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Investigation of Apple Supplier Foxconn reveals serious labor issues

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Apple Foxconn

This report is the result of a Fair Labor Association (FLA) independent investigation into Apple’s supplier Foxconn, China’s largest private employer. FLA is a unique collaboration among companies, universities, and labor and human rights civil society organizations that goes beyond identifying labor problems by uncovering the sources of these problems, and how best to resolve them. Working directly with corporations allows for more success in developing meaningful solutions that remain after public scrutiny and media attention have faded. After growing criticism during 2011 about the working conditions at Foxconn, including those conditions that led to deadly accidents, Apple agreed to allow FLA to conduct a thorough investigation of those suppliers, beginning with three factories at Guanlan, Longhua, and Chengdu in China. Much more than an audit for compliance, this investigation is best described as an in-depth, top-down and bottom-up examination of the entire operation.

The findings of FLA’s nearly month-long investigation revealed serious and pressing noncompliances with FLA’s Workplace Code of Conduct,1 as well as Chinese labor law. In addition to the findings summarized below, this report contains a detailed set of necessary remedial measures to protect the health and safety of workers, reduce worker hours to legal limits while protecting worker pay, and establish genuine avenues for workers to provide input on company decisions that affect their lives and livelihoods.

The measures address the root causes of issues at Foxconn facilities. They aim to prevent future noncompliance with Chinese legal requirements and the FLA’s Workplace Code, while bettering many aspects in workers’ lives. Both Apple and Foxconn have agreed to ongoing assessments by FLA in order to ensure that labor practices meet FLA standards and remain in compliance for the long term.

Findings and Remedial Measures

In its investigation of Foxconn, FLA observed at least 50 issues related to the FLA Code and Chinese labor law, including in the following areas: health and safety, worker integration and communication, and wages and working hours. The most pressing problems are laid out below with the sustainable remedial measures that Apple and Foxconn have agreed to implement, in keeping with requirements of the FLA program.

A) Working Hours
During peak production, the average number of hours worked per week at Foxconn factories exceeded both the FLA Code standard and Chinese legal limits. This was true in all three factories. Further, there were periods during which some employees worked more than seven days in a row without the required minimum 24-hour break. The root causes include high labor turnover, which undermines efficiency, and gaps in production and capacity planning.

Remedial Action: Foxconn has agreed to achieve full legal compliance regarding work hours by July 1, 2013, while protecting workers’ pay. While reducing hours and stabilizing pay, Foxconn will need to increase employment to maintain current levels of output,
productivity and quality. In the next year, tens of thousands of extra workers will need to be recruited, trained and accommodated at the same time as hours worked are progressively reduced per worker.


B) Health and Safety
Our assessors identified numerous issues related to inconsistent policies, procedures and practices. The investigation revealed that a considerable number of workers felt generally insecure regarding their health and safety. The issue of aluminum dust was of
particular concern, as this was the cause of an explosion at the Chengdu facility last year. FLA found that, one year after the Chengdu explosion, Foxconn had improved operating procedures, measurement, and documentation to reduce risk related to aluminum dust where Apple products are made.

Remedial Action: Workers are the first line of defense in health and safety, and increased worker involvement in formulating and implementing health and safety policy will help to ensure future compliance. Many of Foxconn’s health and safety violations, including blocked exits, lack of or faulty personal protective equipment, and missing permits have already been remedied. Additionally, Foxconn has agreed to change the system by which accidents are recorded. In the past, only those accidents that caused work stoppage were recorded as accidents. Moving forward, all accidents that result in an injury will be recorded and addressed.

C) Industrial Relations and Worker Integration
Investigators found that workers were largely alienated, in fact or in perception, from factories’ safety and health committees and had little confidence in the management of health and safety issues. The assessment also suggests that if workers had more involvement with developing and monitoring health and safety procedures, many of the problems with implementation could be avoided. It should be noted that committees may not be truly representative of the workers, because management nominates candidates for election. The result is committees composed not by those who need representation, but instead are dominated by management representatives. Moreover, committees are largely reactive, failing to monitor conditions in a robust manner. As a result, workers remain generally unaware of committees’ existence or role, while factories’communications are almost entirely top-down.

Remedial Action: Foxconn has agreed to enhance workers’ participation in committees and other union structures. In keeping with local laws, Foxconn has agreed to ensure elections of worker representatives without management inteference. All workers will receive a copy of the Collective Bargaining Agreement and new employees will receive information about union activities during their orientation process.


D) Compensation and Social Security Insurance
While Foxconn wages are above the Chinese average and the legal minimum, the assessment found that 14 percent of the workers may not receive fair compensation for unscheduled overtime. The assessors discovered that unscheduled overtime was only paid
in 30-minute increments. This means, for example, that 29 minutes of overtime work results in no pay and 58 minutes results in only one unit of overtime pay. Across China, all workers must have health, accident, social security, unemployment, and maternity coverage, but the system is set up on a provincial and city basis. This means that workers who migrate from other cities or provinces can’t collect their insurance when they return home. Workers are further unmotivated to enroll because of a required co-pay into insurance programs from which they do not benefit.

Remedial Action: Foxconn has agreed that the policy and practice relating to such situations warrants improvement; workers will be paid fairly for all overtime and work-related meetings that occur outside regular working hours. After extensive discussions,
Foxconn will offer a two-track remedial strategy: to investigate alternative private options to provide unemployment insurance to migrant workers, and work with government agencies to expedite the transportability of benefits. FLA will conduct a cost of living study in Shenzhen and Chengdu to assist Foxconn in determining whether worker salaries meet FLA requirements for basic needs, as well as discretionary income.


Conclusion

As an affiliate of the Fair Labor Association, Apple has committed to ensuring that the FLA code standards are upheld in its supply chain. This investigation was the first of an ongoing series of FLA investigations and assessments into Apple’s supply chain. FLA will report periodically on the progress of Foxconn and Apple in taking steps to meet FLA’s remedial recommendations.

Read more: Foxconn Investigation Report

Last modified on Monday, 02 April 2012 12:15

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