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Sweatshop is a pejorative term used to describe a manufacturing facility, usually a garment manufacturing facility, where working conditions are poor and workers are paid little. There is no single agreed upon clear definition of what a sweatshop is.

In a report issued in 1994, the United States Government Accountability Office found that there were still thousands of sweatshops in the United States, using a definition of a sweatshop as any "employer that violates more than one federal or state labor law governing minimum wage and overtime, child labor, industrial homework, occupational safety and health, workers’ compensation, or industry registration" [4]. This recent definition eliminates any historical distinction about the role of a middleman or the items produced, and focuses on the legal standards of developed country workplaces. An area of controversy between supporters of outsourcing production to the Third World and the anti-sweatshop movement is whether such standards can or should be applied to the workplaces of the developing world.

Sweatshops are also sometimes implicated in human trafficking when workers have been tricked into starting work without informed consent, or when workers are kept at work through debt bondage or mental duress, all of which are more likely in cases where the workforce is drawn from children or the uneducated rural poor. Because they often exist in places without effective workplace safety or environmental laws, sweatshops sometimes injure their workers or the environment at greater rates than would be acceptable in developed countries. Sometimes penal labor facilities (employing prisoners) are grouped under the sweatshop label.

Sweatshops have proved a difficult issue to resolve because their roots lie in the conceptual foundations of the world economy. Developing countries like India, China, Vietnam, Bangladesh and Honduras encourage the outsourcing of work from the developed world to factories within their borders in order to provide employment for their people and profits to their employers. The shift of production to developing countries is part of the process known as globalization, but may also be described as neoliberal globalization to emphasize the role that free market economics plays in outsourcing.