CSR and Child Labour
CSR/ethical issues associated with child labour
Student: Laura AMBARDARYAN
COLLEGE OF EUROPE | EEIB
PROFESSOR: SUNWINDER MANN
ASSISTANT: KATJA TUOKKO
2014-2015
WORDCOUNT: 4399 WORDS
Table of Contents
List of Abbreviations used ..............................................................................................................................2
Introduction .....................................................................................................................................................3
1. Presentation of child labour ........................................................................................................................5
1.1 What is child labour? ............................................................................................................................5
1.2 History of child labour ..........................................................................................................................5
1.3 Causes of child labour ...........................................................................................................................7
2. CSR and Child Labour ................................................................................................................................9
2.1 Why should business combat against the child labour? ........................................................................9
2.2 How should businesses combat against the child labour? ..................................................................10
2.3 Suggestions .........................................................................................................................................12
Conclusion ....................................................................................................................................................15
Bibliography .................................................................................................................................................16
1
List of Abbreviations used
CSR
Corporate Social Responsibility
ILO
International Labour Organisation
UN
United Nations
GDP
Gross National product
NGO
Non-Governmental Organisation
MDGs
Millennium Development Goals
PR
Public Relations
2
Introduction
Child labour being the most ethical part of the Corporate Social Responsibility (CSR)
should undoubtedly be an inseparable part of the CSR agenda of any business having child labour
in its supply chain. However, nowadays, there are not so many companies that are concerned with
the elimination of child labour in their supply chain. Only a few companies are using CSR to act
against child labour by implementing some educational programs or by achieving more
transparency in their supply chain. This little engagement of companies to include the fight against
child labour in their CSR agendas is conditioned in some extent by the main causes of the child
labour being mainly social, wealth distribution issues in countries where child labour persists. The
inability of businesses to fix the failures of the governments keeps most of the companies away
from bringing into play some real action against child labour in their agendas. However, the fact
that the companies cannot be expected to replace governments to address social problems of a given
country, they are directly concerned to use most efficiently their resources to prevent child labour
from further increasing.
Correspondingly, the questions arises for a responsible business are as follows: “Up to what
extent are the companies concerned with the elimination of child labour in the countries that they
are operating?”, “How businesses can address the ethical dilemma of child labour”, “What kind of
programs would be more efficient in order to reduce this problem?”.
Within the scope of this essay, I will argue that the businesses knowingly or unknowingly
having child labour down their supply chain are directly engaged to use their resources to eliminate
it because of the risks that it creates. Consequently, it is important for the businesses to use their
resources most reasonably in order to address the problem in most efficient (low cost) way. This
responsible approach could even become an competitive advantage or a way to increase the
company’s sales because it would incentivise its stakeholders to help indirectly to eradicate the
problem of child labour as the company that they are investing or the products that they are buying
would help to invest more and more resources of a company to help to develop communities. This
means that the reputational risk that a company bears would be transformed into an advantage over
the competitors, would increase sales and would attract more investment.
This essay will be divided in two main parts: presentation of child labour and fight against
child labour as a part of CSR. Firstly, I will present internationally recognised definition of child
3
labour, its brief history and causes of the child labour in order to acquire a better understanding of
its link to CSR. Secondly, I will assess the main rationales why businesses are engaging to combat
this social problem (which are the risks that they are bearing), how they can address this issue and
finally I will suggest in my view the most feasible approach to respond to child labour before doing
some concluding remarks.
4
1. Presentation of child labour
1.1 What is child labour?
In order to acquire a better understanding of main ethical issues of child labour and its link
to Corporate Social Responsibility of businesses we need to start with the definition of child labour.
International Labour Organisation (ILO) defines child labour “as work that deprives
children of their childhood, their potential and their dignity, and that is harmful to physical and
mental development”1. Basically, according to ILO it refers to any kind of work that is “mentally,
physically, socially or morally dangerous and harmful to children; and interferes with their
schooling by: depriving them of the opportunity to attend school; obliging them to leave school
prematurely; or requiring them to attempt to combine school attendance with excessively long and
heavy work”2.
From this definition follows that not all kind of work can be considered as child labour and
must be excluded. Children’s assistance in work that does not have negative impact on child’s
health or does not hinder child from going to school could even have favourable impact on the
personal development by supporting to develop skills and become better prepared to their adult life.
In order a work to be called a child labour, it depends on the conditions of work (hours of work,
child’s age and type of work, etc). However, different countries have different criteria to consider
a work as a child labour. It goes without saying that most of the efforts should be addressed to
eradicate in the first place the worst forms of child labour. The Article 3 of ILO Convention 182
defines as “the worst form of child labour” being all kind of trafficking, use of a child for
prostitution, forced labour, etc.
1.2 History of child labour
After defining child labour, it is important to go briefly through the history of child labour
to assess which are the cornerstone events that have led to such a dramatic number of child labourers
all over the world (168 million in 2012), how this number is distributed among countries, which are
the sectors where child labourers are mostly employed.
1
International Labour Organisation Website (Consulted 28 March 2015)
http://www.ilo.org/ipec/facts/lang--en/index.htm
2
Ibid
5
The practice of child labour have been present throughout all stages of history of humanity.
It reached its peak during the Industrial Revolution3. At this period, children were employed in
factories and mostly in dangerous conditions. They were considered very effective labourers
because of their small size they were able to access the places where adults could not. Also, in the
colonies of European power mostly in Africa, the governors of colonies have promoted this bad
practice. Additionally, the administration has imposed a head tax on the population older than 8
years. This was another reason which boost young children to work in order to cover living expenses
of the family.
Child Labour was a common practice in the United States as well. In order to highlight the
dimension of diffusion of child labour Karl Marx in his “Capital” illustrated that U.S. capital was
financed by the "capitalized blood of children"4 as in 1900s 18 per cent of all workers in America
were children.
Even in the 21st century, the child labour is a major problem. International Labour
Organisation has estimated that there were 168 million child labourers around the globe in 2012.
Around the half of these children (85 million) were engaged in hazardous works and in dangerous
conditions for health5. The situation was much worse in 2000s, when 246 million children were in
child labour. Despite this significant decrease, the number of child labourers still represent a huge
number, mainly in some developing and emerging countries. In India, for example, United Nations
estimated that child labour contributes to more than the 20 per cent of Gross National Product. In
Nepal, an economy which is highly dependent from agriculture (81% of all workers are employed
in agricultural sector), almost 10 per cent of GDP is produced by child labourers despite the fact
that in both of these countries there are a number of legal acts to prohibit child labour (Child Labour
Prohibition and Regulation).
3
http://www.history.com/topics/child-labor (Consulted 28 March 2015)
Karl Marx. Capital Volume One; Chapter Thirty-One: Genesis of the Industrial Capitalist
5
International Labour Organisation’s website (Consulted 29 March 2015)
http://ilo.org/
4
6
Source: International Labour Office, 2013
Child labour is very present in the developing world. Correspondingly, 96 per cent of child
labourers are in the developing countries of South America, Asia and Africa. The record number of
child labour is registered in Asia representing over 60 per cent of the overall child labourers. Africa
and South America have respectively 32 and 7 per cent of global child labour.
Statistics shows that these children are mostly employed in the agricultural sector (58.6%).
Some of industries where children are employed (32.3% of overall child labour) use "toxic metals
and substances such as lead, mercury, manganese, chromium, cadmium, benzene, pesticides and
asbestos”.6 Most of the child labour is oriented to export-oriented industries including glass
manufacturing, gemstones, leather and footwear manufacturing.
1.3 Causes of child labour
After defining and assessing the history of child labour, it is essential to understand the main
causes of child labour. During the whole history of child labour, the principal causes of this
phenomenon have remained the same. Only by eradicating the main causes of child labour it would
become possible for businesses to address in one way or another this issue in the scope of the
Corporate Social Responsibility of business.
ILO together with UNICEF have evaluated that the primary cause of child labour is
poverty (82% of all child labourers). Over 20% of families where child labour is common are below
6
US National Library of Medicine website (Consulted 30 March 2015)
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3425238/#ref10
7
the poverty line. Consequently, the income from child labour becomes crucial and central for a
given family attain to satisfy some initial needs as it contributes between 25% and 40% of overall
household
income.
Another major explanation of persistence of child labour is the lack of relevant alternatives
(schools, cost of education). The communities, where 60-70% of child labour is common, are rural
areas where there is no affordable school facilities or schools at all. Even though the schools exist,
either they are too far away or unaffordable. United Nations in one of its reports that the cost of
attaining full education for children would worth $ 10-30 billion which represents a tiny percentage
(2%)
of
overall
military
expenditure
of
one
year 7.
Some scholars argue that there are also macroeconomic rationale behind child labour. They
explain the persistence of child labour is conditioned both by demand and supply side. Extreme
poverty, lack of normal school facilities justifies the supply side of the child labour, whereas the
growing popularity of cheap informal or “grey” economy constitutes the demand side of the child
labour, revealing why there are no significant effort to eradicate this problem. This means that until
this demand of low cost economy prevail, the child labour would remain acceptable.
Another cause of child labour is a cultural one. In certain cultures, child labour is considered
important and therefore acceptable, because it has some positive impact on character building, on
the development of some skills of a child, etc.
7
Child Labour Public Education Project- The Child Labor Public Education Project of the University of Iowa Labor
Center and Center for Human Rights provides educational workshops and materials on a range of issues regarding
child labor in the U.S. and other countries.
8
2. CSR and Child Labour
2.1 Why should business combat against the child labour?
In this part, I will discuss the main incentives of business to address a part of it resources to
combat with the problem of child labour.
The main rational of business to “fight” against the child labour in the scope of CSR is that
a business that has child labour in its supply chain is facing legal, operational, financial and
reputational risks. Let me assess each of these 4 categories of risk which would lead to a better
understanding of the main rationales why actually child labour should be inseparable part of
Corporate Social Responsibility.
Legal Risk
Firstly, beside national legislation that prohibits child labour in almost all countries all over the
world, there are 3 main international instruments that regulate child labour: “UN Convention on the
Rights of the Child (1989), ILO Convention No. 182 on the Worst Forms of Child Labour (1999)
and ILO Convention No. 138 on the Minimum Age of Admission to Employment (1973)”8.
The failure to respect the national legislation prohibiting child labour would mean that the business
must have criminal sanctions and/or financial penalties. Even the revelation of child labour down
the supply chain would lead to legal responsibility. This would result in indirect violation of human
rights (case of John Roe et al v. Bridgestone Corporation9).
Financial Risk
At the side of legal risk, the business is confronted to a financial risk. The ethical responsibility of
business is explicitly transferred to its stakeholders mainly to its investors. This would mean that a
company that have gained a bad reputation because of the existence of child labour in its supply
chain, most probably would lose a significant part of its investors and would impede some potential
investments. Financial risk can also take form of loss of market share and competitiveness of a
given company.
United Nations’ website (Consulted 28 March 2015)
http://www.un.org/en/globalissues/briefingpapers/childlabour/intlconvs.shtml
9
Business and Human Rights Resource Center (Consulted 28 March 2015)
http://business-humanrights.org/en/firestone-lawsuit-re-liberia-0#c9343
8
9
Operational Risk
A business exploiting child labour is also exposed to an operational risk. The discovery of child
labour could result in breaking supplier’s contracts, customer’s boycotts, etc. Businesses might also
bear huge expenses in seek of new suppliers, better monitoring of supply chain, etc.
Reputational Risk
A number of associations, trade unions, NGOs, created to eradicate the child labour would not save
efforts to make it known to large public including all type of stakeholders of the irresponsible
practice of a given company. For instance, a Non-Profit Organization called Responsible Sourcing
Network (RSN), has achieved to make a campaign against the large retailers of cotton which
purchased cotton without knowing that there was child labour in their supply chain. The retailers
together with “socially responsible shareholders, pension funds and human rights advocates joined
together to demand that the Uzbek government stop using child labour in its cotton harvesting”10.
2.2 How should businesses combat against the child labour?
Given the risks presented above, nowadays, normally, a policy against child labour should
be inseparable part of Corporate Social Responsibility. However, in order to implement some policy
actions against child labour businesses are facing a number of dilemmas.
A responsible company is facing generally a dilemma, which is “how to address the child
labour in its supply chain in communities where this practice is commonplace and widely accepted
and eliminating child labour would mean for these family to dive more deep into more poverty and
or indirectly promote other form of exploitation”.
In order to address this dilemma it is critical from Corporate Social Responsibility
prospective to distinguish long and short term effects of each action. Several studies made by ILO,
have revealed that some businesses think that they conduct an ethical behaviour because by
employing children they increase the income of the family and help for their survival. However, it
10
Human Rights and Business Dilemma Forum ( Consulted 02March 2015)
http://hrbdf.org/dilemmas/child-labour/#.VRUk0PzMhxM
10
is crucial from CSR prospective to address this problem in long term, because these short term
profits that these children get would have a negative impact on the long term profits and
opportunities of children. After all, child labour impedes child from going to school, gaining
proficiency. By not frequenting school, they under-accumulate human capital by losing the
possibility to increase their productivity, efficiency and earning capacity which would lower the
wages they would have got in the future by increasing their knowledge instead of working. This
means that the opportunity cost of child labour is considered by families as very low (as it is not
possible to monetise the value of attending school) while the opportunity cost of these child labour
is very high because it leads to the further perpetuate the cycle of poverty.
So a responsible company need to resolve the problem of child labour within its supply
chain at the same time by taking into account the social problems where child labour is common.
This means that even if the business would look for complying with international and local laws
concerning the minimum age, this compliance with law would become unethical to dismiss a child
labourer. Preventing a child from working would mean to cut down the main source of the income
of the family, which would have a drastic consequence both on the child and its family. As
illustrated, the families are highly dependent from the income from child labour as it contributes
from 20 to 40 per cent of family’s income. Unfortunately, a lot of international companies take
“carte blanche” to exploit child labour and taking advantage from the dependence of families of
this income.
Given this complex situation, responsible business need to address child labour by
implementing some innovative strategies that would assist to combine the education and labour. A
good approach could be cooperating with international organization such as United Nations,
International Labour Organization and others, which respectively have launched a number of
initiatives being “Business Call to Action” and “International Program on Elimination of Child
labour” and a number of other projects that suppose cooperation with business to combat this ethical
issue.
Correspondingly, the United Nations “Business Call to Action”
initiative “aims to
accelerate progress towards the Millennium Development Goals (MDGs) by challenging
companies to develop inclusive business models that offer the potential for both commercial success
11
and development impact”11. Within the objectives of this action plan, the ultimate goal is to direct
the business investments to address the issues of poverty, school facilities, connect the companies
by creating a network of companies which best address the issue, transfer these best practices, share
methods and knowledge. As an example, IKEA has implemented “Better Cotton Initiative” in India
and Pakistan12, by providing some trainings to thousands of young people working for its company.
In this way, it resolved two problems at the same time. It improves the quality of its workers because
thanks to such kind of trainings, the workers become much more productive and at the same time,
it could become a first step for them to have education and increase their quality of life. This means
that this kind of investment in human capital is considered both reasonable and justified because it
helps them to increase the effectiveness of their labourers.
2.3 Suggestions
Even a number of business are managing some innovative strategies to address the child
labour, however not every company is succeeding to achieve its goals. Some businesses have tried
to implement several community development programs which have been more or less effective.
However, it is important for businesses to bear in mind the long term effects on children of the
programs that they are implementing.
In this section, I would suggest in my opinion the most reasonable way to resolve the
problem of child labour by creating long term advantages for child labours. In my opinion, in order
to address this issue, a responsible business should implement a set of consecutive actions
(transparency of supply chain, grade advancement schemes and offering educational opportunities)
which would ultimately lead to breaking the vicious cycle of poverty and bring to long term benefits
to child labourers and their families. I do believe that the combined and consecutive application of
these three actions by diversified use of a company’s resources would bring to a significant decrease
of child labour because they would address the root causes of it.
11
Business Call to Action. UNDP ( Consulted 01 March 2015)
http://www.businesscalltoaction.org/about/
12
IKEA: Promoting sustainable cotton farming in India and Pakistan, Case study, Business Call to Action UNDP
12
Firstly, the increasing globalization has created a situation where companies are able to
organise the shipment of their raw material from the developing countries more easily. However,
the distance between a company and its suppliers makes it very difficult to have information and to
monitor the procedure that these raw materials are produced. Due to these asymmetry of
information, there has been a lot of cases where the businesses were not aware about the existence
of the child labour down their supply chain (case of Apple). A better supply chain monitoring would
necessarily lead to a significant decrease of the child labour overall because the responsible
companies would comply with their CSR commitments much more easily. Nowadays, a number of
supply chain transparency laws enforce the companies to disclose a maximum of their available
information about the transparency of their supply chain to their consumers. However, it is
important to conduct the audit of the supply chain by an independent company in order to reduce
the conflict of interests. For instance Apple’s “internal audit revealed 106 children employed at 11
factories making Apple products in 2012”13 and now, in 2015 Apple has launched a new initiative
to have an independent auditing firm to control its supply chain in order to identify more easily the
child labour and implement immediate actions against it to evade scandals.
Even though the supply chain total transparency would be a huge step forward to identify
the child labour, however it is not enough to address the root causes of child labour. It is necessary
but not sufficient because it provides with no incentives for child labourers and their families to
stop working. That is why businesses should be engaged in other more tangible actions to address
this issue.
So the second and the most important action that I would suggest to businesses to implement
within the scope of their CSR fight against child labour is “grade advancement schemes” for parents
of child labourer. This could be effective because a number of studies show that there is a negative
correlation between the education level of parents of child labourers and the probability of a child
to become a child labourer. One of the reasons why parents impose their children to work is that
they are not able to evaluate the real value of education because in most of the cases they do not
have their own experience of education as well. This is the main reason of the repetition of poverty
cycle.
13
The Guardian- Child labour uncovered in Apple's supply chain, Friday, 25 January, 2013
Source: http://www.theguardian.com/technology/2013/jan/25/apple-child-labour-supply ( Consulted 06 March 2015)
13
So the grade advancement scheme would be as follows: by targeting the education of parents and
creating a grade advancement scheme would mean helping to increase the education level of
parents, which would automatically reduce the child labour because the parents themselves would
start to appreciate the importance of the education of their children. Also, it is important to provide
economic incentives to further increase their level of education by creating a dependency between
the salary and educational level. Due to an extra money received the parents would become more
and more motivated to increase their educational level because it will provide with the additional
income for their family and most probably the children would not be imposed to work. Also, this
would be beneficial to businesses as well because they would be able to increase the skills of their
workers and become more efficient.
The lack of educational facilities in a number of developing countries brings me to the next
engagement of businesses which would be to provide some educational opportunities for child
labourers.
Even though it would not be possible to expect businesses to replace governments to resolve
all social and educational problems that persist in countries that they operate, however, the
companies are engaged to address a part of their resources to provide some educational facilities to
child labourers as well because due to this cheap labour they are able to reduce their costs and to
gain some advantages. This means that a part of this gain should be redistributed to combat the
child labour in the scope of the CSR.
For this reason, a business can implement a number of innovative programs by creating for
example partnership with companies that are already specialised in the production of educational
materials which would provide educational materials to child labourers. At the same time this would
provide them with a huge PR in the media and for the customers. The customers would become
more and more attached to the responsible company because they would know that a part of their
costs would become a benefit for child labourers. However, these last two propositions would not
be feasible without some support from the governments because the main role of the business is not
creating school facilities for child labours.
14
Conclusion
The child labour has been and continues to be the most ethical part of the Corporate Social
Responsibility of businesses. Given the complex social issues and main causes of the child labour
it is important to underline that the businesses should not be expected to replace government to
eradicate poverty or resolve the lack of education as most of times it would be beyond the capacities
of business. However, this does not mean that the businesses can exploit child labour or do not put
enough efforts to increase the probability of resolving this social issue because of a number risks
(legal, operational, financial and reputational risks) that business is facing. The extent to which the
businesses are concerned with this problem is directly correlated with these risks and even some
possible positive outcomes of the efforts of the business such as increase of productivity, PR, more
investment, more customers, etc.
Another issue of this complex phenomenon is the ethical dilemma that business is facing
which makes the possible solutions of the child labour persistence more and more complicated
because the border between what is ethical and what is unethical becomes very vague mostly in
countries where the child labour is a common practice and is widely accepted. This brings me to
the last and the most difficult issue which is how can a responsible business help this bad practice
to be eradicated and create long term advantages for children. A number of businesses have tried
to engage in some activities to prevent the child labour. More precisely, some companies are
introducing more and more control over their supply chain in order to decrease the probability of
child labour down the supply chain. Also some others are introducing grade advancement programs
to promote the education of the parents which would help them to break the cycle of poverty while
the others are trying to increase their spending on the education of child labourers. However, the
concentration on one of these three solutions would not necessarily be sufficient to be able to reduce
child labour. A combined and consecutive action is needed to address the root causes of the child
labour which would only be possible with some cooperation with the governments of these
countries.
15
Bibliography
Books

Weston, Burns H., and Mark B. Teerink. 2005b. Rethinking Child Labor: A Multifaceted Human Rights Solution.
In Child Labor and Human Rights: Making Children Matter, ed. Burns H. Weston, 235-266. London and Boulder,
CO: Lynne Rienner.
Official Documents/ reports



IKEA: Promoting sustainable cotton farming in India and Pakistan, Case study, Business Call to Action UNDP,
January 2013
How sensitive are estimates of working children and child labour to definitions? A comparative analysis MICS
METHODOLOGICAL PAPERS Paper No. 1, 2012, United Nations Children’s Fund (UNICEF), Statistics and
Monitoring Section/Division of Policy and Strategy, December 2012
Estimation of the Contribution of Child Labour to the Formation of Rural Incomes: An Application to Nepal
By M. Menon, F. Perali, F. Rosati
“Using Corporate Social Responsibility to Implement Educational Programs to Reduce Child Labor.”Andrea
Papandrew , Seraphim Global Fellow,
University of Tampa
CSR and children’s rights in South Asia, 2007, Save the Children Sweden, by Girish Godbole
“It is a corporate responsibility to address forced and child labour, not mine”, World Vision Austria, 2012
“Do international Labour standartds contribute to the persistence of the child labour problem?” Working Paper
15050, National Bureau of Economic Research, june 2009 by Matthias Doepke and Fabrizio Zilibotti
“The Economic Impact of Child Labour”, DP/128/2001, University of Lugano, Switzerland by Rossana Galli
“Marking progress against child labour, Global estimates and trends 2000-2012, ILO, Geneva, 2013

“Why does child labour persist with declining poverty?”, June 2012, Jayanta Sarkar,Dipanwita Sarkar
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Internet sources

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
Business Call to Action. UNDP, consulted 28 March 2015
http://www.businesscalltoaction.org/about/
International Labour Organisation Website consulted 15 March 2015, 28 march 2015
http://www.ilo.org/
Human Rights and Business Dilemma Forum
http://hrbdf.org/dilemmas/child-labour/#.VRUk0PzMhxM
US National Library of Medicine website
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3425238/#ref10
United Nations’ website (Consulted 28 March 2015)
http://www.un.org/en/globalissues/briefingpapers/childlabour/intlconvs.shtml
Business and Human Rights Resource Center (Consulted 28 March 2015)
http://business-humanrights.org/en/firestone-lawsuit-re-liberia-0#c9343
Journals

The Guardian- Child labour uncovered in Apple's supply chain, Friday, 25 January, 2013
http://www.theguardian.com/technology/2013/jan/25/apple-child-labour-supply
16
17