Thursday, March 29, 2012

Apple, Foxconn promise change after FLA audit finds severe violations

The report many have been awaiting, the full Fair Labor Association (FLA) report on the conditions at Apple's Foxconn manufacturing partner in China is "in," and it doesn't appear to be a whitewash. The audit, posted at the FLA's website on Thursday, found "serious and pressing" violations of Chinese labor laws, but the FLA said that as a consequence, it has obtained commitments for improvements from Apple's largest manufacturing partner.

The report said that the FLA has "secured groundbreaking commitments [from Foxconn] that will reduce working hours to legal limits while protecting pay, improve health and safety conditions, establish a genuine voice for workers, and will monitor on an ongoing basis to verify compliance." The FLA found that Foxconn violated not just the code of conduct Apple signed when it joined the FLA in January, but at least 50 breaches of Chinese labor law as well.

Included among the changes will be a reduction of working hours to 49 hours per week, including overtime, while at the same time maintaining total compensation at its current level. The FLA audit found that during peak production periods, workers in the three Foxconn factories it examined put in over 60 hours per week, on average.

In order to make up for the reduced hours per employee, Foxconn will hire tens of thousands of additional workers. It will also have to increase its dormitory and housing capacity to handle that.

This all translates to more cost for Foxconn, which will also translate to more cost for Apple and any others who use Foxconn's manufacturing, including HP, Dell, Nokia, and more. It also explains why worker productivity in the U.S. is so high, for those who are willing to extrapolate the obvious.

Worker productivity is high in the U.S. because companies are unwilling to hire. Companies are unwilling to hire because it costs them more. Even though the current set of workers are overworked, and many of them in the U.S. complain they are, companies continue to eschew hiring.

What's of note is that the report focuses on Chinese labor laws. It doesn't take a rocket scientist to know those are far less stringent than American's labor laws. It would be interesting to see how many of those would be violated.

Although Foxconn does work for other companies, it's Apple that has been the focus, as the Cupertino, Calif. giant is the world's most valuable company by market cap. In an emailed statement, Apple said,

“We appreciate the work the FLA has done to assess conditions at Foxconn and we fully support their recommendations. Empowering workers and helping them understand their rights is essential.”

Notably, the FLA auditors found no issues related to child or forced labor, the report said. The average age of workers was 23, it said. However, earlier, SACOM (Students & Scholars Against Corporate Misbehavior) said that Foxconn hid underage employees during the inspections.

Even before joining the FLA, Apple had published a supplier responsibility report annually since 2007. Last year's report, published in early January, included the results of more than 200 audits at supplier facilities; in addition, for the first time Apple included a list of over 150 suppliers of either components or manufacturing services for Apple.

Apple joined the FLA after a New York Times expose later that same month brought to the fore the harsh working conditions at Foxconn plants.

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