ISSN 2330-717X

Complexities Of MNCs And Child Labour – OpEd


By Nattavud Pimpa

The confusion and failure to create a universal definition of child labour for multi-nationals, organizations and governments alike has contributed to the difficulty in finding solutions to child labour. In the world of international business, Multi-national corporations (MNCs) are not bound by enforceable legislation on child labour and can, therefore, individually tailor the extent of their moral obligations to the issue.

The International Labour Organization (ILO) in 2005 estimated that 250 million children worldwide between the ages of five and fourteen have entered workforce. Whilst in 2007, the United Nations International Children’s Emergency Fund (UNICEF) cited 218 million or 1 in 6 children in the world gave up school for work. The bottom line here includes poverty and lack of educational support from the local governments.

Kolk and Tulder (2002) discusses the evolution of child labour and the concerning spread of into formal and informal economic sectors to include not only legal work but also illegal work such as sex worker, child soldiers and bonded labour. This is a relevant point to include because whilst the focus of Bachman’s view is centered on the affects of child labour to international business, other equally shocking forms of child labour such as child soldiers often co-exist with child labour and need to be considered.

Labour-intensive export industries are believed to be crucial to advancing these economies in poverty stricken countries. Perhaps this ambition to advance the economies in developing countries has overshadowed the abolition of child labour. After all, it was not clear until the 1990’s that governments in some developing countries began to admit that child labour existed in their country.

The common truth amongst most profit-seeking MNCs are constantly striving to be more efficient and are under competitive pressure in the market to reduce per unit cost, which results in cost cutting risks like child labour. These economic pressures are likely to only strengthen with globalisation and MNCs becoming more efficient and savvy. Ritcher and Buttery (2002) refers to this as the trickle down effect.It is based on utilitarian beliefs (the end justifies the means for maximum benefit) and that an activity is ethical if everyone who is affected is ultimately better off. The application of this theory to the use of cheap labour by MNC’s would suggest the developing country involved is ‘better-off’, which would justify the exploitation.

In a situation where MNC’s change suppliers, the workers in developing countries are left unemployed and essentially ‘worse-off’. Clearly the simplicity of the trickle down effect in the existing academic literature fails to consider issue such as child labour. Legal or illegal child workers are not in a position to determine their conditions and terms of employment and are therefore powerless to negotiate or even terminate employment with the MNCs.

The moral complexities of child labour has proved it was ‘too frustrating’ to reach an agreement in trade discussions. Pierlott (2004) argued that the U.S as being fearful of linking their country to child labour and developing nations were seen to be blocking the issue from the agenda, therefore the issue was left out of the Uruguay Round and GATT (General Agreement on Tarrifs and Trade). Traditionally, the World Trade Organization (WTO) has not included international labour in their coverage however after the failure to reach agreements at the GATT, some members of the U.S business committee have proposed that the ILO and WTO should work in conjunction. Unfortunately the most important or ‘core’ labour standards including; minimum wage, hours of work and occupational health and heightened the role of NGO’s are organisations.

Most governments have been increasingly pressured to include child labour in the agendas of international trade discussions; however corruption, the influences from MNCs, and the differences in developed and developing economies interests have slowed any universal binding legislation. It is undoubtedly clear that child labour is still occurring in parts of the world (both in informal and formal sectors).

To be sustainable and successful in today’s globalised market, MNCs must acknowledge their role in the issue and create initiatives rather than free-riding on reduced costs and avoiding responsibility as has been done in the past by organisations.


Bachman, S.L (2000). “The Political Economy of Child Labor and its impacts on International Business”, Business Economics, 35(3): 30-41.

Kolk, A & Tulder, R (2002). “Child Labour and multinational conduct: a comparison of international business and stakeholder codes”, Journal of Business Ethics, 36(3): 291-301.

Pierlott, M (2004). “Moral considerations in outsourcing to foreign labour”, International Journal of Social Economics, 31(5/6): 582-592.

Richter, E & Buttery, E (2002). “Convergence of ethics?”. Management Decision, 40(2):142-151.

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