Running head: LEVI STRAUSS & CO.

– ADDRESSING CHILD LABOR IN

BANGLADESH 1

LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH

Name of Student

Institution Affiliation
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 2

LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH

Child labor is rife in many poor and developing countries. Child labor has been a global

prevalent problem. Despite innumerable efforts made by humanitarian groups and the

International Labor Organization (ILO), many organizations harbour children in the labor

force. This is done to decrease the overhead costs as young children tend to be more productive

at less expenses. Protecting children and eradicating child labor has been principal objectives

of United Nations. One out of every six children aged 5-14 is engaged in child labor in

developing countries (Doytch & Mendoza, 2014). The International Labor Organization (ILO)

estimates that 19% of children aged 5-14 in Asia and the Pacific are economically active (ILO,

2002). These 127.3 million children constitute 60% of all child laborers worldwide (Edmonds,

2003). This paper aims to elicit the grave issue of child labor in Bangladesh and the strategies

that need to be adopted for benefit of both the children employed and the organization they

work for.

Summary of the Case

United States is the second largest trade partner of Bangladesh with 8.38% of its total

trade (Bahmani-Oskooee & Rahman, 2017). Levi Strauss & Co. was the first apparel company

to establish a humanitarian work place code of conduct for the suppliers. This code was named

Terms of Engagement (TOE) which was designed to ensure that the suppliers adhere to the

basic labor rights and workers’ well-being. The organization believes if workers’ well being is

maintained and their family is strengthened they are going to improve efficiency and

productivity in the factories. With this notion, LS & Co. has always worked hard after:

Promoting gender equality, empowering women, eradicating poverty, reducing child mortality,

upscaling maternal health, and ensuring environmental standards.

The firm appoints a team of 20 assessors who carry out an audit around the world. Matt

Wilson is one such assessor who is highly impressed by the quality of the products the suppliers
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 3

are delivering and the working conditions they are maintaining at the factory. Wilson is highly

disappointed when it comes to light that children under the age of 15 years are employed in

two of the suppliers in Bangladesh. This is against the ILO standards but there are no laws

governing child labor in Bangladesh. Moreover, poverty and low parental education are the

perpetrators of child labor. The difference in the labor regulations of the home country and host

country poses a complex issue. Wilson goes back and discusses with the management team of

the firm about the impact of this serious concern and course of action to be taken complying

with ILO standards.

The stakeholders that will be affected by the management team’s decision

When an organization takes an action, all the stakeholders are likely to be affected. The

parties involved in an organization’s interests are its stakeholders. Earlier the stockholders were

believed to be the financial instruments of the organization and referees of their financial

powers. Now-a-days it is the shareholders who determine the growth of an organization.

Stockholders care for profitability but shareholders for responsibility. Stockholders worry for

sufficing their self interests of economic prosperity but shareholders work for economic

symbiosis where joint interests of both the organization and shareholders are looked after. In

Levi’s case, all the principal stakeholders will be affected by the management team’s decision.

a. Employees- All the employees of the organization will be directly affected by the

decision. If the children will not be allowed to work in countries like Bangladesh,

they will be affected and their families’ livelihood too. It is likely that the children

will resort to any other work they get in the country which could be even more

harmful than apparel industry work.

b. Suppliers- The code of conduct should be universal for all the suppliers across the

world. If LS & Co. decides to take an action against this supplier who has employed

child labor, the work force of all the suppliers will be affected especially in
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 4

developing countries where child labor is rampant in apparel industry. In many

countries children are appointed to pick up cotton as their tender fingers do not

damage the crop. They are involved in all stages of fashion supply chain from

producing cotton seeds in Benin, harvesting in countries like Uzbekistan, yarn

spinning carried out in India and putting garments together in factories in

Bangladesh (Moulds, UNICEF)

c. Unions- Levi Strauss & Co. has been foremost in lending ears to voices and

opinions of the unions. The changes that will be made in the workforce will directly

affect the unions. There is probability that they will not like the decision and find it

pleasant. They can retaliate to the management’s decision hence care needs to be

taken to keep their interests in mind before deriving any inferences.

d. Society & Government- The government of the host country and the home country

may have different rules and regulations. The government of the business partners

of LS & Co. will likely be affected. Society at large will be highly affected by

management’s decision. If the betterment of children is sought, the society will reap

the benefits of healthy children and productive adults.

e. Creditors- Investors believe in investing money in the firms who are ethically

strong. If it comes to their notice that LS & Co. has failed to adhere to its ethical

standards there are chances that will negatively impact the creditors’ interests in the

firm.

f. Customers- Now-a-days the customers cannot be fooled and they are much

involved with the organization and not its product. If the organization is trapped in

unethical controversies, it is bound to have a negative impact on its brand image. If

the consumers get to know that the goods they are using are made by hands who
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 5

deserve books will create a negative image and may loose some of the loyal

customer base of LS & Co.

Employees

Customers Unions

Shareholders

Society and
Suppliers
government

Creditors

The management team’s options

Levi Strauss & Co. must take a rational and realistic decision. It needs to brainstorm all

possible options that can be opted for – to deal with the case. After brainstorming with the

management committee, Matt Wilson comes up with following options:

a. To become blind to the child labor in Bangladesh and do not take a stringent action

against it (Danny, Irwin, & Reczek, 2016). These suppliers are maintaining good

quality standards at work life, following environmental standards, equipping the

factory with a canteen, delivering high quality products except for the fact that they

have appointed children under the legal age. If children are not allowed to work at

the firm, their family income will reduce. Their families can force them into a work

which can be detrimental to their health and even child trafficking. Their families

are likely to be affected with the decision of the firm.

b. To terminate the employment with the supplier

LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 6

LS & Co. has laid down strict guidelines to work. It has been assessing various

aspects of health and safety conditions, human rights environment, legal system and

social environment. The supplier in this case has made a breach of TOE (Terms of

engagement) of employment standards wherein it is clearly stated that child labor

is not permissible. LS & Co. will not utilize partners who indulge in child labor.

c. Taking a corrective action

The supplier has abused human rights and unethical behaviour in supply chain has

been entertained. As a result, a stringent action against the supplier needs to be

taken. A warning can be issued to the contractor and it should be given a timeframe

to get the things corrected failing which the firm reserves the right to resort to a

stricter approach.

d. To adopt a pro-children approach: The core values of Levi Strauss & Co are

Empathy, Integrity, Originality and Courage. The firm can empathise with the

employed children in the work force, they can stop the children under 15 years of

age from working, but keep paying the wages to them, finance their schooling and

education, and finally offer employment once they reach the desired and legal age.

e. To get it investigated which is a costly affair

LS & Co. can outsource the problem to an investigation committee to look after this

hazardous issue of child labor especially in developing countries. This would be an

expensive option and it can tarnish the firm’s image in the corporate world.

The solution that would best suit Levi Strauss & Co.

A practical and principled business decision needs to be arrived at by the organization

as the decision will affect all the parties or shareholders involved in the business. LS & Co. has

always believed that worker rights protection and enforcement measures should be an integral

part of the bilateral trade negotiations. The community activities of the firm assist many non-
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 7

profit organizations in their work. The Red Tab Foundation, a non-profit organization largely

funded by their employees offers financial assistance to the employees who cannot afford basic

amenities. The organization should think in the interest of the society at large and should not

allow children to work under 15 years of age. They should not immediately terminate the

employment with the contractor because he has been following many other ethical standards.

But a strict warning should be issued for appointing child labor. The supplier has violated the

Terms of Engagement so should be given a timeframe to rectify the things. If the children are

stopped from working, welfare of their families can be affected and so the root cause should

be tackled (Jackline, 2015). Moreover, the children already working should be linked with a

NGO and their right to education should be reserved. They should be given opportunity to

educate themselves and develop. They should be employed once they are legal to work.

Keeping in mind its ethical standards and core values of LS & Co., the management must take

following measures to avoid such concerns in future:

a. A transparent approach needs to be catered to: A social audit must happen

frequently in the suppliers where child labor is prevalent. A strict action needs to be

taken against the supplier who violates the code of conduct.

b. Grievance mechanism to be strong: Grievance redressal mechanism helps the

workers to voice their concerns without the fear of retaliation. Human Resource can

play a vital role in this mechanism. The grievance redressal committee should be

strong enough to address these concerns of the worker.

c. To make the suppliers aware and give some incentives for following ethical

practices

Awareness and awakening is needed amongst all the suppliers to follow the

operating guidelines of the organization. Training should be imparted by Human

LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 8

resource personnel to all the business partners. The suppliers who follow the ethical

values should be reinforced and rewarded with the incentives.

d. To listen to the workers: Workers can bring forth the issues that they are facing.

The organization should respect the say of unions which will reduce burdensome

practices of child labor.

e. HRM strategies: Strict HRM strategies should be emphasized upon. The

recruitment team should follow all employment standards of appointing the

workforce with legitimate documents of the employees.

f. A global strategy might be accompanied by HRM and universal ethical norms. A

transnational strategy should be designed with integration of HRM and ethics.

Rather than following a relativist approach, a universal approach should be

incorporated (Kolk & Tulder, 2004).

g. Stricter monitoring and internal policing should be done.

Labor market and availability

There are many factors that determine labor market demand and supply:

1. Demand for labor- It depends on the demand of the product in the market and the

production capacity of the labor. Children are appointed in workforce because they are

young and more productive.

2. Supply for labor- If wages are high, the supply of labor tends to rise. If the working

conditions are good, the supply of labor increases. For low skilled jobs, the supply of

labor is less and hence children are forced into it.

3. Wage Determination- If supply is more, the wages offered are less. Children are forced

into labor because they get ready to work even at low wages.
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 9

Labor regulations

Labor law governs the relationship between worker, trade unions, governments and

employing agencies. Enforcement of labor law is taken care by Employment Standards

Administration. The labor regulations should be laid down by a country bearing in mind the

ILO standards and promoting fundamental principals and rights at work. ILO has laid standards

to protect basic rights of workers, enhance their job security and improve quality of work life.

Labor trends

ILO has estimated that child labor has declined by 30% between 2000 and 2012 but still

11% of children around the world are deprived of their right to education and are forced into

work. In 2004, 20 million fewer children were found working in the age group of 5-14 years

than they were four years before. Boys continue to be slightly more exposed to work than girls

(Hagemann, Diallo, Etienne, & Mehran, 2006).

Poverty and low parental education are the key perpetrators of child labor in

Bangladesh. It is found that households that have assets like land prefer to send their children

to school as compared to those without any assets (Shafiq, 2007).

Labor challenges

The need for low wage rates and maximum returns has forced children into labor.

Stringent anti child labor law cannot rule out the possibility of increasing child labor in other

sectors as it can bring an equilibrium in labor market. Child labor has a great impact on cultural,

social, economical and political environment. The country’s economy is largely affected by it.

If a country is economically prosperous, the people can work after health and education of the

children. They do not need to force them to become working hands of the family.

Despite many schools opened in the country and government working after making

school attendance compulsory, children are made to work by the families and shun schooling.
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 10

The situation of child labor in Nepal is of grave nature. Children work in hazardous conditions

in an industry like brick industry which can be detrimental to their health (Larmar et al., 2017)

Conclusion

A range of interventions need to be brought in – to address this hazardous problem of

child labor. Children are forced into labor because their families cannot sustain themselves

financially. Child labor prevents the society to have healthy and productive adult citizens. This

case study shows the perils of child labor not only on the society but to the entire world. The

economy and structure of the country should be studied before designing any intervention

strategy. It is impossible to eradicate child labor without strengthening the economy. Changes

need to be illuminated in this approach. The interventions should be designed and implemented

to reduce child labor. The families who send their children to school should be given incentives.

Micro finance initiatives should be encouraged. Emphasis should be laid over school

attendance. Quality of life is a cornerstone that can keep employees engaged. LS & Co. respects

the rights of the children and believes to make not only the company better but also the world.
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 11

References

Bahmani-Oskooee, M. & Rahman, M.O. (2017). The US-Bangladesh commodity trade:

An asymmetry analysis. Economic Analysis and Policy, 56, 28-36.

Danny, Z., Irwin, J. & Reczek, R.W. (2016). Why companies are blind to child labor.

Harvard Business Review, Retrieved from https://hbr.org/2016/01/why-companies-are-blind-

to-child-labor

Doytch, N., Thelen, N. & Mendoza, R.U. (2014). The impact of FDI on child labor:

Insights from an empirical analysis of sectoral FDI data and case studies. Children and Youth

Services Review, 47(2),157-167.

Edmonds, E.V. (2003). Child Labor in South Asia. OECD social, employment and

migration working papers. 5, 1-87. Retrieved from

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DELSA/ELSA/W

D/SEM(2003)5&docLanguage=En

Hagemann, F., Diallo, Y., Etienne, A. & Mehran, F. (2006). Global child labor trends

2000 to 2004. Retrieved from:

http://www.oit.org/wcmsp5/groups/public/@ed_norm/@declaration/documents/publication/

wcms_decl_wp_25_en.pdf

Jackline, W. (2015). Child Labor. In J.D. Wright (Ed.) International encyclopedia of

the social & behavioral sciences (pp. 405-409). Oxford: Elsevier.

Kolk, A. & Tulder, R.V. (2004). Ethics in international business: multinational

approaches to child labor. Journal of World Business, 39(1), 49-60.

Larmar, S., O’Leary, P., Chui, C.H., Benfer, K., Zug, S. & Jordan, L.P. (2017).

Hazardous child labor in Nepal: The case of brick kilns. Child Abuse & Neglect, 72, 312-325.

Moulds, J. Child labor in the fashion supply chain. UNICEF. Retrieved from

https://labs.theguardian.com/unicef-child-labour/
LEVI STRAUSS & CO.: ADDRESSING CHILD LABOR IN BANGLADESH 12

Shafiq, M.N. (2007). Household schooling and child labor decisions in rural

Bangladesh. Journal of Asian Economics, 18(6), 946-966.