Labor Standards: There’s an App For That

The news coming out of China of ten suicide deaths at Foxconn industrial park is terribly distressing. All of the workers who committed suicide were recent high school or vocational training school graduates aged between 18 to 24. One of the fatalities, Sun Danyong, jumped to his death after being interrogated over a missing iPhone prototype. Foxconn, the makers of Apple iPhones and iPads, is now under international scrutiny for its working conditions and the news is not good. Not surprisingly, Apple (and other companies that purchase Foxconn products such as Dell and Hewlett-Packard) are also under intense scrutiny regarding their enforcement of supplier codes of conduct.

The New York Times reports that:

“Foxconn’s production line system is designed so well that no worker will rest even one second during work; they make sure you’re always busy for every second,” says Li Qiang, executive director of the China Labor Watch, a New York-based labor rights group. “Foxconn only values the enterprise benefits but totally ignores the social benefits. Those claims have been bolstered in recent weeks by some of China’s state-run newspapers, which have published a series of sensational reports about the suicides, alongside exposés detailing what they claim are the harsh conditions inside Foxconn factories. Some articles have described the company’s authoritarian management style, the heavy burdens workers face in trying to meet Foxconn production quotas. Others say the company has cramped dormitories that sometimes house 10 to a room.”

An Apple spokesman stated today that “a team from Apple is independently evaluating the steps they are taking to address these tragic events and we will continue our ongoing inspections of the facilities where our products are made.” Sounds good.

But it made me wonder what has Apple done prior to these tragedies to promote labor standards. The news isn’t pretty. Apple’s Supplier Code of Conduct is acceptable enough, limiting working hours to 60 hours per week (including overtime), requiring minimum wage and benefits consistent with local laws, and clean and safe dormitories with adequate heat, ventilation, personal space, and entry and exit privileges.

So does the reality match the rhetoric? When social auditors examined factory compliance, they found distressing news. Only 46% of their audited suppliers comply with Apple’s working hours requirements. This means a majority of Apple’s audited suppliers violate the 60 hour work week. Here’s what Apple’s 2010 Supplier Responsibility Progress Report says:

At 60 facilities [of the 102 audited], we found records that indicated workers had exceeded weekly work-hour limits more than 50 percent of the time. Similarly, at 65 [of the 102] facilities, more than half of the records we reviewed indicated that workers had worked more than six consecutive days at least once per month. To address these issues, we required each facility to develop management systems—or improve existing systems—to drive compliance with Apple’s limits on work hours and required days of rest.

Second, according to the report, 65% of the audited factories comply with the local minimum wage and benefit laws. In other words, one-third of Apple’s audited suppliers pay their employees below the minimum wages required by the local law. According to the report:

At 48 of the [102] facilities audited, we found that overtime wages had been calculated improperly, resulting in underpayment of overtime wages. At 24 facilities, our auditors found that workers had been paid less than minimum wage for regular working hours…. Another common violation we found was underpayment of legally required benefits. We found 57 facilities with deficient payments in work benefits such as sick leave, maternity leave, or social insurance for retirement.

Finally, the audit revealed a 51% compliance rate with respect to management accountability and responsibility. In other words, almost half of Apple’s audited suppliers do not evidence a commitment to corporate social responsibility. According to the report:

Our audits revealed 55 facilities [of the 102 audited] that did not have dedicated personnel accountable for compliance with all categories of Apple’s Code. Apple required the facilities to appoint qualified personnel, ensuring that responsibility and accountability for compliance are included in their job descriptions. These job descriptions include ownership of a process for correcting deficiencies identified by internal and external audits, written corrective action procedures, and verification of the completion of appropriate actions.

Apple’s report states that it “is committed to ensuring the highest standards of social responsibility throughout our supply base.” Today an Apple spokesman stated that the company is “saddened and upset” by the suicides and that Apple was determined to ensure that Foxconn workers were treated with respect and dignity. But if you scratch beneath the surface, Apple’s own social audit report paints a different picture of its suppliers. It is a picture of employees who are routinely being underpaid, overworked, and poorly supervised.