Gap's Labor Problems

Prepared By:

Utkarsh Saxena

CHILD LABOUR• Violates a nation’s minimum age laws • Threatens children’s physical, mental, or emotional

well-being • Involves intolerable abuse, such as child slavery,

child trafficking, debt bondage, forced labour, or illicit activities

• Prevents children from going to school • Uses children to undermine labour standards

COUNTRIES INVOLVED The countries normally covered by Child Labour are

India, Bangladesh, Brazil, Nepal, Thailand, El Salvador, Pakistan, Costa Rica and Tanzania.

FACTS• Approximately 250 million children work worldwide. • They are deprived of a basic education as well as

their health and a chance at a normal family life. • UNICEF says, “Young children are often made to

work long hours in cramped and squalid conditions”

Case Study: GAP The Gap Inc. Francisco. As of September 2008, Gap, Inc. has

approximately 135,000 direct employees and operates 3,076 stores worldwide, of which 2,551 are in the United States. On October 28, 2007, BBC footage showed child labour being used in Indian Gap factories. Gap has denied that it was aware of such happenings and that it is against its policy to use child labour. The clothing in question was removed from 3000 stores around the world and was destroyed. As of November 2007, a big proportion of the company's clothes were made in India, which has become the world's capital of child labour. Of the estimated 218 million labourers worldwide who were younger than 14, around 45 million were from India, and they accounted for around 20% of the country's GDP. Gap says it employs 90 people across the globe to supervise compliance with its rules. Gap have said they have revoked approval for 136 plants which have failed to comply with its standards.

Better strategy would be to identify and correct weaknesses of its internal monitoring system instead of giving in to the political pressure of third party monitor.

1. In your view, should Gap have given in to the union's 1995 demand that it should hire a third-party independent group to monitor the Mandarin plants instead of relying on its own inspectors and the word of factory owners?  Should Gap have done anything more?

From bottom to up information hierarchy of Rational Organization, there was communication gap between the lower layer monitoring Gap’s factories and top management due to which top management was not aware of human rights violation issues within Gap; that is why monitoring system of Gap was not working with maximum efficiency.

we are of the view that GAP should not have given up to Union’s demands of hiring third party monitor

Question & Answers

2. Is a company like Gap morally responsible for the way its suppliers treat their workers?  Why or why not?

Moral responsibility lies on following points;1) If employer can and should improve the conditions.2) Knows about them.3) Is not prevented from changing them.

GAP has defined code of conduct for Vendors. Gap has given contracts to third party vendors

and signed an agreement that asks these vendors to comply with the Gap's requirements

According the Los Angeles Times, "Gap is now viewed as a leader in the small but growing corporate movement to improve conditions for some of the world's most exploited workers." The paper states that the company has wielded its buying power in Africa, Central America, and Cambodia to help improve factory conditions and is encouraging other manufacturers to follow suit. "No one company created these issues, and no one company can fix it by itself," said Alan Marks, Gap's chief spokesman. Source: Los Angeles Times, Jan 17, 2005

3. Should companies like Gap attempt to get their suppliers to pay more than the local industry standard when it is insufficient to live on?  Should they pay wages in the Third World that are equivalent to U.S. wages?  Should they provide the same levels of medical benefits that are provided in the United States?  The same levels of workplace safety?

Ethics of care:

Yes companies like GAP should attempt to get their suppliers to pay more then the local industry, WHEN IT IS INSUFFICIENT TO LIVE ON.

BUT the wages in any given economy should be based on the following factors rather then comparison with the United States or where the head quarter of company located.

Productivity level of employees. Revenues made by the company. Living wage and living cost in that

nation. Local labor markets.

So by Ethics Of Care companies like GAP should force their suppliers to provide maximum work place safety, by eliminating job risks, compensation for high risk jobs and full awareness of the hazards of a job to employee.

4. In your view, and in the light of the fact that Gap's own monitors had not reported the sweatshop conditions and unpaid overtime in its Saipan factories that these were in compliance with all applicable worker health and safety laws, was it right for Gap to settle the lawsuit?  Should Gap have settled the lawsuit?  Explain.

Incorrect reporting of monitors of Gap is a weakness in Rational Model of Organization, which needs improvement, as we are supporting it from the beginning.

GAP was initially resistant for an out of the court settlement and tried to fight the case. Later, Gap felt that out of court settlement was eminent due to ineffective performance of monitoring department of The Gap.

This shows in overall, the rational and ethical behavior of a business organization.

5. In light of the long history of labor problems that Gap has had to contend with, what recommendation or recommendations would you make to Paul Pressler concerning what the company should now do to deal with these and future problems?  Explain how your recommendations will effectively solve these problems for Gap.

Implementation of a Rational Model of an Organization. Improvement in internal monitoring system. cram the reasons behind futile performance of monitoring

department. Strong compliance of vendor code of conduct by suppliers, take

account of their history of working conditions, beforehand.

6. From an ethical point of view, assess Kernaghan's ending statement concerning the issue of unions. Should Gap require unions?

In economies that are paying poverty wages, when people have no rights and no power, what you end up monitoring are well-run prisons," he says. "Sure, factories will be cleaned up. They'll have bathrooms where the water runs. But when it comes to wages, when it comes to having a democratic voice on the shop floor, monitoring and codes of conduct are a dead end."