Introduction

Conducting ethical international business is particularly challenging given diverse countries and societies with different moral foundations and beliefs. Many international businesses confront issues of child labor in their own operations and those of suppliers in their value chain. Culture, laws and regulations, and international and industry protocols provide some areas of common approach, although differences in practice across countries and cultures must be respected when addressing child labor. Ethical perspectives and theories such as value driven management will help businesses make better decisions about child labor.

What is child labour?

The broad term "child labour" covers a considerable diversity between and within countries in the types of activities in which children participate. Fortunately, abhorrent images of children chained in factories or forced into prostitution stand out for their relative rarity. Most working children are at home, helping their family by assisting in the family business or farm and with domestic work. Fundamentally, child labor is a symptom of poverty. Low income and poor institutions are driving forces behind the prevalence of child labor worldwide. As a result, some economic events or policies can have ambiguous effects on child labor; for example, a country that experiences an increase in labor demand, perhaps because of globalization, may experience greater demand for both adult and child labor. However, the greater demand for adult labor can raise family incomes in a way that tends to reduce child labor. While some children do work in circumstances so hideous as to command immediate attention, development is the best overall cure for child labor. However, historical growth rates suggest that reducing child labor through improvements in living standards alone will take time. If a more rapid reduction in the general incidence of child labor is a policy goal, improving educational systems and providing financial incentives to poor families to send children to school may be more useful solutions to the child labor problem than punitive measures designed to prevent children from earning income.

Who is a child labourer?

The term child labour generally refers to any economic activity performed by a person under the age of 15, defined by the International Labour Organization (ILO) of the United Nations. On the beneficial side of the continuum, there is light work after school or legitimate apprenticeship opportunities, such as helping out in the family business or on the family farm. At the destructive end is employment that is: Preventing effective school attendance; Hazardous to the physical and mental health of the child. Estimating the number of children working around the world is a difficult task. Most working children live in low-income countries. These countries often lack reliable data on many aspects of their labor market. Even more difficult, some policymakers have until recently defined "child labor" as economic activities that are deleterious to the wellbeing of children. There are some situations where it is hard to imagine how an activity could not be harmful to the child-forced prostitution, child soldiers-but as we will discuss, these activities are very rare. Most working children participate in activities that can be harmful or beneficial for the child, depending on the circumstances of the activity, and ultimately, the impact of child labor on the well-being of the child depends on the counterfactual of what the child would be doing in the absence of work. Official figures always tend to underestimate the numbers of children working. But an ILO study of child workers aged 10 to 14 indicates with some reliability which countries have the highest incidence of child labour. Notable by their absence from the top ten are the countries most readily associated with child labour - India and Pakistan - whose respective percentages were 14.37% and 17.67%. The ILO's Statistical Information and Monitoring Program on Child Labor (SIMPOC) most recently estimated that 211 million children, or 18 percent of children 5-14, are economically active worldwide (ILO, 2002). A child is defined as economically active if he or she works for wages (cash or in-kind); works in the family farm in the production and processing of primary products; works in family enterprises that are making primary products for the market, barter or own consumption; or is unemployed and looking for these types of work. The academic literature also uses the phrase "market work" to refer to these activities (with the exception of unemployment). The estimated 211 million economically active children correspond to 18 percent of the world's population of 5-14 year olds. Sixty

percent of these working children are in Asia, and 52 percent are boys. While 23 percent of economically active children are believed to be in sub-Saharan Africa, participation rates are highest there with an estimated 30 percent of children 5-14 working. Most economically active children are in low-income countries. Estimates of the number of child workers worldwide are notoriously unreliable. This is partly because the definition of child labour is unclear - at what point does helping out the family become work? But it is also because governments are not keen to measure a phenomenon that is officially not supposed to exist. The best estimate of 250 million comes from the International Labour Organization. But this not only excludes children in the industrialized world - it also does not measure the child workers hidden from the statistician's view, notably girls doing domestic work. Including these child workers from the shadows would push the total up to nearer 500 million - or half the children in the developing world aged 5 - 14. 500 million child workers including those not declared and those doing domestic work 250 million child workers according to the International Labour Organization

Numbers of child workers in the developing world

Isn't there a law against it? Most countries have laws against child labour. But those laws kick in at different ages, are routinely abused - and the very definition of exploitative child work varies the world over. The International Labour Organization's Minimum Age Convention sets a basic minimum age for employment of 15 years while allowing light work at 13 and prohibiting hazardous work until 18. But only 49 countries have ratified the Convention and none of these are countries considered to have the highest incidence of hazardous child labour. Legal minimum ages for different types of work, selected countries: - 18 Peru - Ports and seafaring Bolivia - Construction Luxembourg - Abattoirs, meat rendering United States - Construction

17 Pakistan - Mining, circular saws Myanmar - Mining Austria - Tanneries, glass manufacture Canada - Maritime work 16 Peru - Deep - sea fishing Cote d'lvoire - Mining Mexico - Work with acids United Kingdom - Noxious substances 15 Thailand - Night clubs, bars Dominican Rep. - Mining Italy - Machinery in motion Costa Rica - Street trades 14 India - Explosives, carpet weaving Cyprus - Construction Belize - Electrical work Sri Lanka - Street trades 13 Germany - Light agricultural Switzerland - Non - industrial light Denmark Shop assistant Tunisia - Non - industrial light 12 Egypt - All work Benin - Light agricultural Senegal - Seasonal work Burkina Faso - Domestic service

What about the rich world? Global figures on child labour do not tend to include the children of the West. Yet part - time work by rich - world children in their early teens is routine and considered socially acceptable. Children particularly those from ethnic minorities, are also employed in hazardous conditions - for example, in agriculture or in garment workshops.

Where are they?

Most child workers in the South are to be found in Asia. But these figures are slightly misleading given that the population is much higher in Asia than elsewhere - the proportion of African children who work is twice as high as in Asia. While the most extreme examples of exploitative child labour tend to come from Asia, an African child is more likely to work. Proportion of total number of child workers found in each continent.

Child workers in the US In 1990, 100 adolescents were killed and a further 70,000 injured while at work in the service sector. The National Institute for Occupational Safety and Health estimates that

70 teenagers are killed each year in work - related accidents and that more than 200,000 working teenagers are injured annually. Given that both these estimates are drawn from official data they are probably gross underestimates. A study by the US General Accounting Office showed a 250% increase in child labour violations between 1983 and 1990. In 1990 a three - day 'sting' operation by the Department of Labor discovered more than 11,000 children working illegally. The involvement of migrant children in US agriculture is routine. In the 1980s the United Farm Workers union estimated that 800,000 under - aged children worked harvesting crops. In 1990 a survey of Mexican - American children working on farms in New York state showed a third of them had been sprayed with pesticides.

Case study Nestl

Nestle soon will be self policing its supply chain, in an attempt to curb child labor on cocoa farms. The company announced that it will work with the Fair Labor Association (FLA) to investigate whether children are working on the cocoa farms that supply its factories. With more than 800,000 cocoa farms in the country, companies have struggled to establish where their cocoa comes from and under what conditions it was farmed. The FLA's methodology will bring consistency and transparency to the process, providing Nestle with the information needed to eliminate instances of child labor in its supply chain. The work with the FLA will complement Nestle's efforts to promote sustainability and better working practices in its cocoa supply chain, which it set out in the Nestle Cocoa Plan.

BP, Rio Tinto, Shell and Unilever

BP, Rio Tinto, Shell and Unilever admitted they had no worldwide minimum age when hiring staff, but pledged strong support for human rights. All four multinationals have been criticised for their records on human rights. In 1996, BP was accused of complicity in human rights abuses in Colombia. Earlier this month, the World Development Movement claimed Rio Tinto, the world's biggest mining group, was steamrollering through the lands of indigenous peoples in Indonesia. Shell has been forced to withdraw from a project in Nigeria after objections from the Ogoni people, while Unilever was criticised for its former operations in Burma. BP, Rio Tinto and Shell told the Commons foreign affairs select committee that they had included support for the UN universal declaration on human rights in their mission statements, and Unilever said it was committed to operating in a responsible way. However, Sir John Stanley, a Conservative member of the committee, asked if the multinationals had a worldwide minimum age when hiring staff, to prevent the exploitation of child labour. Richard Newton, director of BP's European operations, said the company had no minimum age but added that it regarded child labour as a human rights abuse. Sir John said that amounted to a "thoroughly woolly" policy. After the other three companies confirmed they also had no minimum age, Sir John, a former Rio Tinto employee, said he was "somewhat disappointed". Sir John added: "I would have hoped in this kind of area the companies concerned would be doing much more than basically complying with an extremely general UN resolution and taking as their benchmarks the legislation in the countries in which they are operating." David Wilshire, another Conservative member of the committee, suggested the companies could not avoid paying "commissions" in order to operate in some countries. The companies said they would never accept bribes. Mr Newton said BP had lost business because it would not tolerate corruption or bribes. Robin Aram, head of external affairs at Shell International, said the company had also lost business by not taking bribes. It had lobbied the Nigerian government about its poor record on human rights. "The danger in speaking up on human rights, whether a government or a company, is that it does not come without cost," he said.

Mr Aram, Guy Walker of Unilever, and Andrew Vickerman of Rio Tinto said cultural and religious values in some countries meant it was not always possible to promote gender equality. Copyright Financial Times Limited 1998.

Gap
With allegations of child labour making world headlines lastweek, Gap has found itself in a familiar spot - doing damage control. Executives are hitting the airwaves in full force, expressing shock and anger over a British newspaper investigation that found Indian children as young as 10 working in brutal conditions to make Gap clothing. Blaming an unethical subcontractor, Gap has promised to fix the problem, saying it will ensure that all its suppliers adhere to its employee rights' policies, and firing those who don't. But while the company's PR machine has been working overtime to minimize damage to its image, they've failed to realize that their response will actually do nothing to help the very children they are pledging to protect. By singling out and punishing individual subcontractors, Gap is pushing child labour further underground. The factory owners involved will simply fire their child workers - forcing them to find work elsewhere. Desperate for money, they will likely become easy targets for exploitation at much more dangerous jobs. With its response, Gap missed the opportunity to prove to the world that it is truly serious about contributing to a systemic solution to child labour. Why not help the children in its factory get an education? Or hire their parents at a fair wage? Reebok was rocked by similar allegations last decade, and they did just that. The children working in their soccer ball production factories were sent to school and their parents were given employment training. Reebok was celebrated for showing a long-term commitment to its former young workers. Gap has been in this position before. In 2000, a BBC documentary showed young girls in Cambodia making clothing for them, causing a huge public backlash. The company responded by implementing strict policies forbidding the use of child labour. With these new allegations, Gap pointed out that it cut ties with 23 of its factories last year alone when incidences of child labour were discovered. Executives also said that Gap has 90 full-time

inspectors who make unannounced visits to the company's suppliers worldwide, looking for rights violations. But that is not enough. The company can instead become a truly responsible corporation by ensuring these child labourers - and any future ones - are not simply rehired somewhere else by providing them and their families with an opportunity to find their way out of poverty.

Nike's dilemma
In this bustling commercial hub near the Kashmiri border, fortunes seem to rise and fall with the Nike swoosh. Some 80 percent of the world's soccer balls are produced here by Nike and other top sports brands - making Sialkot, a city of 3 million, a model of prosperity in a country where poverty and extremism freely intermingle. But there is a controversy behind this pot of gold. In November, Nike severed its contract with Saga Sports, its chief supplier, saying Saga's poor management exposes Nike to the threat of child labor and other labor violations. The incident, observers say, highlights the moral dilemma of first-world corporations using third-world labor. And since it is Pakistan, the outcome may be more pressing than elsewhere in the world. Many say a surge of unemployment and falling profits in Sialkot, a rare oasis, is the last thing a Pakistan struggling with militant Islam and poverty needs. A soul-searching debate is now coursing through the country: Child labor is universally condemned, but is it fair for multinationals to cut and run when incidents arise of children working? Or do corporations have an obligation to work to fix these problems themselves? For Nike's part, the Beaverton, Oregon-based firm stated in a November press release that it will continue working with contract factories in China and Thailand to supply hand-stitched balls. Nike's contracts with Saga will expire in March. About Saga's 5,000 stitchers, it added: "In this case, the company exhausted all options and was left with no alternative but to cease orders, despite the potential impact to workers and the near-term effect on Nike's soccer ball business." Gloomy-looking executives at Saga Sports, 70 percent of whose work is for Nike, say they're confident they can keep the company on board. The US Embassy recently told

the Sialkot Chamber of Commerce that Nike will continue its other textile operations with existing contractors in Pakistan, according to unofficial statements from American officials. By severing its contract with Saga, Nike is likely to score moral points with its customers in the West. But it's also likely, observers agree, to sink Saga, a corporate giant that makes about 6 million of Pakistan's annual production of 40-million soccer balls. Saga estimates that as many as 20,000 families could be affected, since 70 percent of the local market relies on them for work. "Definitely, Saga did wrong. But does the wrong they did warrant Nike leaving?" asks Nasir Dogar, chief executive of the Independent Monitoring Association for Child Labor (IMAC), which oversees compliance at Sialkot's 3,000 soccer-ball stitching centers. Sialkot's hand-stitched ball industry, about a century old, is big business: Saga Sports alone accounted for $33 million of the industry's $210 million total. For Sialkot's 45,000 stitchers, who earn less than $100 a month on average, soccer balls are a way of life. But for as long as there have been soccer balls in Sialkot, the hands of children have stitched them. That is not unusual in Pakistan, where a per capita income of about $2,800 commonly drives children to work. According to UNICEF estimates, more than 3 million boys and girls below age 14 work in Pakistan. That began changing a decade ago in the soccer-ball industry, when Nike, Puma, and Adidas, among others, worked with the International Labor Organization (ILO) and Sialkot suppliers to eradicate child labor. Today a majority of soccer-ball manufacturers voluntarily participate in IMAC's childlabor monitoring program, but some contest how effective those measures have been. The case of Saga Sports, in which two children were found working in the home of a subcontractor in May, is not unusual, points out Mr. Dogar of IMAC. Every morning, Dogar's 12 monitors perform unannounced checks on stitching centers randomly selected by computer. Still, children are found from time to time. "You cannot do 24-hour surveillance. You cannot cover the whole area," he says. Nonetheless, he and many others question Nike's decision to leave, given how many families may be losing their livelihood. "They could have found some alternative way with Saga," says Khawaja Zakauddin, who heads the anti-child labor wing of the Sialkot Chamber of Commerce and Industry. "To go away is the worst solution. If Nike moves from here, these people will have no work."

Ratify ILO Convention No. 182 now!

ILO Convention No. 182 is considered by many as perhaps the most significant legal instrument to tackle child labour. It defines the worst forms of child labour and asks all Governments to ban them. These are: All forms of slavery; Child prostitution; The use of children for illicit activities, especially drug trafficking; Work exposing children to grave health and safety hazards.

Ratification of the Convention should be the first and immediate task for all Governments. It will mean acceptance of the Convention by national parliaments. Secretary-General Kofi Annan, in his Millennium Report has urged all Member States to ratify and implement the Convention without delay. Once Governments have ratified the Convention, they must apply it in law and in practice. Among other things, Governments should: 1. Introduce action programmes to remove and prevent the worst forms of child labour; 2. Provide direct assistance for the rehabilitation of children and their social integration; 3. Ensure access to free education; 4. Identify children at special risk; 5. Take account of girls and their special situation. Governments must also report regularly to the ILO regarding the application of the Convention and be accountable for all allegations of violations. As of August 2000, 30 countries have ratified the Convention.

Conclusions
Child labor, and especially the worst forms of child labor found in many agricultural tasks, is a complex social problem that is often hidden from view in many countries. Numerous international conventions, national laws and industry protocols such as the Harkin-Engel Protocol have been drafted over the past decades. Broad consensus has been reached on definitions of child labor and nuances of age, type of labor, and exceptions for family-related work. International business opens companies to new markets and new challenges. By deciding to expand operations internationally, companies must also adapt their culture and values to the international context and international standards. Social issues are increasingly fundamental to business reputation, market share, attracting consumers and employees, and avoiding greater government regulation.