Make Sure You Are Not Running a Sweatshop

http://www.inc.com/eric-markowitz/do-your-manufacturers-treat-workers-fairly.html

By Eric Markowitz |  @EricMarkowitz   | Jan 25, 2012

Make Sure You're Not Running a Sweatshop

You treat your direct employees fairly (heck, they have great benefits!) but your suppliers or manufacturers abroad might be another story. Here's what you can do about it.

Discussions about American firms that outsource inevitably turn to the loss of American jobs. But there's another side to the debate that's discussed less often: Namely, when you're expanding overseas, how sure can you be that your suppliers treat workers fairly?

"To credit the consumers, it's something that comes up fairly frequently," says Fan Bi says, the founder of Blank Label, a custom mens's shirt maker. Like many American retailers, Bi decided it was cheaper to set up his company in China, where manufacturing was cheaper, quality was high, and margins were fat. And while Bi travels to China three to four times a year to check in with his suppliers, he says recent media coverage, especially Wired's March 2011 cover story on the suicides at the Foxconn plant, where iPhone parts are made, has made consumers wary about the working conditions of workers abroad.

"People e-mail in," he says. "They want to know, like, what's your deal?"

One of the most extensive, privately-funded reports on the state of labor conditions worldwide comes from Impactt, a UK-based labor consulting with offices in London, India, China, and Bangladesh. Impactt helps companies improve labor standards in their supply chains—"in a way that makes business sense."

Impactt's report, released in December 2011, was the result of visits to some 567 factories worldwide which employ hundreds of thousands of workers. Its "Exploitation Index," a measure of overall exploitation of workers by country each year, is an indictment of the sub-par labor practices of suppliers around the world. For example, 18 percent of factories surveyed still employ...