Primark’s Labour Exploitation – Business Ethics Case Study

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In April 2013 the Rana Plaza factory in Bangladesh collapsed, killing more than 1000 workers. They were garment workers for outsourced operations from fashion brands, including Primark as well. This incident happened due to bad operations management of key supplier companies. It is well known that the garment workers are housed in illegal buildings with poor working condition. The Rana Plaza disaster shows that the garment companies turned a blind eye to the safety standards. Primark as well as other companies failed to act proactively to improve the working conditions of their supplier’s factories.[12]

In the following year, Primark was reported again due to serious labour and human right violations by girls and young women. The report highlighted some of the factories Primark sourced from. The girls and young women were lured from their home villages by false promises and they worked under appalling conditions. [13] Another issue emerged in 2014 when one of the customers claimed that the dress she purchased from Primark store in Swansea contained a label: “forced to work in exhausting hours” stitched along with washing instructions.[14] Another customer also found another label with the message saying “degrading sweatshop conditions” in trousers she bought. Later on, Primark claimed that the respective factory had been checked nine times by an “ethical standard team” in the last five years without finding any evidence for unethical practices. However, 31% of Primark’s factories were rated as grade 3 which means that ethical compliance was not met and significant and numerous issues were found.

Q1: WHY IS IT A BUSINESS ETHICS CASE?

Ethics is the discipline that examines your moral standard or the moral standard of the society. It asks how these standards apply to your life and whether these standards are reasonable or unreasonable. Business ethics is a study of our moral standards insofar as these apply to business, how reasonable or unreasonable these moral standards we have absorbed from society are, and the implication our moral standards have for business activities.

This Primark fashion industry case is considered to be a business ethic case because it questions about the implication of moral standards held in the company’s business activities. Although the company is trying to defend itself from the recent scandals about the working conditions in Bangladesh, the use of child labour and inappropriate wages are totally denied by the company. However, the investigation of BBC has revealed these unethical issues as well. The company’s lack of control about their subcon factories can also be considered as unethical behaviour for what the best example is the tragedy happened at Rana Plaza factory in Bangladesh. As the mother company, Primark should be responsible for the whole supply chain process of their production including all the stakeholders who are going to be specified in the next section.

The labour exploitation case of Primark violates the moral standards, because it neglects the human rights, the rights to receive minimum standard of salary and the rights to have safe and healthy working conditions. Despite the denial the company also used (are still using) children as labour force who should get basic education rather than work in a sweatshop with bad safety conditions for low (or even no) salary. The Primark’s factory in Bangladesh took advantage of the poor conditions and hopelessness situation of refugees who suffer from bad economic conditions. Primark benefited from this exploitation at the other side of the world gaining abundant financial benefits by selling low price but trendy clothes for the European and American market. The contradiction between the low conditions of the workers in Bangladesh and the abundant profit generated by Primark is the reason why this case is considered as business ethic case.

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Q2: WHO ARE THE STAKEHOLDERS?

Stakeholders are all the people or group of people who have interest or concern in the specific organization. In our Primark case we distinguish the following stakeholders:

- The suppliers (Subcon):

The supplier is the most important stakeholder of this case. One of Primark suppliers is called Rana Plaza factory in Bangladesh, which was actually burn down by accident and killed more than 100 employees. The safety and work conditions in Rana Plaza factory were not appropriate so in that emergency case they could not survive[15]. Primark also has several other factories in Bangladesh which also conducted non ethical practices toward their workers and suppliers. Companies rely on their suppliers heavily so they really affect the company’s business and operation and also their reputation. Thus, manage suppliers by setting strict standards and regulations and good management control system is essential and beneficial for the company.

- The retailers & Customers:

Beside suppliers, Primark’s retailers are also considered to be important stakeholder because they give immediate feedbacks and take actions according to these impressions after the revealed issues. As soon as the issues arose the retailers cancelled all the new orders with the factories concerned and withdrew thousands of garments from its stores. Their actions had definitely significant impact on Primark’s financial conditions and future prospects.

- The media:

Media such as BBC, The Observer and many other mass media is also considered to be important stakeholder of the company. Their existence can have bad or good impact on the company. Regarding the issues of labour exploitation, media helped to uncover the scandals happened in connection with Primark and its suppliers. In our case the media is considering whether Primark is really guilty or not. The existence of media also helps the company to give clarification about the scandals.

On the other hand, media can bring about negative impacts on the case revealing the truth about the company. The issues and scandals can spread easily around the world from one person to another by using social media, and it can influence the reputation of the company so that the customer will be disappointed and they will refuse to purchase more clothes in Primark. This will definitely influence the company’s income and also will decrease their market value in the stock market.

One problem that has to be taken into account is the the existence of sweatshop gangsters who murdered journalist