A 2023 report by the Organization for Economic Cooperation and Development shows that global unemployment rates have dropped after the pandemic, and continue to remain stable. It means there are more jobs, and more people are working. It paints quite an optimistic picture of the global job market.
But here’s the catch- real wages have dropped. People are not getting paid enough to keep up with inflation. It means they are probably putting in more work for less pay. They are settling for lower paying jobs. This is a time when national governments need to support their low-wage workers.
In context of these global developments, what are governments really doing for their workers? In this article, we will look at the labor laws and working conditions, and discuss why it is important to have strict ethical standards for outsourcing partners.
Labor laws
The Labor Rights Index (2022) evaluates the labor laws in different countries based on criteria like fair wages, decent working hours, employment security, maternity support, child/forced labor, etc. The report shows great disparity in terms of how workers are treated.
For example, Nordic countries like Finland and Sweden have made it to the top ten, with equal opportunities for all genders and paid paternity leave. On the other hand, Bangladesh and UAE rank in the bottom ten, with severe wage gaps across different groups of people.
Child labor
On a global level, 91% of countries prohibit child labor; in fact this is one law that most countries follow uniformly. But there are alarming exceptions to this, e.g., Mongolia has set the employment entry age lower than the compulsory schooling age, which makes it easier for families to stop education and put children to work.
Ethical standards of employment
A report by the International Labor Organization showed that more than half of the workers across various regions are required to do repetitive body movements during manual labor, which is a risk to their physical health. One in five employees is exposed to high temperatures.
In European countries itself, one in three workers reported tight deadlines and high speed work that involves not just physical and mental efforts, but also emotional labor. Even more alarming are the differences in working hours.
In European countries, about 15% of people work more than 48 hours. In China and Korea, a staggering 40% work more than 48 hours per week. In Turkey and Chile, the number exceeds 50%.
Beyond these statistics, there are many untold stories of unhygienic working conditions, mistreatment, deadly accidents without healthcare support, violation of job contracts by employers, and so on. As you can see, there are some dark truths about how workers are treated across several countries. As an outsourcing employer, one needs to be aware of these practices, to avoid being a part of the problem
Ethical considerations in outsourcing
Many employers misunderstand outsourcing as a way of obtaining cheap labor and profiting from the currency value difference. This is not just unethical, but also an oversimplified and rather childish way of looking at it.
First of all, outsourcing is meant to simplify things for your company. But when you do it with the intention of “getting done with it” at a cheap price, you lose out on a lot of value. It’s like replacing an expert in the boardroom with a distant vendor who offers cookie-cutter solutions for your unique problems.
Secondly, it is unethical on many levels. Doing so is a sign of devaluing the potential and talent of the person, just because of their nationality. You might even (intentionally or unintentionally) be taking advantage of someone who is desperate to make money.
Compassion before cost-efficiency
The reason why many companies outsource is need for cheap labor. Earlier, I mentioned how it’s not always an efficient approach. Apart from that, it’s important to do your research before approaching a platform like an outsourcing company or profile. Background check for legal clearance and ethical standards is as important as negotiating fees.
Finding the right vendors
The first step to finding an ethical outsourcing partner is understanding your own priorities. For example, the region you are targeting may be especially vulnerable to wage gaps and long working hours.
So these two will be on your priority list when it comes to ethical standards. In fact, you might find certain certifications and ranking systems that will give you an unbiased view of how the company fares on various ethical aspects.
Next, look up the labor laws for that region; it is important to understand fair labor practices so that you don’t get into legal trouble. One part of the process is being legally in the clear. The second task, is to take a look at their work policy, so that you avoid being in any ethical grey area. It will save you potential legal fees, plus you can live with a clear conscience.
Benefits of ethical outsourcing
Employee-partner trust
When your stakeholders know you care about ethics, be it outsourcing, obtaining raw materials for production, hiring, or any other process- they have more confidence and trust in you. Interpersonal trust is very important in professional relations.
Company reputation
Companies who are clear on their moral compass definitely stand out in the market. It’s important to emphasize your ethical commitments as a part of your vision and mission. Lastly, and most importantly. it is crucial to follow through on the promises you make about ethics and fair trade- and ethical outsourcing is one way of doing that.
If you are in the process of searching vendors for outsourcing, we hope this article gave you a glimpse of the ethical and legal considerations involved in outsourcing, especially abroad. Go ahead, and do business with a clean conscience!
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