(Solution) CIPD Level 7 70S05- Managing People in an International Context

Solution

 70S05- Managing People in an International Context

Question 1 (AC 1.4) People-Related Ethical Issues for Fitter Threads Ltd

Labour Exploitation and Fair Wages

Labour exploitation is among the most pressing ethical issue in the garment industry, especially in terms of unfair wages and excessive working hours (Di Marco, 2023). From a general context, the ethical issues are critical for success of modern organisations. The ethical issues influence how sustainable relations are established amongst the employers and employees. Factories workers in countries like Bangladesh, India and Vietnam often earn far below a living wage, meaning employees work full time but still struggle to afford basic necessities (Grimshaw & de Bustillo, 2021). For example, Bangladesh’s legal minimum wage for garment workers is roughly $75 per month, while Asia Floor Wage Alliance estimates that a living wage should be a minimum of $250 per month to ensure basic worker’s survival (Ullah, 2024). Similarly, garment workers in India earn between $100 and $150 a month and a living wage is estimated to be $300 or more (Dutta, 2021). Due to the need for low costs of production and high profit margins, workers are often forced to work excessive overtime, exceeding 60-80 hours per week, and yet often receive no additional compensation for such overtime (Ford & Gillan, 2021). There is a need for appreciating the role played by employees in an organisation for achieving sustainability in relations and operations. This is particularly the case in organisations operating in the highly competitive business environment.

Furthermore, some factories practice wage withholding, where workers are pressured to work for an exceptionally long time before getting paid. According to Di Marco (2023), the lack of formal employment contracts in some cases exacerbates the issue, leaving workers without job security or legal recourse in cases of exploitation. Fitter Threads Ltd should take appropriate measures to ensure compliance on ethical wage practice. Living wage policies can be implemented across its factories to prove commitment to ethical sourcing (San Juan, 2022). This includes transparent payroll systems, making payments regular and fair, as well as aligning compensation with international wage benchmarks (Anggadini et al., 2023). If this issue is not addressed, it can severely damage the company’s reputation because global consumers, media, and advocacy groups closely monitor brands for ethical compliance. High profile cases of labour exploitation, such as the 2020 Boohoo’s Leicester supply chain scandal in the UK, where workers were paid as little as £3.50 per hour, have faced significant financial and reputational consequences (BBC News, 2020).

Health and Safety Standards

Another significant ethical issue in garment manufacturing is workers health and safety concerns, especially in developing countries where factory conditions can be hazardous (Khanom et al., 2022). Many of these workers are exposed to inadequate ventilation, severe overcrowding, and lack of fire safety measures, which increases the risk of respiratory diseases, workplace injuries and fatal accidents. For example, in 2013, the collapse of Rana Plaza factory in Bangladesh, which killed over 1,100 workers, brought to light the devastating consequences of poor safety standards in the industry (Goodwin, 2024). In many cases, factories continue operating in unsafe buildings with no structural integrity, emergency exits, and proper fire prevention systems. Workers are also subjected to the use of dangerous chemicals in production of fabric without proper protective gear resulting into long-term health complications (Mahmood et al., 2021).

Safety should be a priority for Fitter Threads Ltd, ensuring that its new factories meet internationally recognised standards on occupational health and safety. Immediate priorities should include conducting thorough risk assessments, investing in fire safety equipment, and upgrading building infrastructure (Nabi et al., 2021). To prevent accidents, companies can create mandatory safety training programs for all employees, conduct regular emergency drills, and hire on-site health and safety officers. Strict compliance monitoring through independent audits will also ensure adherence to ethical safety standards (Hoque & Shahinuzzaman, 2021). Failure to protect worker safety can result in severe consequences such as legal liabilities, operational disruptions and damage to reputation. In addition, increased demand for transparency in supply chains from consumers and regulators makes non-compliance an increasing risk (Saxena, 2022). Factory disasters have resulted in intense backlash for major brands such as Primark and Benetton, hence underscoring the need for strict safety regulations (Goodwin, 2024). Worker safety ensures ethical responsibility and brand reputation, as well as long-term business sustainability.

Issue With Biggest Reputational Risks

The most significant reputational risks for Fitter Threads Ltd is posed by labour exploitation and unfair wages. As Aibar-Guzmán et al. (2022) explain, there has been increased global scrutiny within the fashion industry by consumers, media and human rights organisations surrounding unethical labour practices. In recent years, there has been huge backlash to big brands for underpayment, forced overtime and poor working conditions in supplier factories. For example, Nike and H&M faced consumer boycotts and negative press following reports that their workers suffered from sweatshop conditions while being paid below subsistence wages (BBC News, 2021). Similarly, the Boohoo scandal in 2020 saw its market value drop by £1billion after it emerged that it was exploiting workers in its supply chain (BBC News, 2020).

If Fitter Threads Ltd does not address fair wage concerns, it risks similar financial and reputational consequences. As awareness about ethical sourcing has increased, consumers are increasingly avoiding brands with history of exploitative practices (Ford & Gillan, 2021). These issues are amplified quickly through social media and investigative journalism, turning into public outrage, which translates into loss of customer trust. To mitigate these risks, the company should adopt clear wage policies, conduct independent audits, and collaborate with trade unions and local labour rights organisations (Jardim et al., 2022). Maintaining….

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