The fear is that outside efforts to improve wages or working conditions can result in job losses. However, high-profile campaigning and boycotts to improve the lot of workers at factories that manufacture Nike, Reebok and Adidas sports clothes in Indonesia in the 1990s resulted in a win-win situation, with wages soaring and employment remaining buoyant. In this case, increasing demand for such products was key. However, foreign firms have already begun shifting production to other low-wage Asian countries.
In addition, wages in clothing factories were very low before the anti-sweatshop campaigns, so factories could concede big increases without getting out of line with average manufacturing pay in Indonesia. Crucially, overall profit margins on these big brand goods are high, so firms clearly have the resources to absorb increased labour costs in factories. Where profits margins are smaller and there is no brand recognition, anti-sweatshop campaigns may struggle.
Source: Improving the conditions of workers: minimum wage legislation and anti-sweatshop activism
Ann Harrison and Jason Scorse California Management Review, winter 2006, Vol 48 No 2
Review by Steve Lodge