Unskilled Workers Within Biotech Icelandic Freeze
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 for the different branches. He is
concerned with some of the results. His main concern is with the rising
costs of unskilled labor at the Germany branch. Many of the employees in
the Packaging Department are classified as unskilled laborers making minimum
wage. Josh decided to research the matter further and found that the
current US federal minimum wage is $7.25 per hour, which has not changed since
2009. Interestingly, the German government recently raised its minimum
hourly wage by 4% to 8.84 euros per hour ($9.79 – USD). This information
weighs heavily on Josh since another raise would be costly for the
company.
Adding
to the concern about the increase in unskilled labor costs is that distribution
costs between Europe and North America have risen considerably. The
shipping crisis of 2016 has caused cargo costs to rise for all transatlantic
routes and with the demise of the low-cost flight service of Air Berlin, cost
in Germany have increased.
Josh
is a great outdoorsman and loves Iceland. It occurred to Josh that
relocating the majority of the Packaging and Distribution Department from
Germany to Iceland and setting up a distribution center would solve these
problems because production and distribution costs would be lower in
Iceland. Iceland is the halfway point in the transatlantic route.
The new location would eliminate the need to ship long-distance hauls.
Josh also knows that Iceland is one of the poorest countries in Europe so if
part of the business is moved to Iceland, he will receive the credit for job
creation in the country.
Josh
decided to research Iceland as a potential location. His research
showed:
·All professions are
exempt from minimum wage;
·Salaries are determined
by collective bargaining agreements with most professions paying 260,000 and
300,00 ISK or $2,600 – $3,000 a month;
·Salaries are higher due
to contributions to universal health care coverage;
·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. However, income tax is higher for those workers
who earn higher wages.
Josh
had not expected the higher salary base but further research showed that Josh
could improve the rate considerably by hiring young people between the ages of
15 and 18 who could work up to 40 hours a week since mandatory schooling ended
at age 16. Josh believed he could negotiate a much lower salary.
Iceland’s
teenage unemployment is higher than the country’s overall unemployment.
Hourly costs are quite a bit higher than in the United States and slightly
higher than in Germany. However, Josh believes the change in logistics
will cut distribution costs in the Canadian and Germany branches, and will more
than make up for increase in labor cost.
Josh
also has a desire to help the young people of Iceland. He believes he is
being socially responsible in cultivating one of the poorest European countries
and its low wage earners.
Josh
decides to go ahead and move most of the German production and distribution
business to Iceland as well as open a new distribution center. In moving
to Iceland, Josh decides to exclusively staff young workers and let the workers
go before they reached the age of 19 prior to the time when the worker’s
contract had to be renegotiated.
In
Iceland, employees fall within one of two classification, young workers and
adults.
A
young worker is anyone under the age of 24. An adult is a worker over
24.
Young
workers include youth, children and adolescent workers.
·Youth are those under 18
years of age.
·A child is an individual
under the age of 15 and still in compulsory school.
·An adolescent is an
individual under the age of 15 but not in compulsory school.
Young
workers are subject to restrictions dependent upon the type of work, the work
environment and times worked.
Youth
unemployment tends to be extremely high. Youth can only work part-time
since a person must be 18 years of age to work full-time.
Josh’s
plan came under dispute when two recent lay-offs brought his employment
practice to the attention of the staff who believed that Josh’s employment
practices were unethical. The workers feel Josh is trying to use the
system to avoid paying workers a fair wage and stopping workers from gaining
full-time employment since after the age of 18, a worker’s contract must be
renegotiated.
If
the matter is not quickly settled, 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’s 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 the company operates. However, if workers go to the
Collective, the company will have to pay more money than is reasonable for
unskilled labor costs, and will compromise the move to Iceland. Josh
knows the higher labor cost will negatively affect the company
financially. Added to his concerns is that he 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.
Josh thought to himself, “is it fair that the workers in other countries are
making so much less than the workers in Iceland?”
Step
1: Write the Introduction
Create the introductory
paragraph. The introductory paragraph is the first paragraph of the
paper and tells a reader the main points covered in the paper. To help
you know how to write an introduction, view this website to learn how to write
an introductory paragraph: http://www.writing.ucsb.edu/faculty/donelan/intro….
Step 2: Answer the following
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 ethical issue in the case
scenario that is irrelevant to 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.