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September 03, 2021

Could sweatshops actually be good for poor nations?

Back in 2003 or so, there was a particularly strong Western backlash against sweatshops.

Not to say the labour sites were ever in vogue, per se, but brands like Sean John, Gap and Tommy Hilfiger got a particularly nasty public recoil when it was revealed how they manufactured their goods.

Yet could what we think about sweatshops, somehow, be misguided? Could sweatshops, despite the obvious connotation the word carries, actually be good for the workers inside them?

Now before you get out your “MSN, fire this moron!” stationery, let me preface this post by saying this is not my idea. It belongs to Benjamin Powell, an assistant professor of economics at Suffolk University. He’s somewhat of an expert on the economies of poorer countries, and is currently writing a book called No Sweat: How Sweatshops Improve Lives and Economic Growth.

That title alone leads you to think Powell is a nut, but let’s hear him out.

Powell starts his post on AidWatchers.com like this: “Back to school shopping leads many people to buy apparel that was made in sweatshops. Rather than feel guilty for ‘exploiting’ poor workers, shoppers should rejoice. Their spending is some of the best aid we can give to people in poorer countries.”

The basis of Powell’s argument, as he goes on to write, is that in spite of the unsafe, low-paying circumstances afforded sweatshop workers in poor nations, they are often much more generous than the compensation given employees of other industries in such countries.

According to the professor’s research, so-called sweatshop worker earnings equalled or exceeded the average national income in 9 of 11 studied countries. In four of those nations, sweatshop worker earnings more than doubled the national average.

Further, he notes, sweatshops – for all their toxicity when mentioned alongside a company’s name – also play a “crucial” role in economic development in poverty-stricken countries. They both attract international investment to poor nations and help jumpstart their own economies.

“It was not long ago that sweatshops existed in now-wealthy Asian countries,” Powell notes.

Powell’s case, then, seems to hinge on the name “sweatshop” and how the world’s overstated just how lousy these places are based on the negative inference of the word. Still, for all his accompanying research, this sure appears to be a case of arguing in support of the lesser evil.

Shouldn’t the focus be on improving labour conditions in these nations overall rather than justifying sweatshops – which even Powell admits carry savage work environments – because they stack up well against other work in poverty-rich regions?

What do you make of Powell’s stance? Could sweatshops actually be a good thing for poor countries?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...