www.fairlabor.org
Protecting Workers’ Rights Worldwide
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Independent Investigation o Apple Supplier, Foxconn
Report Highlights
I. Introduction
This report is the result of a Fair Labor Association(FLA) independent investigation into Apple’s supplierFoxconn, China’s largest private employer. FLA is aunique collaboration among companies, universities, andlabor and human rights civil society organizations thatgoes beyond identifying labor problems by uncovering thesources of these problems, and how best to resolve them. Working directly with corporations allows for moresuccess in developing meaningful solutions that remainafter public scrutiny and media attention have faded. After growing criticism during 2011 about the workingconditions at Foxconn, including those conditions that led to deadly accidents, Apple agreed to allow FLA to conducta thorough investigation of those suppliers, beginning with three factories at Guanlan, Longhua, and Chengdu inChina. 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 ndings of FLA’s nearly month-long investigation revealed serious and pressing noncompliances with FLA’s
Workplace Code of Conduct,
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as well as Chinese labor law. In addition to the ndings summarized below, this report
contains a detailed set of necessary remedial measures to protect the health and safety of workers, reduce workerhours to legal limits while protecting worker pay, and establish genuine avenues for workers to provide input oncompany 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.
MARCH 2012
II. Methodology
The assessors methodically and carefully conductedan assessment using FLA’s Sustainable Compliancemethodology (SCI) as well as an anonymous,representative worker perception survey of more than35,000 randomly selected Foxconn workers, referredto in this report as the SCOPE workers’ survey on workforce perception and satisfaction.These surveys asked workers about their perceptions
of working hours, wages and benets, health and safety,
working environment, and the atmosphere within thefactory. The SCI method examines compliance issues, while offering a more thorough assessment of the
employment relationship from start to nish in order
to provide a solid foundation for the achievementand maintenance of legal and code compliance. Theassessors answered more than 2,200 questions overthe course of their investigation, conducted hundredsof on- and off-site interviews, and logged nearly 3,000staff hours inside the factories. This multi-prongedapproach produced a range of both quantitative andqualitative data, allowing FLA to develop an in-depthunderstanding of working conditions, particularly during peak production periods.
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III. Findings and Remedial Measures
In its investigation of Foxconn, FLA observed at least50 issues related to the FLA Code and Chinese laborlaw, including in the following areas: health and safety, worker integration and communication, and wagesand working hours. The most pressing problems arelaid out below with the sustainable remedial measuresthat Apple and Foxconn have agreed to implement, inkeeping 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 theFLA Code standard and Chinese legal limits. This wastrue in all three factories. Further, there were periodsduring which some employees worked more than sevendays in a row without the required minimum 24-hour break. The root causes include high labor turnover,
which undermines efciency, and gaps in production
and capacity planning.
Remedial Action:
Foxconn has agreed to achieve fulllegal compliance regarding work hours by July 1, 2013, while protecting workers’ pay. While reducing hoursand stabilizing pay, Foxconn will need to increaseemployment 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 Saety
Our assessors identied numerous issues related to
inconsistent policies, procedures and practices. Theinvestigation revealed that a considerable numberof workers felt generally insecure regarding theirhealth and safety. The issue of aluminum dust was of particular concern, as this was the cause of an explosionat the Chengdu facility last year. FLA found that,one year after the Chengdu explosion, Foxconn hadimproved operating procedures, measurement, anddocumentation to reduce risk related to aluminum dust where Apple products are made.
Remedial Action:
Workers are the rst line of defense in
health and safety, and increased worker involvementin formulating and implementing health and safety
Contents
Report Highlights...............................................................................1Foxconn Investigation Report.......................................................4Process...................................................................................................4A. Compliance Assessments ..................................................5B. Worker Satisaction Survey ...............................................6Investigation Results.........................................................................6A. Principal Findings .............................................................8C. Hours o Work ....................................................................8D. Compensation ...................................................................9E. Interns ..................................................................................9F. Industrial Relations ........................................................10G. Health, Saety & Environment....................................11FLA Recommended Actions & Remediation Plan.................12Appendices 1. SCI Findings (Guanlan, Longhua, Chengdu)2. SCOPE Workorce Perception and Satisaction Report3. SCOPE Survey Data4. Understanding FLA’s Assessment Methodology
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policy will help to ensure future compliance. Many of Foxconn’s health and safety violations, including blocked exits, lack of or faulty personal protectiveequipment, and missing permits have already beenremedied. Additionally, Foxconn has agreed to changethe system by which accidents are recorded. In the past,only those accidents that caused work stoppage wererecorded as accidents. Moving forward, all accidentsthat 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 condence in the
management of health and safety issues. The assessmentalso suggests that if workers had more involvement with developing and monitoring health and safety procedures, many of the problems with implementationcould be avoided.It should be noted that committees may not be truly representative of the workers, becausemanagement nominates candidates for election. Theresult is committees composed not by those whoneed representation, but instead are dominated by management representatives. Moreover, committeesare largely reactive, failing to monitor conditions in arobust 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 toensure elections of worker representatives withoutmanagement inteference. All workers will receivea copy of the Collective Bargaining Agreement andnew employees will receive information about unionactivities during their orientation process.
D) Compensation and Social Security Insurance
While Foxconn wages are above the Chinese averageand the legal minimum, the assessment foundthat 14 percent of the workers may not receive faircompensation for unscheduled overtime. The assessorsdiscovered that unscheduled overtime was only paidin 30-minute increments. This means, for example,that 29 minutes of overtime work results in no pay and58 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 citiesor 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 benet.
Remedial Action:
Foxconn has agreed that the policy and practice relating to such situations warrantsimprovement; workers will be paid fairly for allovertime and work-related meetings that occur outsideregular working hours. After extensive discussions,Foxconn will offer a two-track remedial strategy:to investigate alternative private options to provideunemployment insurance to migrant workers, and work with government agencies to expedite the
transportability of benets. FLA will conduct a cost of
living study in Shenzhen and Chengdu to assist Foxconnin determining whether worker salaries meet FLA requirements for basic needs, as well as discretionary income.
IV. Conclusion
As an afliate of the Fair Labor Association, Apple has
committed to ensuring that the FLA code standardsare upheld in its supply chain. This investigation was
the rst of an ongoing series of FLA investigations and
assessments into Apple’s supply chain. FLA will reportperiodically on the progress of Foxconn and Apple intaking steps to meet FLA’s remedial recommendations.
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