press Kant, I. (1990). Foundations of the Metaphysics of Morals. New York: Macmillan Maitland, I. (2001).The Great Non-Debate Over International Sweatshops reprinted in Tom L. Beauchamp and Norman E. Bowie, Ethical Theory and Business, 6th ed. Englewood Cliffs: Prentice Hall. Varley, P. (2008). The Sweatshop Quandary: Corporate Responsibility on the Global Frontier. Washington D.C, Investor Responsibihty Research Center. Read More