[By Sudarshana Banerjee]
Apple has recently become a member of the Fair Labor Association (FLA), and says it will open its supply chain to an FLA auditing team, and results of the audits will be made public. While its products draw hundreds of thousands of loyalists to Apple stores, stories about how its supplier companies are treating their employees are raising quite a few hundred thousand eyebrows as well.
While iPads and iPhones drew hundreds of thousands to Apple stores, Sun Danyong, a 25-year-old man working at Foxconn committed suicide in July 2009 after reporting the loss of an iPhone 4 prototype in his possession. Reports of worker abuse at Apple supplier companies kept increasing, and 14 Foxconn workers committed suicide a year after. One of Apple’s key suppliers, Foxconn, is working to stop suicides, and according to some reports, Foxconn workers are contractually obligated from not blaming the company for self-injury or suicides.
There is design, and then there is manufacturing. Apple has been trying hard to strike the perfect balance between the two. There is ethics. And then there are the economics. While Apple products are designed in the United States, the company has around 156 suppliers and manufacturers around the world, mostly in Asia.
Apple’s supply chain consists of a broad network of suppliers, including final assembly manufacturers that assemble the Mac, iPad, iPod, and iPhones, component suppliers that manufacture parts and components (such as LCDs, hard drives, and printed circuit boards from which finished Apple products are assembled) and non-production suppliers, such as office supply vendors and call centers, that provide products and services that are not part of the Apple manufacturing process.
For the first time in the history of the company, Apple released a report on Supplier Responsibility at Apple for the world to see. The 27-page 2012 progress report details Apple’s auditing progress, labor initiatives, and information on Apple’s worker education and development SEED program. As part of underlining its supplier responsibility, Apple has also disclosed a list of its leading supplier companies, representing 97 per cent of Apple’s procurement expenditure.
In 2011, Apple conducted 229 audits — an 80 per cent increase over the previous year. An Apple auditor leads every onsite audit, says the company, supported by local third-party auditors.
In addition to regularly scheduled audits Apple also conducts a number of surprise audits every year, where a Apple team visits a supplier unannounced, and audits must begin within an hour of their arrival. All suppliers must live up to Apple’s Supplier Code of Conduct as a condition of doing business with Apple, says the company. So, do they? No, they do not.
Each year, Apple audits suppliers in eight areas relating to labor and human rights. Apple looks for compliance of both their practices and management systems. If we look at the 2012 progress report, overall compliance is only 74 per cent in practice, and drops to 67 per cent when it comes to management systems in place.
18 facilities screened job candidates or current workers for hepatitis B, and 52 facilities lacked policies and procedures that prohibit discrimination based on results of medical tests. 24 facilities conducted pregnancy tests, and 56 facilities did not have policies and procedures that prohibit discriminatory practices based on pregnancy. 93 facilities had records that indicated more than 50 percent of their workers exceeded weekly working hour limits of 60 in at least 1 week out of the 12 sample period.
At 90 facilities, more than half of the records Apple reviewed indicated that workers had worked more than 6 consecutive days at least once per month, and 37 facilities lacked an adequate working day control system to ensure that workers took at least 1 day off in every 7 days. 42 facilities had payment practice violations, including delayed payment for employees’ wages and no pay slips provided to employees. 68 facilities did not provide employees adequate benefits as required by laws and regulations, such as social insurance and free physical examinations. 49 facilities did not provide employees with paid leaves or vacations. 67 facilities used deductions from wages as a disciplinary measure. 108 facilities did not pay proper overtime wages as required by laws and regulations. For example, they did not provide sufficient overtime pay for holidays.
Apple’s honesty is commendable in making the audit results public, and while listing known issues, Apple has also made it abundantly clear that the company is taking steps to address the problems. But there are two very important points here. a] How could Apple have missed these issues earlier? b] Is Apple’s response enough? For example, Apple’s response to its supplier’s violating payment practices is “We required facilities to pay employees in a timely manner as required by laws and regulations and to provide pay slips to employees. We also required facilities to strengthen their current systems to prevent recurrence.” Apple-designed training programs have educated more than one million supply chain employees about local laws. How can education stop abuse if there is no viable alternative, for either the workers, or Apple, for that matter?
We respect Apple’s innovation, but we probably do not want innovation at the cost of what feels like slave labor. One Uncle Tom’s Cabin is enough.