Business Ethics

Read the Case Scenario Josh Garrett is Head of Packaging and Distribution at Biotech Health and Life Products (Biotech). Josh is in charge of all of the branches the company has throughout the world. Josh has been reviewing cost reports and is a bit unsettled with some of the results. Specifically, he is concerned with the rising costs of unskilled labor at the Germany branch because many of the employees working in the Packaging Department are considered unskilled laborers working at minimum wage. Further research showed the current US federal minimum wage is $7.25 per hour. This rate has not changed since 2009. However, the German government recently raised its minimum hourly wage by 4% to 8.84 euros per hours ($9.79 – USD). Another raise would be costly for the company. Complicating the situation with the increase in unskilled labor costs is the fact that distribution costs between Europe and North America have risen considerably. Shipping cargo costs are on the rise for all of the transatlantic routes with the ocean shipping crisis of 2016 has put 2017 in flux (Xeneta News, 2017). Germany in particular saw cost increases with the demise of the low-cost flight service of Air Berlin (USA TODAY, 2017). Josh is a great outdoorsman and loves Iceland. It occurred to Josh that relocating most of the Packaging and Distribution Department from Germany to Iceland and also setting up a distribution center would solve both problems because production and distribution costs would be lower in Iceland. Iceland is the halfway point in the transatlantic route. The location would eliminate the need to ship long-distance hauls. In addition, Iceland is one of the poorest countries in Europe and if Josh moves part of the business to Iceland, he will be credited for job creation in Iceland. Josh decided to research Iceland as a potential location. His research showed that Iceland has no minimum wage for all professions but salaries are determined by collective bargaining agreements with most professions running between 260,000 and 300,00 ISK or $2,600 - $3,000 a month Part of the salary is a result of the universal health care coverage, which drives salaries higher. The cost of living is higher than many other European countries. The average wage in Iceland is approximately $3160 before taxes per month for a full-time worker. Income tax is 37.3 percent for most people but the tax is higher for those who earn higher wages. This is a slightly higher salary base than Josh expected. However, further research showed Josh that he could improve on the rate considerably. Josh discovered that if he hires young people between the ages of 15-18 (In Iceland mandatory schooling ends at 16.) who could work up to 40 hours a week, he could negotiate a much lower salary. Teenage unemployment is high compared to overall employment and while the hourly cost still may be higher than the US and slightly higher than Germany at present, Josh believes the change in logistics will cut distribution costs in Canada and Germany and more than make up for the small labor cost hike. Josh also has a desire to help the young people of Iceland as he believes he is being socially responsible in cultivating the poorest European country and its lowest wage earners. Josh decides to go ahead and move most of the German production and distribution business to Iceland as well as open up a new distribution center. In moving to Iceland, Josh decides to exclusively staff young workers and then let the workers go before they reach the age of 19 before the worker’s contract has to be renegotiated. What is important to understand is that in Iceland, employees fall within one of two categories: Young workers and adults. Young workers encompass youth, children and adolescent workers. Youth are classified as under 18 years of age. A child is an individual under the age of 15 and still in compulsory school and an adolescent is an individual under the age of 15 but not in compulsory school. Young workers are restricted depending on the type of work, the work environment and working time. Youth unemployment tends to be extremely high. To work full time, a person must be 18 years of age. Workers fall into the young workers category up until the age of 24. After the age of 18, a worker’s contract has to be renegotiated. Josh’s plan came under dispute when two recent lay-offs brought his employment practice to the attention of the staff who believe that what Josh is doing is unethical. The workers feel Josh is trying to use the system to avoid paying the workers a fair wage or from gaining full-time employment. If the matter is not settled quickly, the workers will go to the Collective to ask for higher wages and request a guarantee of full-time employment when they reach the age of 19. The workers have also questioned the company policy of paying different wages for the same job in different worldwide locations. The company has always had a policy of ensuring fair wages dependent upon the country in which they operate, but if the workers go to the Collective, the company will be forced to pay out more money than is reasonable for unskilled labor costs and will compromise the move to Iceland. Josh knows the higher labor cost will negatively impact the company financially. Added to his concerns is that Josh knows that unskilled workers within Biotech make different wage amounts especially in Germany, Mexico and the United States. In these locations, wages are much lower. He thought to himself, “is it fair that the workers in other countries are making so much less than the workers in Iceland?” Assume Josh’s employment practices are unethical. • Explain the meaning of an ethical issue; • Identify and explain the ethical issue in the case scenario using the course material to support the reasoning and conclusions made; • Identify the one non-ethical issue in the case scenario. Explain why? • Identify and explain the ethical dilemma. Use the course material to support the reasoning and conclusions made; • Define ethical relativism and moral universalism; • Does this case scenario illustrate ethical relativism or moral universalism? Explain why or why not?