IKEA's Response to Outsourced Child Labor Allegations

The IKEA distribution chain uses a business model that involves exclusive outsourcing for product manufacture. Due to this type of sourcing, the fact of the matter is that IKEA itself does not involve in manufacturing or production but instead relies exclusively on contractors. This means that they have only limited control of how such facilities operate and generate product. As a result of the above strategy, IKEA had recently come under fire through media and public awareness campaigns for employing Child Labor in countries like India, Pakistan and Nepal by their suppliers (One in Specific, Rangan Exports). This situation was caused despite IKEA repeatedly reiterating the importance of not employing child labor to their suppliers owing to

However, like Rangan Exports several other suppliers fail to meet this clause and actively employ child labor. The problem is domestic as much as it is international. The laws and reports on Child Labor vary widely is countries such as India and Pakistan. While the Indian law severely prohibits employment of child labor, it allows child labor in select industries like crafts (As the talent has to be passed on through each generation). This provides certain loop holes for the suppliers to exploit and use child labor as they can greatly cut down on labor costs. IKEA has a fiscal and social responsibility to their consumers and other suppliers to establish both short term and long term responses to the problem at hand. This situation requires immediate action most of which is already being done by Barner in the form of finding and researching facts, local laws, communicating with organizations such as the ILO, UNICEF to better understand the child labor situation. Though these might help in mitigating the social outcry, IKEA is yet to find a permanent solution to put the situation to rest. Ultimately Marrianne Barner is responsible for making the final call of either terminating the contract with Rangan Exports and any other companies found to be practicing the same or to create a working relationship with the suppliers that ultimately results in the

Our recommendation to IKEA would be to prepare a root cause analysis report and prepare a detailed document to present on the child labor incident. The best way to mitigate this problem would be to formulate a solution that compensates/ improves the condition of the children directly employed by Rangan exports as this would appeal to the general public. IKEA can also have a few representatives present from the local Indian community who can attest to the improvements made by IKEA and future steps taken to prevent this from happening. As this was not directly IKEAs fault and that of the supplier, IKEA can reassure their consumers by participating in the manufacturing and production process of all their products going