Ikea Sorry for Using East German Slave Labor

We love Ikea for its particleboard dorm-room tables, its interactive catalogs and its maze-like retail monoliths--masterpieces of psychological trickery designed to make it impossible for visitors to leave without walking past every single cupboard and toothbrush holder stocked in the company’s massive basement warehouses. But this week we learned that Ikea hasn’t always been a group of good guys distributing meatballs and cheap full-length mirrors to Americans on a budget. While the company’s “official code of conduct” currently includes “zero tolerance for child and forced labor”, its European executives apparently didn’t feel any ethical qualms about utilizing prison labor in the 70’s and 80’s. A recent report on Ikea’s past practices by auditor Ernst and Young--which the company requested after outside parties accused it of using slave labor--revealed that the workers who made some of the company’s signature furniture in its East German factories didn’t work by choice: they were prisoners who’d been sentenced to hard labor due to their political beliefs, which in most cases amounted to opposing the Soviet-backed Communist government after the post-war division of Germany. Seems like Ikea had a “don’t ask, don’t tell”-style arrangement with its Eastern partners. Ikea can’t claim ignorance either; the Ernst and Young report found that company executives received tip-offs about the practice but did nothing to curb it. Ikea Germany head Peter Betzel issued a public apology last week in front of a roomful of the very prisoners who helped build some of his company’s signature items. A “squirming” Betzel listened as these former POW's described the prison’s daily productivity targets—and the isolation chambers that awaited "workers" who failed to meet them. Betzel claims that the company now has an extensive “checks and balances” system in place to prevent such unethical practices, but this scandal leaves him with little credibility on that front. The prisoners themselves also claim that several other multinational brands participated in the forced labor scheme; Ikea has been the only company bold enough to go public so far. The problem is twofold for Ikea; in addition to the reputational damage inflicted by this story, it also faces the very real possibility of reparations in the near future. What do we think? How could Ikea have handled this situation differently? Does the controversy make you less likely to shop there?

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Ikea Sorry for Using East German Slave Labor

Patrick Coffee

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