In this chapter, we are particularly interested in the contracting arrangements of MNCs with suppliers in less developed countries which have been labelled as ‘sweatshops’. Critical stakeholders from civil society, such as labour and human rights activists, trade unions and non-governmental organisations (NGOs) have charged that large MNCs exploit workers in sweatshops by failing to pay a living wage, tolerating child labour, and disregarding basic labour rights. The sharp criticism of sweatshops recently has led not only to an increase in public discussions in the media and a more critical evaluation of the sourcing activities of MNCs. It has also fostered the development of numerous hard and soft law initiatives addressing human rights and environmental as well as social issues in global supply chains (e.g. German Supply Chain Law, United Nations Global Compact). Against this background, the questions arise as to which role sweatshops play in global value chains, how they should be evaluated from an economic and ethical perspective, and what measures can and should be taken to improve poor working conditions. This chapter proceeds as follows: In the next section, we provide a brief overview of the labour rights frequently affected by the contracts between MNCs and their suppliers before discussing a number of examples for violations of these labour rights in global supply chains. We offer a definition for sweatshops and then continue to critically evaluate the pros and cons of sweatshop labour. Based on these insights, we briefly review opportunities at different levels and by different actors to regulate and improve working conditions in global supply chains. In particular, we discuss the role of MNCs, industry-led initiatives, multi-stakeholder initiatives and governments in improving labour rights in global supply chains.