IKEA and Child Labour

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Case Analysis - Ikea and Child Labour
This paper builds on the class discussion of the case:
Bartlett, C. (2006). IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor, by, Case Study from the Harvard Business School, No. 9-906-414
This paper outlined the issues raised by child labour in the supply chain, placing it in the context of international conventions related to child labour. The discussion are about the following topics: Is child labour always a bad thing? If IKEA does discover child labour in its supply chain, what options does it have to deal with it? How can it work with international stakeholders to prevent any future likelihood of child labour?

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IKEA and Child Labour

  1. 1. IKEA and Child LabourShirley LiMGMT 566 Sustainability & International Corporate CitizenshipMay 5, 2013
  2. 2. Li-2ContentsIntroduction:.....................................................................................................................................31. Issues raised by child labour in the supply chain (in the context of internationalconventions related to child labour)................................................................................................31) Damage to the goodwill and loss of sales: ......................................................................32) Difficulty to practice external monitoring in India and Pakistan: ...................................33) Large number of child labor and children work below minimum age:...........................44) Poorly enforcement of the child labour laws by local society and government: ...........42. Is child labour always a bad thing?..........................................................................................43. If IKEA does discover child labour in its supply chain, what options does it have to dealwith it?..............................................................................................................................................54. How can it work with international stakeholders to prevent any future likelihood of childlabour?..............................................................................................................................................5Bibliography......................................................................................................................................6
  3. 3. Li-3Introduction:IKEA is a global furniture retailer that was founded by Ingvar Kamprad half a century ago.With a successful business model of selling good quality and affordable furniture based onthe principle to “create a better life for the many people”(Bartlett, Dessain and Sjoman 2006,2), it keeps a pace of growing both in sales and expanding to all over the world. At themeantime, in order to support the sustainable expanding pace and keep the competency ofits price, global sourcing and a reliable supply chain becomes extremely important for IKEA.Although it has got significant achievement in dealing with suppliers in other countries, forexample support its suppliers in a long-term relationship and work actively with suppliers todeal with the environment issues, to manage its 2300 suppliers in 70 countries(Bartlett,Dessain and Sjoman 2006, 5) still create problems. One big challenge for IKEA in the mid of1990s is the use of Child Laborwhich happens quite common in some south Asian countrieslike India, Pakistan and Nepalwhere IKEA’s suppliers operate and once reported by Mediabrought great sales loss and damage to its goodwill.1. Issues raised by child labour in the supply chain (in the context of internationalconventions related to child labour)The UN convention on the rights of the Child defines the principles that the entireglobal society should put best interests for Child first. There are also other internationalorganizations like Swedish Save the Children, UNICEF and ILO(Bartlett, Dessain andSjoman 2006, 7) who are working for the protection of children. Issues raised by theviolation of this convention happens in India and Pakistan where some of IKEA’s supplychain extends to and the way IKEA deal with it could be concluded as below:1) Damage to the goodwill and loss of sales:In 1994, some media reported that a factory in Pakistan where children are workingin weaving looms is a supplier of IKEA. The UN convention to the rights of child hadjust been published five years ago so the awareness of social media and customersrequest IKEA to pay attention to it immediately otherwise the market response willbring instant damage to its sales.2) Difficulty to practice external monitoring in India and Pakistan:These two countries are not signatories to the ILO convention 138 that work for the
  4. 4. Li-4abolition of child labor under the age of 15, neither so they have strong awareness ofchildren labor is illegal, so it is difficult for IKEA to adopt some action to the supplierslocated in these two countries for example to appoint a third party monitor toensure no violation of child labour there.3) Large number of child labor and children work below minimum age:Child labor data was elusive according to the government figure but the actualnumber of child labor is very large and very small children are doing hazardous workwhich is clearly a violation ofthe framework as to the minimum age of ILO and UNconvention. In India, as many as 200,000 children are employed in the carpetindustry, and these factories have quite possibly becomesubcontractors of thesuppliers of IKEA.4) Poorly enforcement of the child labour laws bylocal society and government:In India poverty is considered to be a “socioeconomic phenomenon”(Bartlett,Dessain and Sjoman 2006, 7) because of poverty and under development, so boththe government and the poor families give tolerance to the child labor although it isa violation of local laws like Children Act and The Bonded Labour System Act andinternational convention like the Child Labour Act of 1986. The “bonded children”who work for the factories which is in the upstream of IKEA’s supply chain, in orderto pay off debts incurred by their parents were given very low wages and it’s almostimpossible for them to accomplish it.2. Is child labour always a bad thing?To argue whether child labor is good or bad, first we have to know the description of it.According to the Article138 on the Minimum Age for Admission to Employment, 1973 ofILO(United Nations n.d.), the children who are doing work when they too young or thework is too dangerous for them to do means child labour. The UN convention on therights of the child article 32 defines the work that “is likely to be hazardous or tointerfere with the child’s education or to be harmful to the child’s health or physicalmental moral or social development.”According to this I would say Child Labour IS definitely bad because it is a violation ofhuman right. Although there will always be argue that giving excuse to the poverty and
  5. 5. Li-5lack of development, this fact could not rationalize that child labour is good but shouldbe the opposite. Also it will become an excuse for the local government and the globalcompanies to ignore the fact of exploiting children if we give any condition to make childlabour a “good thing”.3. If IKEA does discover child labour in its supply chain, what options does it have to dealwith it?When child labour is found in its supply chain, IKEA should request its supplier who isusing the child labour to stop its act immediately and implement a corrective andpreventive action plan within a time frame. If violations occur again, IKEA shouldterminatefuture business with the supplier according to contract(IKEA n.d.).When adopting any new suppliers, an investigation of its past operation in regards ofuse of child labour should be especially noticed and sub supplier should be strictlycontrolled.In order to take care of the children who were working in the supplier’s factory, IKEAshould provide education and training to them and visit them often.If the use of child labour is not discovered by IKEA itself, IKEA should also apologies tothe consumers immediately for the bad influence it brought to the society as a model ofindustry.4. How can it work with international stakeholders to prevent any future likelihood ofchild labour?The use of child labour is an issue deeply rooted in the culture of some countries andthe fact of poverty and lack of social awareness has made the problem complicated.Hence IKEA should work closely with the international organization to tackle the problem,as well as the local government, trade unions and NGOs. The IKEA Foundation that IKEAcurrently operates has partnerships with UNICEF and Save the Children(IKEA n.d.).For future prevention of the child labour, IKEA and its monitoring team should workclosely with the international suppliers and sub suppliers to understand their situation,pay unexpected visit to them to prevent the possibilities of using a child labour(IKEA n.d.).More communication to the suppliers and giving them the education of prohibition ofusing child labour is also important.
  6. 6. Li-6BibliographyBartlett, Christopher, Vincent Dessain, and Anders Sjoman. "IKEAs Global SourcingChallenge:Indian Rugs and Child Labour." November 14, 2006.IKEA. Our Partnerships.http://www.ikea.com/ms/en_US/about_ikea/our_responsibility/partnerships/index.html(accessed May 5th, 2013).Our Partnerships.http://www.ikea.com/ms/en_US/about_ikea/our_responsibility/partnerships/index.html(accessed May 5th, 2013).United Nations. International Conventions on child labour.http://www.un.org/en/globalissues/briefingpapers/childlabour/intlconvs.shtml (accessed May5th, 2013).

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