In a previous FR Talks post, we discussed alleged poor working conditions found at Apple Inc.’s factories in China. Since then, at the request of certain parties, the Fair Labour Association (FLA) became involved, and proceeded to audit these factories which resulted in an investigation report in March, 2012 and a verification status report in August 2012, substantiating the claims of poor work conditions in said factories.
FLA is a unique collaboration among companies, universities, and labor and human rights civil society organizations that goes beyond identifying labour problems by uncovering the sources of these problems, and how best to resolve them.
Let’s look at what they found at one of the factories, Foxconn:
The investigation report
The investigation came following growing criticism in 2011 about the working conditions at Foxconn factories (at Guanlan, Longhua, Chengdu), including conditions that led to deadly accidents. Apple Inc. agreed to allow the Fair Labour Association conduct a thorough investigation of Foxconn, China’s largest private employer, using an in depth, top-down, and bottom-up examination of operations.
Two independent labour monitoring organizations accredited by the Fair Labour Association conducted the investigation. Around 35,000 workers were randomly selected and provided anonymous responses to questions on a survey regarding their work conditions, specifically, perception of hours of work, wages and benefits, health and safety, working environment, and the factory atmosphere.
Additionally, the assessors examined compliance issues, the employment relationship from start to finish in order to provide a solid foundation for the achievement and maintenance of legal and code compliance, conducted hundreds of on- and off-site interviews, and logged nearly 3,000 staff hours inside the factories.
The investigation concluded there were serious and pressing non-compliances with the Fair Labour Association’s Code of Conduct, and Chinese labour law.
The investigation revealed at least 50 workplace issues that confirm the existence of poor working conditions and violation of labour laws and code of conduct. Here are some of them:
- 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
- Numerous issues related to inconsistent policies, procedures and practices were identified. The investigation revealed that a considerable number of workers felt generally insecure regarding their health and safety. Some violation included blocked exits, lack of or faulty personal protective equipment, and missing permits
- 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
- 14 percent of the workers may not receive fair compensation for unscheduled overtime
The investigation report proposed remedial measures needed in order 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 affected their lives and livelihoods. Specifically:
- Working hours: To rectify the hours of work issue, 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
- Health and safety: To rectify the health and safety issues, it is important to increase worker involvement in formulating and implementing health and safety policies, practices and procedures to ensure future compliance. Also, it is important to change the system by which accidents were recorded (in the past, only those accidents that caused work stoppage were recorded as accidents). All accidents that result in an injury has to be recorded and addressed
- Industrial relations and worker integration: 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 interference. All workers will receive a copy of the Collective Bargaining Agreement and new employees will receive information about union activities during their orientation process
- Compensation and social security insurance: 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.
In addition, Apple Inc. has committed to ensuring that the FLA code standards are upheld in its supply chain. FLA will report periodically on the progress of Foxconn and Apple in taking steps to meet FLA’s remedial recommendations.
The action plan stretches over a period of 15 months, from April 1, 2012, through July 1, 2013, with deadlines for many of the action items set in the first three months. FLA scheduled follow-up verification visits to track remediation and verify progress reported by Foxconn and Apple.
The Foxconn verification status report
From June 25 to July 6 2012, FLA returned to each of the three Foxconn facilities to verify the implementation status of remedial action items.
A report on what they found was released in August, 2012.
- Foxconn completed 100 percent of the 195 remedial tasks that were due to be completed by May 31, 2012
- Foxconn was ahead of schedule in a number of areas, having completed an additional 89 action items that were due between June 1, 2012 and July 1, 2013
- Implementation continued on the 76 remaining action items due between June 1, 2012 and July 1, 2013, which would be subsequently verified by the Fair Labour Association at a later date
- The remediation plan developed following the original investigation outlined a total of 360 remedial action items, of which 284 have been completed and verified, for an overall completion rate of nearly 79 percent
The verification report noted the many physical changes to improve worker health and safety that were made since the investigation including the enforcement of ergonomic breaks, equipment design changes, new policies, and testing of emergency protective equipment. Foxconn also engaged consultants to provide health and safety training to workers.
The report mentioned that the most significant commitments made by Foxconn were related to union elections and worker representation, along with labour law compliance.
What’s more, Foxconn helped to extend unemployment insurance coverage for migrant workers by advocating for legislation that would allow them to access the insurance scheme effective January 1, 2013.
The remediation progress report noted that Foxconn and Apple Inc. plan on continuing with the remediation plan. One main thing that has not yet occurred is compliance with Chinese labour law regarding hours of work. We will keep you posted on compliance regarding the remaining remedial requirements.
I think this is good news and a step in the right direction. What do you think?
First Reference Human Resources and Compliance Editor