Child Labor in the Developing World

Stephen DeAngelis

January 28, 2009

Unicef reports that an estimated 158 million children aged 5-14 are engaged in child labor. That represents one in every six children in the world. Everyone agrees that the best place for children is in school; but the hard reality is that millions aren’t and won’t be. Those who aren’t in school, according to Unicef, are often found “engaged in hazardous situations or conditions, such as working in mines, working with chemicals and pesticides in agriculture or working with dangerous machinery. They are everywhere but invisible, toiling as domestic servants in homes, labouring behind the walls of workshops, hidden from view in plantations.” The World Bank insists “that child labor is one of the most devastating consequences of persistent poverty.” That being the case, it might seem surprising that New York Times‘ columnist Nicholas Kristof wrote a column in which he claims that in some cases having children working in a sweatshop is a good thing [“Where Sweatshops Are a Dream,” 14 January 2009]. He submitted his column from Cambodia.

“Before Barack Obama and his team act on their talk about ‘labor standards,’ I’d like to offer them a tour of the vast garbage dump here in Phnom Penh. This is a Dante-like vision of hell. It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires. The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage. Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough.”

That sounds harsh — and it is. Kristof isn’t an anti-labor reactionary ranting against the excesses of corrupt labor union leaders. Nor is he arguing against the value of labor standards or the need for them. And he certainly isn’t arguing that it is better for children to be at work than at school. The point that Kristof is making is that labor standards, if enacted, need to take into account local conditions and needs.

“Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children. ‘I’d love to get a job in a factory,’ said Pim Srey Rath, a 19-year-old woman scavenging for plastic. ‘At least that work is in the shade. Here is where it’s hot.’ Another woman, Vath Sam Oeun, hopes her 10-year-old boy, scavenging beside her, grows up to get a factory job, partly because she has seen other children run over by garbage trucks. Her boy has never been to a doctor or a dentist, and last bathed when he was 2, so a sweatshop job by comparison would be far more pleasant and less dangerous.”

Kristof makes it clear that just because working in a sweatshop might be more pleasant work than scavenging around in a toxic waste heap it doesn’t justify ignoring the working conditions in sweatshops. On the other hand, he insists that eliminating sweatshops rather than working to improve working conditions there is also the wrong tactic.

“I’m glad that many Americans are repulsed by the idea of importing products made by barely paid, barely legal workers in dangerous factories. Yet sweatshops are only a symptom of poverty, not a cause, and banning them closes off one route out of poverty. At a time of tremendous economic distress and protectionist pressures, there’s a special danger that tighter labor standards will be used as an excuse to curb trade. When I defend sweatshops, people always ask me: But would you want to work in a sweatshop? No, of course not. But I would want even less to pull a rickshaw. In the hierarchy of jobs in poor countries, sweltering at a sewing machine isn’t the bottom. My views on sweatshops are shaped by years living in East Asia, watching as living standards soared — including those in my wife’s ancestral village in southern China — because of sweatshop jobs.”

Kristof clearly understands what most people in the development community understand — jobs are the key to a better life. The creation of jobs is an essential activity for any country mired in poverty, especially if it has a burgeoning population.

“Manufacturing is one sector that can provide millions of jobs. Yet sweatshops usually go not to the poorest nations but to better-off countries with more reliable electricity and ports. I often hear the argument: Labor standards can improve wages and working conditions, without greatly affecting the eventual retail cost of goods. That’s true. But labor standards and ‘living wages’ have a larger impact on production costs that companies are always trying to pare. The result is to push companies to operate more capital-intensive factories in better-off nations like Malaysia, rather than labor-intensive factories in poorer countries like Ghana or Cambodia.”

Kristof points out the fallacy of one the big arguments used against globalization. Detractors claim that companies scour the globe looking for low-cost labor to exploit. As Kristof points out, that simply is not true. The countries with the greatest numbers of low-cost laborers have been the last countries to benefit from globalization. Manufacturers are looking for low-cost countries not just low-cost labor. Such countries must achieve a minimum level of competence in areas such as the rule of law, security, infrastructure, and so forth. Countries that struggle to survive because they don’t meet those minimum standards need to be helped to achieve them. That is the motivating principle behind Enterra Solutions’ Development-in-a-Box™. Kristof reports America’s best foreign policy objective would be to help developing countries attract manufacturing — in other words, to help make them low-cost countries.

“Cambodia has, in fact, pursued an interesting experiment by working with factories to establish decent labor standards and wages. It’s a worthwhile idea, but one result of paying above-market wages is that those in charge of hiring often demand bribes — sometimes a month’s salary — in exchange for a job. In addition, these standards add to production costs, so some factories have closed because of the global economic crisis and the difficulty of competing internationally. The best way to help people in the poorest countries isn’t to campaign against sweatshops but to promote manufacturing there. One of the best things America could do for Africa would be to strengthen our program to encourage African imports, called AGOA, and nudge Europe to match it. Among people who work in development, many strongly believe (but few dare say very loudly) that one of the best hopes for the poorest countries would be to build their manufacturing industries. But global campaigns against sweatshops make that less likely.”

One of the reasons that analysts use “purchasing power parity” to compare the quality of life in different countries is the obvious fact that the cost of basics varies from country to country. An apple may cost 50 cents in one country and a nickel in another. In America, retirees often look at the cost of living in different areas of the country before deciding where to live out their golden years — a form of purchasing power parity. Kristof’s point is that the developed world’s labor standards cannot be easily transferred into the developing world. He concludes:

“Look, I know that Americans have a hard time accepting that sweatshops can help people. But take it from 13-year-old Neuo Chanthou, who earns a bit less than $1 a day scavenging in the dump. She’s wearing a ‘Playboy’ shirt and hat that she found amid the filth, and she worries about her sister, who lost part of her hand when a garbage truck ran over her. ‘It’s dirty, hot and smelly here,’ she said wistfully. ‘A factory is better.”

There is much left to be said that Kristof didn’t write. One must look back at the industrial revolution and how workers were exploited to understand why labor unions and labor standards emerged. Even though jobs are important and manufacturing can supply them, that doesn’t justify the continued exploitation of workers. If the terrible labor strife that many developed nations went through is to be avoided, developing countries must be constantly looking for the right time to enact evolving labor standards that protect both jobs and those that fill them. According to a 2004 United Nations International Labor Organization (ILO) report, “The benefits of eliminating child labour would be seven times greater than the costs.” But there was a big caveat to that statement: “Reaping the economic value of expanded education depends on countries’ ability to create new jobs, take advantage of higher levels of human capital and develop economic policies to stimulate growth.” That is the Catch 22 with which Kristof’s column deals. The faster the international community can assist developing countries to create jobs, the sooner the world will be able to eliminate the scourge of child labor and ensure that all workers labor in more favorable conditions.