ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Industry : Improving Labour Standards

Over the last decade multinationals have had to contend with criticism over a number of issues. The most significant of these has been overcharges that these corporates operating in third world countries permit working environments that are unsafe and unhealthy, that they pay low wages, keep labour in ‘slave’ conditions and engage in unfair labour practices. This campaign has prompted a renewed interest in corporate codes of conduct. The initial impetus for such codes came after the pricing scandals of the 1980s in the US defence industry and by 1986 a common business ethics and conduct code had been evolved for and by defence industry contractors.

Over the last decade multinationals have had to contend with criticism over a number of issues. The most significant of these has been overcharges that these corporates operating in third world countries permit working environments that are unsafe and unhealthy, that they pay low wages, keep labour in 'slave' conditions and engage in unfair labour practices. This campaign has prompted a renewed interest in corporate codes of conduct. The initial impetus for such codes came after the pricing scandals of the 1980s in the US defence industry and by 1986 a common business ethics and conduct code had been evolved for and by defence industry contractors.

The enactment of the US Sentencing Guidelines in 1991 which offered monetary incentives for companies instituting ethical guidelines or compliance programmes further prompted changes beginning with internal guidelines regarding the acceptance of money or gifts in business transactions. The big impetus for comprehensive codes of conduct came with the growth of consumer action against unethical labour and marketing practices. A case in point was the very successful campaign against Nestle's marketing of baby food in third world countries, because of which its sales suffered and it was forced to change its product range and marketing strategies. An ILO note on 'Codes of Conduct' quotes a 1995 poll of 30,000 consumers in UK which showed that one in three had boycotted stores or products because of concern for ethical standards and this seemed to be a broadening trend. Some corporations when confronted with the unethical practices adopted by their contractors in third world countries closed down these operations, as Levi Strauss did in China. The Conference Board, a no-profit non-advocacy business membership and research organisation which documents and monitors such codes all over the world records that by 1991 most codes included workplace and labour, environmental, marketing and product safety concerns.

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