Primark’s Labour Exploitation – Business Ethics Case Study

[pic 2]

TABLE OF CONTENT

INTRODUCTION        2

BRIEF EXPLANATION OF THE CASE        3

Q1: WHY IS IT A BUSINESS ETHICS CASE?        5

Q2: WHO ARE THE STAKEHOLDERS?        6

Q3: WHICH BUSINESS ETHICS THEORY CAN BE USED TO EXPLAIN THE CASE?        8

Q4: WHAT CAN YOU DO DIFFERENTLY IF YOU WERE IN THE SAME POSITION?        10

CONCLUSION        11

LIST OF REFERENCES        12

INTRODUCTION

Primark is an Irish clothing retailer company founded in 1969 by Arthur Ryan who opened his first store in Dublin, Ireland under the name of Penneys. The company offers a diverse range of products from baby and kids, to women, men, home ware, accessories, beauty products and confectionery for very reasonable price. Due to this below average prices combined with trendy clothes the company could quickly gain success among customers and expand rapidly throughout the years. Today Primark operates in over 300 stores in eleven countries across Europe and America. In Ireland the stores are called Penneys while outside Ireland they use the name Primark^[1].

Despite of the initial success nowadays, the company is facing with unethical issues including labour exploitation or child labour. Primark benefits from offering low cost price for the clothes they want to sell, and at the same time they maximize their profit by outsourcing the production in developing countries that offer the cheapest labour costs. In the „third world” factories employees have to work for long working hours (most of the time about 10-12 hours per day) and they are usually underpaid, not even reach the minimum standard. Primark tends not to be concerned about these unethical (gossips) activities including child labour, wages below living standard and inhuman working conditions. As one of the largest fashion retail industry in the world, Primark does not demonstrate respect for its suppliers’, employees and customers and they do not care about their health or safety.

In addition, Primark not only violate the rights of the workers but also its company’s code of conduct. It is a bit ironic that the ethical practices of the company are based on three key values: employees, partners and community. In its code of conduct the company outlines that their workers should be treated ethically but in reality, the implementation of the company’s behaviour is unfortunately far from what we call ethical behaviour^[2].

In this paper, Primark’s unethical case will be explained in a structured way as follows. The next section focuses on the brief explanation of the case, continued with answering the questions about why the case is considered to be a business ethics case and who are the stakeholders. The third section will deliver answers about which of the theories are related to case, and the last section is about recommendations and conclusion.

BRIEF EXPLANATION OF THE CASE

Primark is a subsidiary company of the Associated British Foods Group which was launched in Ireland and by 2000 they were operating over 100 stores across Britain. By 2012, it had 238 branches across the UK, Ireland, and Europe. Primark’s prices rely on low costs that are achieved through economies of scale and efficient distribution.^[3] Primark works closely with the suppliers and factories that produce its goods. When selecting new suppliers and factories, Primark requires them to go through a selection process. This enables to decide whether the working conditions are appropriate or improvements are necessary.^[4] 

The company sets out the core principles in their code of conduct that suppliers and factories must follow to ensure that all workers making its products are treated decently, paid a fair wage, and work in good working conditions. In its code of conduct, Primark states that the wages and benefits that are paid for a standard working week meet at least the minimum, national legal standards or industry benchmark standards or even higher. In any events wages should always be enough to meet the basic needs and to provide some discretionary income.^[5] Primark joined the Ethical Trading Initiative (ETI) in 2006, a collaborative organisation which brings together businesses, trading unions, and NGO’s to work on labour right issues in their supply chain. ETI members commit to work towards the implementation of the code of conduct based on the International Labour Organisation’s core conventions.^[6]

In 2008 a BBC undercover investigation reported that the working conditions of the workers in Indian factories that were supplying clothing to Primark were illegal and unethical. The investigation also included child labour which was the worst among all unethical practices. The company was alerted to the use of child labour in southern India.^[7] One of investigations revealed that children were working sewing sequins and beads on to Primark’s tops until late at night by candle light because of poor electricity. Primark responded with the statement that the company is an ethical organisation and it will take its responsibility seriously.^[8] Primark also ended contracts with three of its suppliers in India but they had to face with mass boycott and organised protests.^[9]

Later in December 2008, similar concerns were raised and published regarding the suppliers of Primark in Bangladesh. The women working in those factories were subjected to a variety of unethical labour practices including sexual abuse.^[10] In early 2009 one of Primark’ suppliers was discovered to be using illegal immigrants as labour and was paying them less than the minimum wages. According to research by War on Want, workers stitching Primark clothes in Bangladesh earn so little. They cannot eat properly and end up malnourished. During one of the interviews with the charity shows the workers claimed that they have to work up to 84 hours a week without access to drink water and they were subjected to verbal threats and banned from joining a trade union. Responding to the scandal, Primark promised to redouble its effort to end sweatshop labour along with setting up the Ethical Primark website. But latest evidence showed that the improvements did not make differences. ^[11]