Gap has faced longstanding labor problems involving child labor and poor working conditions at supplier factories. While Gap has policies against these issues, its internal monitoring system failed to identify problems at some factories. This document discusses debates around whether Gap should rely solely on its own monitors or hire third-party monitors, how much responsibility Gap bears for supplier violations, and what level of wages and benefits it should require of suppliers. It also provides recommendations, such as improving Gap's monitoring system and compliance practices, to help Gap better address these issues going forward.

1. Gap's Labor
Problems
Prepared By:
Utkarsh Saxena

2. CHILD LABOUR
• Violates a nation’s minimum age laws
• Threatens children’s physical, mental, or emotional
well-being
• Involves intolerable abuse, such as child slavery,
child trafficking, debt bondage, forced labour, or
illicit activities
• Prevents children from going to school
• Uses children to undermine labour standards

3. COUNTRIES INVOLVED
The countries normally covered by Child Labour are
India, Bangladesh, Brazil, Nepal, Thailand, El
Salvador, Pakistan, Costa Rica and Tanzania.

4. FACTS
• Approximately 250 million children work worldwide.
• They are deprived of a basic education as well as
their health and a chance at a normal family life.
• UNICEF says, “Young children are often made to
work long hours in cramped and squalid conditions”

5. Case Study: GAP
The Gap Inc. Francisco. As of September 2008, Gap, Inc. has
approximately 135,000 direct employees and operates 3,076 stores
worldwide, of which 2,551 are in the United States. On October 28,
2007, BBC footage showed child labour being used in Indian Gap
factories. Gap has denied that it was aware of such happenings and
that it is against its policy to use child labour. The clothing in
question was removed from 3000 stores around the world and was
destroyed. As of November 2007, a big proportion of the company's
clothes were made in India, which has become the world's capital of
child labour. Of the estimated 218 million labourers worldwide who
were younger than 14, around 45 million were from India, and they
accounted for around 20% of the country's GDP. Gap says it
employs 90 people across the globe to supervise compliance with its
rules. Gap have said they have revoked approval for 136 plants
which have failed to comply with its standards.

6. Better strategy would be to identify and
correct weaknesses of its internal monitoring
system instead of giving in to the political
pressure of third party monitor.

7. 1. In your view, should Gap have given in to the union's 1995
demand that it should hire a third-party independent group to
monitor the Mandarin plants instead of relying on its own
inspectors and the word of factory owners? Should Gap have
done anything more?
 From bottom to up information hierarchy of Rational
Organization, there was communication gap between the
lower layer monitoring Gap’s factories and top management
due to which top management was not aware of human rights
violation issues within Gap; that is why monitoring system of
Gap was not working with maximum efficiency.
 we are of the view that GAP should not have given up to
Union’s demands of hiring third party monitor
Question & Answers

8. 2. Is a company like Gap morally responsible for the way its
suppliers treat their workers? Why or why not?
 Moral responsibility lies on following points;
1) If employer can and should improve the conditions.
2) Knows about them.
3) Is not prevented from changing them.
 GAP has defined code of conduct for Vendors.
 Gap has given contracts to third party vendors
and signed an agreement that asks these vendors to comply
with the Gap's requirements

9.  According the Los Angeles Times, "Gap is now viewed as a
leader in the small but growing corporate movement to
improve conditions for some of the world's most exploited
workers." The paper states that the company has wielded its
buying power in Africa, Central America, and Cambodia to
help improve factory conditions and is encouraging other
manufacturers to follow suit. "No one company created these
issues, and no one company can fix it by itself," said Alan
Marks, Gap's chief spokesman. Source: Los Angeles Times,
Jan 17, 2005

10. 3. Should companies like Gap attempt to get their suppliers to
pay more than the local industry standard when it is
insufficient to live on? Should they pay wages in the Third
World that are equivalent to U.S. wages? Should they provide
the same levels of medical benefits that are provided in the
United States? The same levels of workplace safety?
 Ethics of care:
Yes companies like GAP should attempt to get their suppliers
to pay more then the local industry, WHEN IT IS
INSUFFICIENT TO LIVE ON.

11.  BUT the wages in any given
economy should be based on the
following factors rather then
comparison with the United States
or where the head quarter of
company located.
 Productivity level of employees.
 Revenues made by the company.
 Living wage and living cost in that
nation.
 Local labor markets.

12.  So by Ethics Of Care
companies like GAP should
force their suppliers to
provide maximum work place
safety, by eliminating job
risks, compensation for high
risk jobs and full awareness
of the hazards of a job to
employee.

13. 4. In your view, and in the light of the fact that Gap's own
monitors had not reported the sweatshop conditions and
unpaid overtime in its Saipan factories that these were in
compliance with all applicable worker health and safety laws,
was it right for Gap to settle the lawsuit? Should Gap have
settled the lawsuit? Explain.
 Incorrect reporting of monitors of Gap is a weakness in Rational
Model of Organization, which needs improvement, as we are
supporting it from the beginning.
 GAP was initially resistant for an out of the court settlement and
tried to fight the case. Later, Gap felt that out of court settlement
was eminent due to ineffective performance of monitoring
department of The Gap.
 This shows in overall, the rational and ethical behavior of a business
organization.

14. 5. In light of the long history of labor problems that Gap has had
to contend with, what recommendation or recommendations
would you make to Paul Pressler concerning what the
company should now do to deal with these and future
problems? Explain how your recommendations will
effectively solve these problems for Gap.
 Implementation of a Rational Model of an Organization.
 Improvement in internal monitoring system.
 cram the reasons behind futile performance of monitoring
department.
 Strong compliance of vendor code of conduct by suppliers,
take account of their history of working conditions,
beforehand.

15. 6. From an ethical point of view, assess Kernaghan's ending
statement concerning the issue of unions. Should Gap require
unions?
 In economies that are paying poverty wages, when people
have no rights and no power, what you end up monitoring are
well-run prisons," he says. "Sure, factories will be cleaned up.
They'll have bathrooms where the water runs. But when it
comes to wages, when it comes to having a democratic voice
on the shop floor, monitoring and codes of conduct are a dead
end."