Venture capital

List of contents

List of contents        I

1.        Introduction        II

2.        General context of child labor        II

3.        Financial Implications of child labor        IV

3.1        Financial value generated for stakeholders (low cost thus less operation expenses, low to no liability because child labor is illegal and they work under the table)        IV

3.2 Financial value for the child also (income generated for the family to alleviate cost of life ➔ context of poverty)        V

4.        Negotiation vs Legislation and/or regulatory actions        VI

4.1        Advantages and disadvantages of Negotiation        VII

Stakeholders        VII

Child laborers        VIII

At a larger scale (local, national)        VIII

4.2        Advantages and disadvantages of legislation and/or regulatory actions        IX

Stakeholders        IX

Child laborers        IX

Discussion:        X

CONCLUSION        XIV

Question: is negotiation a more effective approach in dealing with organizations involved in child labor than legislation or regulatory actions?

1. Introduction

1. General context of child labor

According to UNICEF, the estimated number in 2014 of child laborers aged between 5 to 14 years, was 153 million1 and the vast majority of this labor was in developing countries mainly in African and Asian countries.

The international Labor Organization (ILO) defines the term 'child labor’ as work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development. It refers to 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.

The employment of children as labor has its origin in the preindustrial2 period of our era. In fact, before the appearance of child labor legislations and before the automation of tasks, children were used as a workforce in Europe, Australia, USA etc. Using child as labor is motivated by several causes:

• The main reason is poverty: In poor families, every member must work in order to contribute to the household and children are not excluded from working
• The cultural factor: in ancient societies, children were supposed to learn by imitating their parents and performing adults’ tasks in order to build their character and to help the household. For instance, Ethiopian culture encourages children to work to develop their skills and they are considered as an asset for the family farming business.
• The lack of alternatives such as affordable schools, quality education is another cause
• The affordable cost of this workforce

In our modern and industrial society specifically in Western countries, quality life improvements and regulations have contributed to alleviate child labor. Nevertheless, the phenomenon of child labor is still present in the developing world and a lot of organizations are still taking advantage of it. Thus, several Non- Governmental organizations such as the International Labor Organization (ILO) are fighting against child labor by setting international laws and signing conventions with countries involved. Unfortunately, some organizations are not abiding these laws and kids are still being exploited. For instance, in the region of Katanga (Democratic Republic of Congo), there are about 7 minerals processing plants owned by Chinese companies. An African NGO3 has reported that 80,000 child laborers were working in these mineral mines despite existing regulations against child labor in Congo. Then, regulations alone are not strong enough to alleviate the child labor issue and alternatives to regulations such as negotiations are being considered.

1. Financial Implications of child labor

1. Financial value generated for stakeholders (low cost thus less operation expenses, low to no liability because child labor is illegal and they work under the table)

The consumerism society in which we are living and our will to always get new products at the lowest price is pushing a lot of organizations around the world to abuse of their employees and to use unconventional workforce such as child labor to cut the production costs. In fact, Child labor has been proven to be a much lower cost workforce for organizations using it. Most of the time, this workforce is used in the informal sector, in rural areas, in family businesses and in small factories. Regulations protecting children are difficult to be applied in rural areas and among poor families. In big cities, this workforce is used for illicit trafficking such as prostitution and drugs. Thus, recent data4 from UNICEF estimated that 40,000 young boys and girls are used for dangerous and hazardous mining activities in the southern Democratic Republic of Congo (Katanga), for a remuneration of 1 to 2 dollars per day. These young boys and girls represent 40% of the total mining industry of this part of the world. Another example is the clothing industry in Bangladesh, where a factory employing child labor collapsed in 2013 and killed nearly 1,100 workers. This tragedy showed the world that the race to cut costs in the clothing and fashion industry has created a new order in which permissive actions such as using child workforce in hazardous conditions have been allowed. Such affordable and available workforce represents what makes the business very lucrative and competitive for national and international investors such as Chinese companies in Katanga. Furthermore, these companies are not willing to stop using this workforce as they will have to hire a much expensive one to operate in their companies. An economic study and investigation from the ILO (International Labor Organization), demonstrated that the cost5 of a Child laborer working for companies and organizations in INDIA is 15 rupees per day (0.2208 Euro) for 8 hours of work per day and the vast majority of these kids (60 Millions) work in the agricultural sector. An adult worker in INDIA would cost 115 Rupees per day (1.5801 Euro). The financial benefits generated by the child labor are so high that not only regulations and laws can alleviate this phenomenon.

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