Tuesday, February 18, 2014

Philip Morris: International and Labor Abuse (2010)

Philip Morris Company logo

Phillip Morris International is the leading non-government international tobacco company. It owns seven of the world’s top fifteen international brands, including Marlboro, the world’s best-selling cigarette brand. Its goals are to provide high quality and innovative products to adult smokers, generate superior returns for shareholders, and reduce the harm caused by smoking while operating their business sustainably and with integrity. (PMI). Before 2009, the Phillip Morris International website allegedly contained information stating that the company was against the use of children for labor practices. This was before an extensive report, compiled by the Human Rights Watch, the best known group for documenting governmental abuse and war crimes, emerged. (NYtimes).
The report, authored by Jane Buchanan, a HRW activist, focused on the widespread presence of unethical work practices by a subsidiary branch of Philip Morris International: Phillip Morris Kazakhstan. According to the report, migrant workers contracted by farms in Kazakhstan that supply tobacco to the Philip Morris Company were subjected to conditions that often amounted to forced labor. These workers usually had their passports confiscated and were often forced to do additional work for no pay. (Independent). Migrant workers move to Kazakhstan from neighboring countries such as Kyrgyzstan and Uzbekistan where there are few job possibilities and high poverty rates. The document "Hellish Work: Exploitation of Migrant Tobacco Workers in Kazakhstan," shows how some employers confiscated passports, failed to provide them with written contracts, did not pay regular wages, cheated them of earnings, and required them to work excessively long hours. (HRW). The “Hellish Work” video can be viewed at HERE. An example story from an individual named Almira can be followed at HERE. She shares the story of the oppression her and her family faced in moving to work at a Kazakhstan farm. In many cases, the families who had arranged for their journeys to Kazakhstan through the use of intermediaries had to pay back unrealistic amounts of debt for the aid. According to the The Independent, these types of requirements represent a form of human trafficking (Independent).
Philip Morris producing child workers for labor
The migrant workers on farms like that of Kazakhstan were at the mercy of their employers. Typically only the head of a family would receive a lump sum payment at the end of an eight or nine month tobacco season after harvesting has occured. This system prompted workers to have to stay for the entire season if they desired to receive compensation for their work. It also forced many workers to depend on employers for food and other necessities, in which the employer would generate costs to deduct from the worker’s pay at seasons end. (HRW). Many workers were also only paid on a piecework basis by the ton of harvested tobacco, which was an incentive for adults to migrate with their families to Kazakhstan during the harvest season. After repaying any debts and accumulated charges by employers or intermediaries for board and travel, families often only made a few hundred dollars for a half season of toiling farm labor. (NYtimes).
The HRW report documented violations of basic farm safety rules, like laborers wearing open-toed shoes while working with sharp instruments. These conditions are not in compliance with Philip Morris International’s current standards of safety in business. The PMI website states that, “Wherever we manufacture, we apply the same exacting standards to ensure the premium quality that smokers of our brands have come to expect. The health and safety of employees and contractors is a top priority for Philip Morris International, and we are committed to providing a safe and secure work environment. Our goal is to eliminate all work related injuries and illnesses.” (PMI). These principles were not established by the PMI branch in Kazakhstan before 2010.
The HRW report cited conditions that are dangerous for both adult and children workers. Easy access to clean water is not viable, so laborers had resorted to drinking from irrigation channels contaminated with pesticides. (NYtimes). Tobacco farming is considered, by experts, to be one of the worst forms of child labor. Children face particular risks by handling tobacco leaves and being exposed to pesticides. The Human Rights Watch observed frequent use of child workers, in 72 different cases, with workers being as young as ten years old. (Independent). While conducting the HRW investigation, one woman even told the Buchanan that “young children had developed red rashes on their necks and stomachs after working with the tobacco, and there were also cases of dangerous pesticides being stored in living areas.” (Independent). During a single work day, tobacco harvesters can be exposed to a similar level of nicotine as would be found in 36 cigarettes. Workers are at risk of contracting Green Tobacco Sickness, in which nicotine is absorbed through the skin from coming into contact with tobacco leaves – an event that recurs daily for a tobacco plant worker. The illness causes nausea, vomiting, headache, muscle weakness and dizziness, and children are particularly susceptible due to their small body size. (Independent). In addition to physical ailments, working long hours at a tobacco farm exempts children workers from attending school and receiving a fair education.
Jane Buchanan, Human Right Watch author

The Human Rights Watch report author, Jane Buchanan, said Philip Morris should be morally responsible for the fate of child laborers in Kazakhstan, even though it was not their direct employer. Precedents had already been established by apparel and athletic shoe companies that demanded Asian suppliers prohibit child labor, and she thought the same principles should apply to the tobacco industry. (NYtimes). The issue of responsibility for these child laborers is somewhat controversial due to the fact that the children are working alongside their own parents, with parental consent. However, Buchanan states that “Companies are supposed to have policies to recognize and rectify problems with human rights in their supply chain.” (NYtimes). By this standard, the rights of the children were ignored by the PMI Company. Buchanan also notes that “a company like Philip Morris certainly has the resources to put an end to these practices,”(NYtimes), leaving PMI in a position to take necessary action in defense of their corporate social reputation.
Along with Philip Morris International, Buchanan also placed blame upon the Kazakhstan Government for the abuses that had occurred on the tobacco farm. In discussions over the issues with working conditions and the lack of proper schooling for children, Buchanan said officials were “slow” and “vague.” (Independent). She admitted that it was a difficult process to get the Kazakhstan government to admit that migrant workers still have fundamental rights, although their work is being performed illegally. Buchanan says the HRW has researched that the government has not fully made the reforms it had promised since 2009. (Independent).
After receiving an extensive copy of the HRW report, Philip Morris International announced that “immediate action” would be taken to stop the abuse. The company issued a statement saying it is "Grateful to Human Rights Watch for raising the issues, and "[it] is firmly opposed to child labor and all other labor abuses.” (Independent). The PMI Company planned to institute a number of changes to its policies with tobacco production and harvesting. Many measures have occurred for PMI, like working with local government to ensure school access for children of migrant workers, and implementing a monitoring system in which a third party ensures that tobacco farms strictly comply with all company guidelines. (Independent). A spokesman for Philip Morris International, Peter Nixon, said the company already had policies in place to prohibit purchases from farms that used child labor, and that this policy had reduced abusive practices at Kazakh tobacco farms in years prior to the NHW report. He also announced that PMI would be making additional policy changes, like requiring farms to sign written contracts with adult laborers during growing season. An outside-source monitor would also be hired to police farms for compliance with child labor laws, and suppliers would be required to pay monthly salaries, rather than piecework pay, to workers. This would discourage migrant parents from enlisting the help of their children. Lastly, PMI would work with Kazakhstan local schools to open a summer camp for children of migrant-workers in the tobacco region of Kazakhstan. (NYtimes).

Andre Calantzopoulos, CEO of Philip Morris
Incidents like that of the PMI child labor scandal are often analyzed in terms of the four main ethical theories. All individuals affected by a situation or decision must be considered. Stakeholders in the PMI case include Philip Morris, the cigarette company founder, as well as his lower executives. All spokespeople for the company are also affected, since they reflect the overall position and opinions of the firm. For Philip Morris Int’l, an extreme number of employees are affected. The company sells cigarettes in 160 countries outside of the United States, including Kazakhstan. It contracts with 300 farms in Kazakhstan, which about 1,200 seasonal workers total. These workers are typically accompanied by about 200 children. (NYtimes). All workers, including children, in Kazakhstan, are affected, along with activist groups like the Human Rights Watch that are dedicated to corporate social responsibility and proper ethics. Even customers that consume PMI cigarette smoke products are affected if they are concerned with the use of children in PMI production.

IndividualismThe normative theory defines individualism as a collection of egoism, or selfishness, and right-based constraints. (Salazar). Simplified, this means that everyone has the right to seek their own interests, but cannot not influence, judge, or interfere with others pursuing their own interests. By PMI using children to produce its products, is the company pursuing its own interests to turn a profit? Are the children’s rights to pursue their own interest affected in the process? An Individualist would most likely recognize that PMI is negatively affecting children within its own pursuits. This goes against a main qualification of the individualist theory. However, with PMI’s original position considered, the company was openly against the use of children before it was discovered that children were being actively used in one of the company’s own farms. Considering Philip Morris International did not intentionally interfere with children’s rights to seek their own interests, like attending school and playing rather than working, an individualist might agree that PMI was attempting to pursue its own interests in an ethical way. With the hard facts of child labor being provided, an individualist would probably think PMI’s actions are not in compliance with the theory.

Philip Morris USA headquarters in Richmond, VA

The theory of Utilitarianism is the ethical tradition that directs people to make decisions based on the possible outcomes of their actions. (Salazar). Utilitarian values have helped shape today’s modern world, including political, economic, and public policies, and even business. It has provided some of the framework for democratic policies while going against the popular view of many “elite” citizens. The consequences of an action should result in the creation of the most good for the most people overall in order for the decision to be seen as ethical under utilitarianism. A utilitarian would have to decide what would create the most “good” involving Philip Morgan International. Would the most good come from PMI continuing to obtain a supply from PM-Kazakhstan, while closely monitoring the practices to ensure proper working conditions and laborers? Or would more good come from PMI dropping PM-Kazakhstan as a supplier to avoid the problem of child labor overall? One source notes that “only a tiny fraction of Philip Morris’s global tobacco purchases are made in the country[Kazakhstan], and no tobacco raised on the farms employing child labor went into cigarettes sold outside of former Soviet countries.” (NYtimes). The PMI spokesman Peter Nixon also admits that “the company’s purchases in Kazakhstan are tiny compared to its global operations; it bought 1,500 tons in 2009, compared to its global total of 400,000 tons.” (NYtimes). Although the fraction of Kazakh tobacco is small in comparison to the total amount of tobacco obtained by PMI, and it would seem as though the company would survive without the individual supplier, a utilitarian would probably decide that the most good comes out of keeping the PM-Kazakhstan branch running. PMI has updated safety and ethics programs and standards, which would help keep children safe. In result, PMI would still make money off of the Kazakh tobacco and migrant workers can remain employed, even if they are working for small or unfair wages. A real call for reform is in the Kazakh government.

KantianismThe theory of Kantianism differs from utilitarianism. “Unlike utilitarianism, it[Kantianism] does not ask us to maximize any particular value, it involves no complex calculations, and it does not treat groups of people as more or less valuable depending on the quantities of individuals or quality of experiences among them.” Kant’s formula of humanity states that one should treat people in a way that is valuable for one’s own sake. (Salazar). Under Kantianism, an individual should encourage and help others make the right decisions in a rational way. Kantian analysis of the PMI case would be that PMI did the right thing in changing its policies. It has worked with the Kazakhstan branch to ensure that there is a common understanding that children deserve to learn instead of work, and that even migrant workers deserve fair working conditions. By implementing a stronger monitoring system, more rational choices will continue to be made. A Kantian would see the PMI company as ethical an in agreement with the formula of humanity.

Virtue TheoryThe last ethical theory is virtue theory. Virtue theory revolves around the necessities to fulfilling a good life. The virtues of courage, honesty, temperance, and justice must be honored in order for a decision to be seen as ethical under this theory. Courage is the willingness to take a stand for the right ideas and actions, honesty is treating everyone fairly and being truthful, temperance is expected reasoning, and justice is being fair and providing quality products and ideas. (Salazar). PMI was courageous in immediately standing up against the use of child labor. They had the guts to admit they missed the issue, and immediately began formulating effective changes. They were also honest. Although PMI allegedly had a policy against labor abuse before the Kazakh incident occurred, they admitted that it is a tough situation to prevent, but were ready to try. PMI used expected reasoning in deciding that the best solution to the problem would be to keep their PM-Kazakh supplier. They displayed this temperance by weighing the pros and cons of their options before making and implementing a rational decision. Lastly, they achieved justice by ultimately putting a stop to the use of children in their production of tobacco products. They have also helped retain the rights of migrant workers in international fields. Virtue theory analyzes the PMI Company as ethical.


Child Labor. (n.d.). Press Releases RSS. Retrieved February 18, 2014, from http://www.pmi.com/eng/about_us/how_w

Independent News. (n.d.). The Independent. Retrieved February 18, 2014, from http://www.independent.co.uk/news/world/asia/tobacco-giant-philip-morris-sold-cigarettes-made-using-child-labour-2026759.html

Kazakhstan: Migrant Tobacco Workers Cheated, Exploited | Human Rights Watch. (n.d.). Kazakhstan: Migrant Tobacco Workers Cheated, Exploited | Human Rights Watch. Retrieved February 18, 2014, from http://www.hrw.org/news/2010/07/14/kazakhstan-migrant-tobacco-workers-cheated-exploited

Kramer, A. (2010, July 13). Philip Morris Said to Benefit From Kazakh Child Labor.The New York Times. Retrieved February 18, 2014, from http://www.nytimes.com/2010/07/14/business/global/14smoke.html?ref=philipmorrisinternationalinc&_r=0

Salazar, Heather. Business Ethics Lectures. WNEU. Spring 2014.

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