Internet Exercises


1			Most people would hesitate to purchase a product made by workers who suffered from sweatshop conditions. In fact, human rights activists have worked tirelessly to publicize incidents of worker abuse. However, a new form of labour abuse is emerging—one that has sprung from the globalization of manufacturing, and one that is threatening workers in many poorer countries. Unfortunately for the workers, the new abuses remain largely hidden. The new form of abuse revolves around the use of foreign contract workers, workers from countries including Viet Nam and the Philippines that have been imported by companies with manufacturing operations in countries such as Taiwan and South Korea where labour costs are significantly higher than in China. The premise is that companies can bring workers from countries with high unemployment rates to countries with higher cost labour and still compete with the ultra low cost China. In fact, the concept is sanctioned both by the governments that send the workers and the governments that host the workers. The catch is that the labour brokers that facilitate the process charge such exorbitant fees that the workers are rendered virtual indentured servants. In theory, the practice of importing foreign workers should benefit poorer countries by allowing them to reduce their unemployment rates, and improve the lot of workers by allowing them to earn far more than they could have done through local employment. In practice however, the concept appears to be benefiting only the labour brokers. While governments have established limits as to what brokerage fees should be, thus far, governments appear to be turning a blind eye to the practice of gouging the workers. For the unsuspecting workers it means debt bondage (see http://www.domini.com/shareholder-advocacy/Issue-Spotlight/verite_taiwan_intro.doc_cvt.htm). In your opinion, who is responsible for protecting the workers in this situation? Should Nike (www.nike.com) for example, which uses imported labour from Thailand in its Taiwan plant, be held accountable for its use of workers who have been gouged by labour brokers? Should governments be responsible for ensuring an end to the practice? If so, who or what should police the effort? Go to the International Labour Organization's web site (www.ilo.org) and determine how the ILO is treating the issue. As a consumer, does the knowledge of this practice change your perspective of the companies that are taking advantage of it? Will it affect whether you purchase products from companies such as Nike? Why or why not? Source: "No Way Out," Businessweek, 1/20/03, p. 102.




2			Outsourcing Outsourcing is not new, the concept has been around for hundreds of years Here are some older examples: "Pirates of the Caribbean" Some of you may have noticed in the three movies "Pirates of the Caribbean" that some of the characters were involved with the East India Company. This enterprise, founded in 1600, and given a royal charter by the Queen to trade in the East Indies, waged war, bought and sold slaves, had military and government functions - some of which were noted in the films. By outsoucing, the Queen could reap the benefit of trade, without putting at risk her army or government in nasty disputes. As the global business community (affected by the rise of the dot.coms) became more intense in the late 1990's and early years of Y2K, companies are striving in many different ways to cut expenses. One of the key consequences of globalization is to make your stuff cheaper than some other company across the ocean that is cutting into your customer base. So companies are seeking every avenue possible to cut design costs production costs shipping costs customer service costs financing costs and one of the popular methods has been to outsource parts of your operation to a smaller company that can do part of your stuff cheaper than you can. Mari-Lem De Guzman, in COMPUTERWORLD http://www.itworldcanada.com/ April 28, 2006 wrote a good article titled "Bank Fraud Trail leads to former Outsourcing Help" This story discussed how former workers at EDS stole money from account holders of the CSB Canada Savings Bond program. The story is very upsetting cause usually Canadians think the lowest risk for investing money is Savings Bonds with the government, and it turns out even that is risky because the government sub-contracted aspects of this work to some U.S. firm - and the employees there committed this fraud cause they thought they could get away with it. From http://www.witiger.com/ecommerce/ThirdPartyRisksOutsourcing.htm

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