Posts

wage inequality
At Solbridge International School of Business in South Korea, students and teachers gathered at a seminar and spoke of how Asian markets were booming because of the combination of huge labor pools, unregulated industry and extreme wage inequality. In combination, these factors have attracted business and manufacturing firms from around the world, producing products at miniscule costs.

Every lecturer spoke with great confidence on the boon of wage inequality and unregulated industry. For the corporate beneficiaries at Apple, Microsoft, Nike, Wal-Mart and other manufactures with production lines in Asia, the low wages, no labor benefits and unregulated industries are certainly a great benefit. But what about the actual worker on the assembly line?

Estimates from the United States Bureau of Labor Statistics approximate that Chinese factory workers earn a paltry 64 cents an hour. Such low wages are not sufficient to lift oneself out of the perpetual cycle of poverty. Lack of labor unions or collective bargaining rights prevent worker representation to counter corporate interests, resulting in long hours in unsafe working conditions for little pay and no benefits.

The prevailing economic ideology at the seminar ignored the blatant instances of social and financial inequality that perpetuates so many instances of poverty around the world. From a moral perspective, workers should be given fair wages and proper representation because that’s what’s “right.” But big business and fairness are rarely considered simultaneously. However, even from a financial perspective, a well-paid, safe and cared-for labor force can benefit everyone.

Robert Reich, former U.S. Secretary of Labor, wrote on the validity of paying workers fair wages. Reich pointed out that in 1914, business magnate Henry Ford paid his workers $5 per eight-hour work day for his Ford Model T production – triple what the average factory worker earned at the time. And yet to the chagrin of critics who called Ford crazy, socialist or both, these high wages created a class of laborers capable of remaining financially secure and able to become consumers of their own product. With higher wages, Ford’s autoworkers could eventually purchase a Model T of their own, reimbursing the company for money spent on higher wages. In the next year, Ford’s profits doubled.

Reich makes an important note in his book, “Aftershock:” “Workers are also consumers,” he says. “Their earnings are continuously recycled to buy the goods and services other workers produce. But if earnings are inadequate…an economy produces more goods and services than its people are capable of purchasing.” In the end, everyone suffers from unfair wages. The economy stagnates and poverty reigns.

In addition, the seminar wrongfully ignored the potential for blow-back resulting from the unfair wages and dangerous working conditions. This is highlighted at Foxconn in China, the primary electronics manufacture for Apple. Work conditions and pay have been strenuous enough to cause a stream of suicide attempts. In 2010 alone, 18 workers leapt from the company’s rooftops. Without financial recourse, factory workers like those at Foxconn strike for better working conditions, damaging both the company’s profits, investors’ returns and the workers’ ability to provide for themselves and their families.

Criminally cheap labor is not conducive to an efficient workforce, and while the Asian markets continue to boom, laborers have not seen a proportional share of that growing economy. Promoting prosperity is as simple as decreasing this vast inequality.

– Michael Giacoumopoulos

Sources: Business Week, Aftershock: The next Economy and America’s Future, Telegraph
Photo: Cult of Mac

Nike_Sweatshop_China_Workers_Human_Rights
Although Nike has established itself as a leading athletic brand and even as an endearing icon of American athleticism, it was not too long ago that the company was publicly scorned for its shameful use of child labor. Since its heyday, Nike had secured its success in part by an efficient, albeit ethically-questionable, business model where its manufacturing was outsourced to underpaid, under appreciated and often underage factory workers. The money that Nike saved by utilizing this business model was often invested in topnotch advertising.

After becoming the face of aggressive mega-business abuses of power and wealth, and suffering markedly due to a dwindling public image, Nike has taken steps to alter its practices and image. In 1998, one of the first significant steps that the company took to change its business model took place with a speech given by then-CEO Phil Knight. Knight proclaimed that “the Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse.” Knight further stated that, “I truly believe the American consumer doesn’t want to buy products made under abusive conditions.”

Ever since Knight’s 1998 speech, Nike has enacted an onslaught of redemptive measures, such as the company’s 1999 creation of the Fair Labor Association. This nonprofit group fuses business and human rights in order to maintain a fairer work-place consisting of a minimum age for labor, increased company monitoring and a 60-hour work week.

Furthermore, in 2005, Nike became the first in its specific sportswear industry to publish a comprehensive list of its contracting factories in addition to thorough reports on its factory environments, factory pay and persisting factory issues in order to maintain its still-nascent pledge to corporate social responsibility.

However, despite these amendments to its business policy, Nike is still dogged by allegations of mistreatment in its factories. In 2011, workers at Nike’s Indonesian Sukabumi plant claimed that supervisors would physically and verbally abuse them. Specifically, workers alleged that supervisors would throw shoes at them and equate them to dogs.

In response, Nike has disclosed that such abuses do indeed remain extant in a handful of its factories, thereby acknowledging that the company, despite its immense progress over the decades, still has a long road ahead of itself in order to completely abolish its history of sweatshop abuse. With increased transparency and a continued allegiance to the humane treatment of workers, Nike may eventually be able to recover its public and industrial image.

– Phoebe Pradhan

 Sources: Business Insider, Daily Mail
Photo: An Focal

Climate-Change-Polar-Bear
In the past year, 131 climate change bills were introduced in the 113th United States Congress. This total exceeds the number of climate change bills introduced in the entire 112th Congress with another full year still to go.  There is a renewed sense of confidence in the fight against climate change and now it seems the corporate world is beginning to react.

Due to increased droughts, flooding and generally unpredictable weather patterns, major corporations are feelings the impact of climate change.  The Coca-Cola Company, which relies on sugar cane, sugar beets and other agricultural products from Asia and South America, has had to adjust their strategy and recognize the economic cost of climate change.

Nike Inc., another corporate giant with hundreds of factories around the world, has been forced to adjust to lower cotton yields and commodity price volatility.  Many of Nike’s factories are located in South East Asia, a region particularly vulnerable to climate change phenomena.

In 2008, due to floods, Nike had to shut down four factories.

This year, the 2014 World Economic Forum (WEF) held in Davos, Switzerland has climate change on its agenda.

A meeting of corporate leaders and politicians from around the world has designated a full day to guest panels and talks regarding climate change and promoting their respective economic interests.  The aim is to build resilience and foster sustainable development through public-private partnerships.

The economic disruption affects companies in various major sectors, from agriculture to energy to manufacturing.  During the 2014 WEF meeting, the World Bank Group President Jim Yong Kim declared this year as “the year of action on climate change.”  President Kim expressed the urgency of putting a price on carbon while increasing the market for green bonds, a financial tool that seeks to stimulate and coordinate public and private sector activity to combat climate change.

Despite the added support of some corporate leaders, a significant amount of work still remains.  Even with this support, it is clear that government action needs to be the main pillar beneath this movement.  Climate change denial in politics must be dealt with and American’s will have their opportunity to do so through the November elections.

Just ahead of the elections, the UN will host a meeting of world leaders in New York to discuss climate change in hopes to make progress before the planned 2015 summit in Paris where leaders hope to strike an international deal on cutting carbon emissions.  Past meetings and summits have come up empty but the new year brings much needed hope and optimism for everyone fighting for climate change solutions.

– Sunny Bhatt

Sources: New York Times, World Bank Group, The Guardian
Photo: Green Packs

Nike, NASA, USAID and Sustainability
Nike has partnered with NASA, USAID and the US Department of State to bring together specialists, designers, academics, manufacturers, entrepreneurs and NGOs to take action around a global challenge — sourcing and utilizing sustainable materials. A three-day LAUNCH 2020 Summit is planned for September 2013, highlighting the importance of innovation and collaboration in developing materials that will not have a negative impact on people and the planet.

It is estimated that around 150 billion garments were produced around the world in 2010, and by 2015 the global apparel industry is expected to produce more than 400 billion square meters of fabric every year. This massive industry has a tremendous effect on agriculture, natural resources, communities, and environmental damage due to toxins, waste and carbon emissions.

LAUNCH, started in 2010, seeks “innovations that will transform the system of fabrics to one that advances equitable global economic growth, drives human prosperity and replenishes the planet’s resources.”  This is what sustainability is all about; finding business practices that are not detrimental, while also allowing for continued growth.

There is also a LAUNCH 2013 Challenge Statement, an open call for innovators to invent new systems of producing fabrics. In August, 2013, the 10 strongest ideas will be selected and participants will take part in an intensive program to provide them access to “capital, creativity and capacity.” Three years ago LAUNCH chose astronaut Ron Garan’s innovation on clean water. Garan developed a concept to deliver clean water, energy and sanitation to poor communities, through the combination of sustainable development and carbon credits. As part of the LAUNCH process, Garan met with experts and investors to bring his idea to life. His Carbon for Water project has now successfully distributed one million filters that provide clean water to 4.5 million people in Kenya.

Nike also recently joined 32 other multinational companies, including eBay, IKEA, L’Oréal and Limited Brands, in signing a “Climate Declaration” asking federal policymakers to take action on climate change. As part of the declaration, the companies also asserted that over coming climate challenge is also one of the biggest American economic opportunities of the 21st century.

– Mary Purcell
Source: Sustainable Brands, LAUNCH

 

 

The Search for Sustainable Materials

What do NIKE, NASA, and USAID have in common? The search for sustainable materials to be used in the production of goods.  As members of LAUNCH, an initiative to raise awareness around the sustainable production of goods, NIKE, NASA, USAID, and the State Department recently gathered with 150 materials specialists, designers, manufacturers, entrepreneurs, and NGOs to ignite action around the issue.

The two-day LAUNCH 2020 Summit was opened by NIKE, INC. CEO Mark Parker. He stressed the importance of innovation and collaboration in the area of producing sustainable goods. The Summit also served to reveal the LAUNCH 2013 Challenge Statement. This is an open call for innovation in sustainable materials and good production. The challenge is to create innovation in the system of producing fabrics and is open to both individuals and teams. In August, the 10 strongest ideas will be selected and granted access to creativity, capital, and capacity.

The materials used to produce goods play a significant role in the environment. LAUNCH was created to address this growing issue and to seek innovations solutions to global issues.  Three years ago, LAUNCH was able to provide the needed capital to get Astronaut Ron Garan’s clean water innovation into production.  His project-Carbon for Water-used carbon credits and a filter system to clean dirty water. His filter has provided clean water for over 4.5 million Kenyans.  LAUNCH was also a key player in Gram Power, a program providing thousands of people in India affordable, renewable energy.

You can learn more about Launch at their website or sign up for the 2013 challenge here.

– Amanda Kloeppel

Source: NIKE, INC.
Video: Vimeo