Ethicsin Emerging Economies

Ethicsin Emerging Economies

Theorganization under focus is Phillip Morris, the largest producer ofcigarette in the United States. The company was caught up in anethical dilemma between choosing the cheap labor that is available inKazakhstan and the need to uphold its human rights values for notusing child labor. It is an ethical dilemma arising frommulticultural practices because child labor is common in Asiancultures. The agricultural industry was leading in using child labor.In most Asian cultures a child’s willingness to work and bring insome income for their family is a virtue. Phillip Morris, on theother hand, is a western organization whose code of ethics disallowsany use of child labor in whichever because it violates human rights.Most families in Kazakhstan live below the poverty line. Theirfamilies are more willing to let them work in factories to bring inincome than follow human rights narratives on the right to education.In some cases, children worked alongside their migrant parents andnot directly for Phillip Morris. However, the company was accused ofgoing ahead to pay them when they knew they were not of theemployable legal age.

Anotherissue that caused further breach on ethical standards is the natureof the product. Tobacco workers suffer from the side effects ofexposure to it. They experience the green tobacco sickness. Childrenare at the greatest risk because they have a small body size thatexposes them more than adults. People with green tobacco sicknessexperience nausea, dizziness, and vomiting it gets worse. Piece workpay encourages child labor in Kazakhstan because the details of therecipients are not scrutinized because it is a one-day affair. Onadmitting the ethical breach, Phillip Morris decided to commence asalaried pay programme rather than using piecework pay. Payingsalaries on a monthly basis would discourage migrant parents fromenlisting their children as laborers.

PhillipMorris had to deal with the ethical breach as soon as possiblebecause it would attract legal and corporate consequences. Legally,child labor is prohibited through the Fair Labor Standards Act(FLSA). If investigators prove that the company abused the FLSA Act,Phillip Morris could attract punitive fines and criminalresponsibility. Fines go as high as $11,000 per child laborer(Curtiss,2004). Other consequences are the curtailment of business arisingfrom the prohibition of shipping products produced from a laborviolation such as child labor. The FLSA prohibits any shipment ofproducts from one state to another if they were produced through abreach of the Act. The company’s share index on the securitiesmarket would also go down if it fails to adequately deal with theethical dilemma. It does not matter whether Kazakhstanlabor laws aresubtle about child labor. Any violation that breaches labor laws ofwhichever part of the world attracts punitive measures from the U.Slabor system.

ThePhillip Morris Corporation had several options to deal with theproblem. First, they could work with local government to ensure thatchildren do not accompany their migrant relatives to tobacco farms.The collaboration could also ensure that children access schoolingfacility so that they do not find the time to work as laborers.Secondly, dealing with child labor incidences along the supply chainin Kazakhstan would instrument through blacklisting suppliers who usechild labor on their tobacco farms. Thirdly, the workers should signa written contract that would be legally enforceable. The contractshould place a mandate on them to avoid bringing their children totobacco farms and enlisting them as workers. The written contractshould involve adult laborers who must prove so throughidentification documents. Finally, the Phillip Morris managementshould institute monitoring practices that prevent any possibleviolations. The Company reacted to the allegations by instituting allthe above stated options with the help of local governments. Itfurther established a summer camp for children of tobacco workers onschool premises to enhance a localized appeal for education andsupporting it as a corporate social responsibility step.

PhillipMorris could have avoided this dilemma by adhering to theinternational standards of labor. It is clear that poor countries donot enforce international standards due to the high level ofunemployment. It should have engaged in human rights due diligence onstandards commensurate with risk associated with child labor thesupply chain. Considering that the tobacco industry is at aninternational concern with health matters, the management should haveconducted impact assessments and a workers social audit in all thesupply chains to show the commitment to avoid any breaches ofinternational labor laws.

Arecommendation of further actions is desirable and relevant forPhillip Morris. They include: (1) Adopting policy and procedure ofthe International Labor Organization (ILO) for all multinationaloperating in emerging markets (Basu,2009). (ii) Training suppliers and company managers working indifferent countries of child rights would help prevent such asallegations. The company can sue through first knowing andunderstanding child labor laws of the country they operate. Obtainskills of detecting falsified documents of under-age workers.


Basu,K. (2009). Child labor: cause, consequence, and cure, with remarks oninternational labor standards. Journal of Economic literature,1083-1119.

Curtiss,D. C. (2004).Fair Labor Standards Act and Child Labor in Agriculture,The. J. CorP. l., 20, 303.