No reason to be complacent: Sweatshops and Pope Francis

No reason to be complacent: Sweatshops and Pope Francis

(Part 4)

The Pope in his Message on the 2023 World Day for the Poor has raised the standards for helping the poor. Because of extreme poverty in the past, some societies have gotten used to ways of alleviating the plight of the poor that cut corners and offend the inherent dignity of those living in dehumanizing conditions. This applies especially to the world of labor in which in the name of cutting costs, multinational corporations tolerate inhuman conditions in factories which they relocate to the emerging economies. In his words: “Then too how can we fail to note the ethical confusion present in the world of labor? The inhumane treatment meted out to many male and female laborers; inadequate pay for work done; the scourge of job insecurity; the excessive number of accident-related deaths, often the result of a mentality that chooses quick profit over a secure workplace.” We are reminded of Saint John Paul II that “the primary basis of the value of work is man himself…However true it may be that man is destined for work and called to it, in the first place, work is ‘for man’ and not man ‘for work,’” (Laborem Exercens, 6).

Despite the fact that there have been commendable improvements in the way workers are treated in many industrialized countries, we still see remnants of the sweatshop environment in some developing countries to which multinational enterprises from the developed countries relocate their factory operations to benefit from lower wages. It is understandable that in the last century, after the Second World War, many countries in Asia were transformed into producers of labor-intensive consumer goods for the developed markets of the US, Japan, and Europe. All over Asia, countries experienced a baby boom after the soldiers returned to their homes with the end of the Second World War. In fact, this is the reason why those of us born during the 1940s and 1950s are referred to as the “baby boomers.” The demographic dividend was enjoyed by all the poor countries all over Asia. Their leaders had enough common sense to make use of their demographic dividend by implementing economic policies that fostered the growth of export-oriented industries such as garments, toys, footwear, furniture, and electronic products that were in great demand in the more developed nations. This was the way that countries like Singapore, Taiwan, South Korea, and, later, China were able to employ their abundant labor force and move up the income ladder. They became the famous “tiger economies” of Asia.

Tragically, the Philippines was the exception. In the name of “nationalism” and a “Filipino First” policy, the strategy followed by the economic managers after the country obtained independence in 1946 was an “inward-looking, import-substitution industrialization” that failed to make use of our own demographic dividend. Worse still, there was an utter neglect of agricultural and rural development. The rest is history. As our Asian neighbors attained higher-income status, one by one surpassing us in per capita income, we became the “sick man” of Asia during the last quarter of the 20th century. This wrong path we took in the early stages of our industrialization efforts explains why we are the least export-oriented economy in East Asia. Our export figures, especially of manufactured goods, pale into insignificance compared with our East Asian neighbors. It is only in the export of electronic products and semi-conductor devices that we have had relative success in competing with our neighbors.

Considering the recent remarks of Pope Francis about how human labor is exploited in the name of profits of multinational corporations, should we really insist in still competing with countries like Vietnam in attracting labor-intensive industries, especially those that are leaving China? I have strong reservations. First, it is too late in the day for us to compete with countries like Vietnam in attracting foreign direct investments (FDIs) in export-oriented manufacturing. We failed in the past to develop the necessary economic support for export-oriented industrialization, especially low-cost energy and low level of wages. Vietnam has much lower energy costs and wages than the Philippines, a major reason why factories from China are migrating to it rather than the Philippines. Unfortunately, however, for the Vietnamese workers, their factories are still notorious for the sweatshop environment which should no longer be tolerated in the 21st century — all over the world there has been significant progress in eliminating practices which go against the inherent dignity of human beings. True, there are those who argue that sweatshops help to lift people out of poverty by providing them with much-needed employment opportunities. They also claim that sweatshops can contribute to long-term economic progress by increasing demand for goods and services within the domestic economy.

The human costs of sweatshop industries may outweigh the economic benefits. Many of these factories, as have been revealed in garments and footwear factories in Vietnam, have poor working conditions. Workers are often exploited and subjected to health hazards, all in the name of profits for multinational companies. Workers typically work long hours with minimal breaks, sometime even forced to work overtime without extra pay. They lack safety equipment such as gloves or masks, leaving them vulnerable to injury and illnesses caused by their work environment. Many workers are paid extremely low wages, barely enough on which to survive. In socialist countries like Vietnam, workers are not allowed to unionize or speak out against unfair treatment. That is why wages can be kept at unreasonably low levels which make it difficult for them to afford basic necessities like food, clothing, and shelter. In many cases, workers may be forced to work long hours or take on additional jobs just to make ends meet.

Long-term employment in sweatshop factories can have detrimental effects on the human resources of a country. The poor conditions described above can lead to chronic pain, respiratory problems, and psychological distress such as anxiety and depression. Lack of proper safety measures and exposure to hazardous materials only exacerbate these issues. Additionally, the pressure to meet quotas and work long hours for low pay can lead to exhaustion and burn out.

The physical environment can also be negatively affected. The rampant growth of these sweatshop factories has caused severe environmental degradation and pollution. Harmful chemicals are released into the air and waterways, causing a ripple effect that extends far beyond factory walls.

Considering all these, I suggest that we do not compete with Vietnam (and other Southeast Asian countries) for the factories that are leaving China. The FDIs we should attract should be those that endow our economy with world-class airports, trains, subways, and other infrastructure, as well telecom facilities that will make it possible for us to target tens of millions of foreign tourists, following the example of Spain. It has been estimated that we employ two workers in the hospitality industry for every foreign tourist who visits the Philippines. We are not even counting the 60 to 70 million domestic tourists. Workers in the hospitality sector can live in better working conditions than in the sweatshop factories.

In general, Filipinos are better employed in service-oriented businesses because of their soft skills. We have already lost the battle in export-oriented manufacturing because of the false start we had in the last century. No use crying over spilled milk. We can still have a flourishing and strong manufacturing sector supported by our huge population (swelling to about 150 million in the next 20 years and earning a per capita income of $15,000 to $20,000 as we attain high-income status).

More importantly, we can avoid what Pope Francis called “the ethical confusion present in the world of labor: the inhumane treatment meted out to many male and female laborers, etc., etc.”


Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.