Ethical issues of Labor Contractor

In today’s globalizing business environment, it is rather easy to dismiss ethical obligation toward labor contractors as well as the ethical obligation toward the actions of labor contractors.

In essence a labor contractor is an extension of a company which allows for outsourcing of its work, yet does not have an employee status. Though different from independent contractor which perform work independently for up to several different organizations simultaneously; labor contractor generally perform one particular task at any give time. Hence making them to proxy employee; which in turn may be accompanies by public relation issues such as moral and ethical standards.

Such direct or indirect associations with a company logically dictate a clear approach in order to avoid pitfalls that may occur if loose regulations are used. Pitfalls include direct association to mismanaged practices that may or may not violate local rules, yet violate moral codes of the originating company.

One of the rather clear examples is the use of child labor. Many developing nations that host foreign companies may not prohibit the use of child labor, yet those foreign countries will fact a degree of public outcry if it becomes public that production of particular goods may have involved child labor. It is besides us to make a judgment about the validity of child labor because of our lack of understanding of asymmetric factors that may contribute to such necessities. However, it is rather morally and socially prohibitive to even consider factors such as child labor as necessary.

Ultimately it is important to point to the most significant factor in such decision making; mainly that most such moral obligations and the consequences have to be tied to public eyes and the reaction of the most important participants – consumers.

The mere mention of outsourcing usually triggers some sort of reaction. The proponents of outsourcing argue for the benefits which may include cost savings, greater effectiveness as well as the unavoidable evolution of industrial economies to service based economy. The opponents’ argument relies on talking points such as national security, national pride, lost jobs as well as national self reliance.

The pro and contra arguments have certainly validity within particular reasoning, however, the most important reason may be not be at the center of discussion; namely stakeholders interest. Essentially, the question of outsourcing and its moral and ethical implications maybe only based on one major factor: stakeholder and their interests.

Once there is a uniform agreement as who the actual stakeholders are, it is simple to argue that the ethical responsibilities of organizations with stakeholders is to create and maintain an environment of constant and maximized profits. This naturally leads to tools such as competitive pricing which in turn will lead to outsourcing.

Notwithstanding that profitability is at the center of argument, outsourcing may not be the only solution. There are other ways including internal investments in tools and education that may enable internal units of a given company to perform outsourced tasks with greater cost effectiveness and efficiency.

Ultimately, the greatest challenge is to determine what benefits the stakeholders.

In the global interconnected village that we call our planet, the recent three decades have proven themselves to be of most significant impact on our social and moral behavior. In essence the technological and social evaluation have created a new and changed breed of participate named Corporate Citizen.

Essentially the new or dynamic participant is compiled of the individual private members of the given society which enhance their participation by means of capital or resource contribution to affect or benefit from the business transactions that are common to commerce oriented societies.

The participation of corporate citizen creates advantages and disadvantages that may have far reaching consequences on local, domestic, national and international level such as creation of jobs, increase or decrease of  tax revenue, societal stability, commercial and political influence as well as soft power. Hence, it becomes even more important to define at least marginal guidelines that would regulate corporate citizenship.

Ultimately, the corporate citizen is faced with challenges of integration into local, domestic or international cultural and societal requirements that will not only depend on geographic and geopolitically induced necessities, but also those non prescribed external influences that are exercised by means of international interactions and their intended or unintended consequences.