Introduction
Organisations need to operate as good corporate citizens. Corporate Social Responsibility (CSR) is pegged on the idea that businesses have charitable, honourable, and decent errands to play while at the same time guaranteeing returns to shareholders. Companies that operate in Chile mining industry can gain a lot when they respect the environment in which they are established. This paper discusses the ethical aspects of CSR in Chile’s copper mining industry.
Ethical Issues
Copper constitutes the most important mineral in the republic of Chile. Chatterjee (2014) asserts that mineral accounts for 20% of the country’s total gross domestic product. It is also the most important export product. It accounts for 60% of the total exports. This observation means that companies that operate in the mining sector should act ethically to ensure that Chile does not lose the value of copper in its economy. Such a loss can influence many communities in terms of poor accessibility of state-supplied public goods such as security, education, and healthcare.
Most of the copper is mainly exported to China for electronics and electrical products manufacturing. Hence, unethical practices can lead to the stoppage of manufacturing processes. This situation hurts the interest of many manufacturers who act as important stakeholders. Most of the copper mining in Chile is outsourced. Chatterjee (2014, Para. 3) says, ‘most jobs with as many as two out of three workers are now working on short-term contracts at salaries as low as one-third of those with full-time staff jobs’. This observation raises an ethical issue of poor remuneration of employees. Contracted workers are also given poor and dangerous work, which poses high threats of injury. This working setting raises an ethical issue of providing safe working conditions to foster employee wellbeing (Caldwell, Hayes & Long 2010).
The Copper Mining Industry has experienced numerous conflicts between employees and the mining companies in recent years. Last year, about 4,000 workers of an Anglo-American copper mining corporation that operated the Los Bronces mines lay off their tools and took part in a strike. They protested against the company’s policies, which hindered the freedom of unionisation through threats such as dismissal and harassment (Chatterjee 2014, para.4). This situation raises the unprincipled issue of denying freedom to employees, harassing, and threatening them when they fight for their rights in the workplace (Caldwell, Hayes & Long 2010, p.499).
In 2013, about 2,300 Escondida quarry workforce took part in a strike. The strike was the third at the BHP Billiton-owned mine after the 2006 and 2011 strikes. The problem of strikes not only affects foreign copper mining companies that operate in Chile. Chile’s state-owned mining company, namely Codelco, has also experienced incidents of strikes. As Chatterjee (2014, Para. 5) reveals, ‘all of the company’s operations were shut down by a July 2013 strike in a protest against privatisation plans followed by another strike in April 2014 to protest low health and pension benefits’. In this case, an indecent issue arises following the failure to provide adequate health and pension benefits to the company’s workers (Crane & Matten 2010).
Ethical Theories to Justify the Need for Attention to the Issues
Utilitarian and deontological ethical theories may help in justifying the need for paying attention to the above ethical issues that have been emerging in companies that operate in Chile’s mining industry. The utilitarian theory calls for people to look beyond their self-centric interests to enhance total good for all people who may be affected by their actions (Ketz 2006). In the context of organisational ethics, it highlights the importance of evaluating the repercussions of an individual action so that an ethical deed is the one, which does not result in harm to any party that is subjected to its consequences. Unfortunately, the deeds of companies that operate in Chile’s copper mining sector harm the employees, especially the contracted workers, through low wages and salaries, poor working environment, and failure to provide health and pension benefits.
The concern of the utilitarian theory in lowering harm on organisational stakeholders corresponds to the concept of corporate social responsibility in the context of Chile’s copper mining companies. The utilitarian ethical theory addresses issues that relate to finance, regulations, and ownership systems to guarantee optimal benefit to all stakeholders. Paying unfair wages to the contracted employees affects their financial capability so that they are unable to progress economically. Thus, it is unethical to give people low wages, simply because they are willing to work because of their low socioeconomic status.
From the utilitarian theory, the companies’ actions are unethical to the extent that their practices lead to over-exploitation. Employees ‘have had a great deal of impact on the relations between families and children of first, second, and third-class workers, destroying family ties and the social fabric of mining towns and regions’ (Chatterjee 2014, Para.3). Guided by the utilitarian theory, employees also need to consider the capacity of their actions to harm other stakeholders, including the communities. This step is important upon considering that the witnessed strike at Los Bronces led to the destruction of property, looting, and vehicle theft. Deontological school of thought holds that having the intention of compliance with the right set of rules and guidelines stands out as a better mechanism for determining the appropriate course of action, as opposed to overreliance on achieving the most desired outcome (Ketz 2006). Chile’s copper mining companies have failed to comply with best CSR practices. They pay poor wages and salaries, fail to resolve conflicts with employees, and/or other stakeholders are harmed by their actions. For example, they know that strike hurts the shareholders, government, Chile citizenry, and manufacturers who are located in China and other places. However, they do not take proactive actions to mitigate the problem. Guided by the deontological ethical perspective, copper mining companies might contend that ethical actions emanate from executing one’s duty, which is defined by rationality while evaluating an action. Duties are universal. They are owed to all people. Gaining from the operations in copper mining constitutes a right to all companies’ stakeholders.
Why the Companies should take Responsibility
The companies need to take responsibility in a bid to comply with best CSR practices. Corporate social responsibility is the obligation for companies to not only serve their interests, but also the interests of the society (Carroll & Buchholtz 2003). A thorough examination of CSR is essentially provided through the analysis of a company’s stakeholders who encompass all groups and specific individuals who either benefit or even get harmed by an organisation’s decisions (Paetzold 2010; Frynas 2009).
Guided by Kline’s (2010) criteria, in the case of Chile, decisions such as curtailing fundamental employee freedoms, for instance, unionisation, harassment, threats of dismissal, and exposure to poor and injurious working conditions undermine the CSR principle of harmonising the interests of all stakeholders. Although employees suffer, manufacturers in China and other places also suffer from strikes that arise from employee complaints about unethical practices of Chile’s copper mining companies. The companies’ shareholders equally suffer the reduction of returns on investments when employees lay off their tools. Chile’s revenues reduce while communities suffer due to the limited public utilities because of the decline in government revenues when employees go on strike. Copper accounts for 20% of Chile’s total GDP (Chatterjee 2014). These expositions underline the need for the companies to take responsibility for their unethical practices based on how they handle employees.
The stakeholder theory identifies different stakeholders such as employees, customers, communities, the environment, and the government among other parties that are worth considering in an organisation’s CSR approaches (Blalock 2005). However, in the case of Chile copper mining industry, employees are greatly affected by the companies’ bad practices. In these companies, employees stand out as stakeholders who help not only in the extraction of copper ore but also in its shipment to China and other places for use in manufacturing. They are crucial to an organisation since they ‘invest their skills and time in their work since their livelihood depends on the activities of the organisation’ (Carroll, & Buchholtz 2003). The main task of the management team is to adopt strategies for determining how employee interests are managed in an organisation without creating a conflict of interest, which leads to labour strikes and destruction of property. Therefore, the companies have the obligation of taking responsibility and resolving their conflicts with the employees if they need to build their competitive advantage through them (employees).
Solutions
Revising Employee Benefits, Wages, Salaries, and Other Remunerations
To resolve the cases of labour strikes, Chile’s mining companies need to revise remunerations, which attract conflicts between the companies and employees. The amount of pay that is given should demonstrate to the employees that the companies serve not only their interests but also those of the employees. As a matter of human rights, the salaries should help the employees to live a decent life by ensuring that they have a purchasing power of basic commodities and needs that are necessary for a dignified living. This recommendation corresponds to the universal ethics management code, which holds that the amount of remuneration that is offered to workers should guarantee them a civilised living (Carroll & Buchholtz 2003, p.34).
Development of Policies to guide Negotiation Processes with Employees
Apart from the miners, other industry players in Chile’s copper mining industry have had their share of operational problems due to labour-related conflicts. For example, port workers engaged in a strike that interfered with the exportation of ores, including Iquique and Antofagasta (Chatterjee 2014). This situation led to the postponement of their shipping for several days. The gold mining industry has also experienced challenges of strikes.
A worker took part in a strike due to the failure of the collective bargaining agreement between him (through his representative) and the Canadian company, which operated the mine. The challenges that were experienced by workers on the contract reached a climax at Los Bronces, resulting in ‘fires, looting, vehicle thefts, and disturbances’ (Chatterjee 2014, Para. 7). To this extent, ethical issues arise on the part of the employees in terms of whether they should participate in acts that violate the rights of other people regarding property ownership and use without damage simply to portray anger on unethical practices of the employers.
Despite blaming employees for acting unethically by destroying property in the process of striking, anger spill-over effects can be associated with the failure of the companies to negotiate and/or concede with the employees. It is recommended that companies should develop policies to guide any negotiation process. Employees can feel that they (companies) value them and that they are always ready to listen to their concerns (Crane & Matten 2010). The government of Chile, as a stakeholder of the copper mining industry, has an important role to play in this process by putting in place legal structures that address the minimum quality working conditions, salaries, and wages. This plan may help in protecting the interests of employees by forming the base point in wage and salaries negotiations.
Incorporating CSR Principles
CSR advances the paradigm of promotion of human rights. The principle of human rights asserts that people need to be treated with dignity. International human rights convention does not have any legal imposition or obligations for organisations to comply with certain human rights provisions. However, national laws regulate the conducts of companies to ensure the protection of individual rights (Garriga & Mele 2009). Therefore, the government of Chile needs to regulate the conducts of the companies in the copper mining industry as the starting point in adopting the best CSR practices.
The goal of CSR is to ensure that organisations’ operations influence positively the enjoyment of human rights among organisational stakeholders (Ketz 2006). For the companies that operate Chile mines, it is against the principles of good CSR practices to expose workers to undignified working conditions such as assigning contract workers dangerous jobs that have high risks of injuries.
Research findings on organisational leadership indicate that leaders should focus not only on how they can increase the profitability of the organisations they lead. They also need to look for mechanisms for ensuring that risky situations that may prompt an organisation to increase its weaknesses and threats to its operations are mitigated (Tengblad 2006). One of the ways of accomplishing this goal in the case of copper mining companies in Chile is through adopting CSR principles.
Critical Evaluation of Solutions
CSR is crucial in resolving many of the ethical issues that emerge in organisations’ operations in the international context. Corporate Social Responsibility (CSR) implies the obligations that companies have to act not only to serve their interests but also the interests of the society (Paetzold 2010). Thus, recommending it as a solution to ethical problems in Chile’s copper mining industry is appropriate. Many of the problems are due to the failure to balance the interests of all stakeholders.
CSR refers to people, society, and communities’ principled, unrestricted, economic, and lawful anticipations in an organisation. Socially responsible organisations take initiatives to ensure that their goods and services are not produced with child labour and forced toil through the exploration of policies that foster discrimination, which hinders the freedom of association of stakeholders. They make sure that they do not violate employee welfare or engage in unhealthy and hazardous production facilities (Vogel 2012; Frynas 2009). To this extent, CSR is appropriate upon considering that the copper mining industry faces criticisms of exposing contracted workers to injurious working conditions, low salaries, and wages while at the same time curtailing their unionisation freedom.
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