This document discusses some of the ethical challenges with offshoring. It examines the issues of job losses, worker conditions, and environmental impact from three perspectives: what the public thinks, what the media reports, and what the facts show. While offshoring is often criticized for job losses in developed countries, economists argue that it leads to cheaper goods and new jobs being created elsewhere in the long run. Studies of factories in China show issues like overtime exceeding legal limits and low wages, but offshoring also improves conditions in developing countries by creating jobs. Offshoring shifts carbon footprints rather than reducing them, as top polluters are now China, US, and other countries with large offshore manufacturing sectors. In conclusion, there are

1. Ethical Challenges with Offshoring
Karlis Lucs
Andrejs Pašņevs
Gurubhaskar C.
Vishal Verma
November 22, 2012
Riga Business School, Riga LV

2. Why are we here?
Offshoring brouhaha
Different stakeholders, expectations
No one approach is right

3. 3 things
Jobs
Worker conditions
Environment

4. 1st issue: Job Export

5. What do the people think?
Loss of jobs = unethical move

6. What does media say?
Goldman Sachs is set to cut 250 jobs across
its global operations as it moves some work
to India.
Tax break fuels anger over outsourcing-
related layoffs in Fla.
Forrester Research: Outsourcing jobs
outflow estimated to hit 3.3 million by 2015.

7. What do economists say?
Short term job loss = cheaper goods
Cheaper goods = more money saved
More money saved = More money
spent elsewhere
More money spent = new jobs

8. What’s the truth?
Semi skilled workers – worst affected
1/3  No job
1/3  Less money
1/3  Life’s the same!

9. What’s the truth?
Lose-Win?
China ≈ Germany
min 25k yuan/yr - 77% (2008)  10% (2015):
FDI(2003) = 82x FDI(1983)

10. What’s the truth?
Offshorers ≠ Biggest job creators
(2% - 1990 - 2008)
Increased efficiency = More hirings than
layoffs
(2000 – 2007)

11. What’s the truth?
Low unemployment?
1983-10.4%, 1992-7.3%, 2008-5%
SMEs save the day

12. So what’s the conclusion?
Offshoring ain’t all that bad.

13. 2nd issue: Work conditions

14. What do people think?
Offshoring = bad work conditions =
unethical

15. What does media say?
Forced to stand for 24 hours, suicide nets,
toxin exposure and explosions': Inside the
Chinese factories making iPads for Apple
H&M, Walmart, Abercrombie & Fitch, the
Gap, Nike, Limited Brands, Calvin Klien,
Phillip Morris, Victoria’s Secret, KYE, Forever
21, Aeropostale, Toys ‘R’ Us, Hershey’s

16. What’s the truth?
8 Samsung factories
>100 hrs overtime; 36 hrs legal
Salary = ½ overtime money
Standing work – 11 to 12 hrs
No labor contracts

17. What’s the truth?
10 Foxconn factories
>50% dispatch workers
Local min. wage
300 hrs/month
Max median age: 32

18. What’s the truth?
Top 10 factories
Min. wage not sufficient
Overtime = 36-160 hrs
Exceedingly high labor utilization; one action
every 3 seconds
No labor contracts
1/3 workers < 18

19. Here’s the proof
http://www.youtube.com/watch?v=pO
g8QbKEkL8
http://www.youtube.com/watch?v=Jk-
xqPKOxl4

20. What do the workers feel like?
Chinese least job-satisfied among
Asians despite max. jobs
Only 49% consider their job ideal

21. So what’s the conclusion?
Offshoring hurts people.

22. 3rd issue: Environment

23. What do people think?
Offshoring = bad environment =
unethical

24. What’s the truth?
Top CO2 emitters: China, US, EU,
India, Russia

27. What’s the truth?
Offshoring = low CO2 emission from
US

28. What’s the conclusion?
Offshoring = Movement of carbon
footprint
Offshoring = Pollution anyway!

29. 4th issue: There is no 4th issue

30. Final Picture
+ve stakeholders -ve stakeholders
Jobs Companies (short run) Home people (short run)
Home people (long run)
Host people
Host govt.
----------------------------------------------------------------------------------------------------------------------
Worker Home businesses Host people
Conditions
-----------------------------------------------------------------------------------------------------------------------
Environment Home businesses (short run) Everyone
Home people (short run)

31. Thank you!