Apple’s Supplier Responsibility

4 02 2014

Infringements of human rights are seen all over the world, not only in Third-World countries. The history shows us that they are mainly economically based.
Children are the weak parts of our society and adults often share the common (borrowed) opinion that they are under no obligation to explain their decisions to young people (although they should do it). Another reason causing children to work hard is the fight for survival of their family.

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Child labour
refers to the employment of children in any work that deprives children of their childhood, interferes with their ability to attend regular school, and that is mentally, physically, socially or morally dangerous and harmful. This practice is considered exploitative by many international organisations. Legislations across the world prohibit child labour.
Child labour was employed to varying extents through most of history. Before 1940, numerous children aged 5–14 worked in Europe, the United States and various colonies of European powers. These children worked in agriculture, home-based assembly operations, factories, mining and in services such as newsies. With the rise of household income, availability of schools and passage of child labour laws, the incidence rates of child labour fell.
In developing countries, with high poverty and poor schooling opportunities, child labour is still prevalent. In 2010, sub-saharan Africa had the highest incidence rates of child labour, with several African nations witnessing over 50 percent of children aged 5–14 working. Worldwide agriculture is the largest employer of child labour. Vast majority of child labour is found in rural settings and informal urban economy; children are predominantly employed by their parents, rather than factories. The incidence of child labour in the world decreased from 25% to 10% between 1960 and 2003 (World Bank).

The companies …

Although children are primarily employed by their parents many companies in the Ready Made Garment (RMG) provoked child labor especially in Bangladesh.

Regarding child labor in the non-industrial sector problems have to be solved by Administrations. It needs International Organizations, engaged journalists to bring those cases to the public.

In the 90s US senator Tom Harkin proposed the Child Labor Deterrence Act. It prohibits the importation of products that have been produced by child labor, and includes civil and criminal penalties for violators.

Other acts on other countries, the massive critique on companies (like H+M with it’s production of RMG in Bangladesh) by engaged journalists led to a rethink.

Products which are manufactured or mined in whole or in part by children would have resulted in the loss of lucrative American contracts. Its impact on Bangladesh’s economy would have been significant as the export-oriented RMG industry represents most of the country’s exports.

Sad to say that the main motivation to solve the problem again is/was not humanity but economics. In the majority of cases companies only react to avoid severe impacts on their sales.

One of the reasons for writing this article was the following headline

Apple iPhone factory workers imprisoned in virtual slavery
Source by Rik Myslewski, 7th November 2013

What a misleading, dishonest headline, meant for attracting clicks. Not only is this not an Apple factory (it’s a Flextronics factory, who has Apple as well as dozens of others as clients, and which produces a single internal component for the iPhone), Apple already dropped this factory from their supply chain last year, precisely because they found out about these violations. Sensational stories that distort the facts and avoid addressing the root of the problem.

For assessing the problems I think you can comply with these theses:

  • 1 Nearly all globally acting companies make use of cheap labor.
  • 2 The manufacturers themselves are primarily responsible for enforcement of human rights.
    Countries, their legislation and their authorities, ate under obligation to avoid infringements of generally accepted human rights.
  • 3 There is not enough good-paying work in a world where everything gets automated and demand languishes.
    This leads to a situation that even children already have to support their parents for fighting against poverty.
  • 4 If prices would be adjusted to fair wages of labor we would have a world-wide crisis and crowds of people in third-world countries would loose their jobs.
  • 5 Economic exploitation happens primarily in authoritative countries where people have no chance to claim their rights.

Apple …

Let’s have a look on Apple and the relation to it’s foreign suppliers.
Like in all other sectors of the industry Apple also is bound to foreign suppliers by contract. The company undertook many steps and is taking towards all issues regarding infringements of human rights (unlike other tech companies).

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Magnified parts of the map …

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Apple’s report of 2013 lists 200 suppliers with 398 companies located in 30 countries. The numbers do not include further locations of a company in one country.

Ending excessive work hours
Ending the industrywide practice of excessive overtime is a top priority for Apple. Our Supplier Code of Conduct limits work weeks to 60 hours except in unusual circumstances, and all overtime must be voluntary. Unfortunately, work weeks in excess of 60 hours have historically been standard rather than exceptional, and little has changed for many years in our industry. In the past, we tried different ways to fix the problem, but we weren’t seeing results. So in 2011, we took a more basic approach: We tracked work hours weekly at a handful of suppliers, and when we found excessive hours, we were able to address the problems quickly with the supplier.

In 2012, we expanded that program and tracked work hours weekly for over 1 million employees, publishing the data every month. As a result of this effort, our suppliers have achieved an average of 92 percent compliance across all work weeks, and the average hours worked per week was under 50.

Addressing underage labor
Our approach to underage labor is clear: We don’t tolerate it, and we’re working to eradicate it from our industry. When we discover suppliers with underage workers or find out about historical cases – where workers had either left or reached legal working age by the time of the audit – we demand immediate corrective action as part of our Underage Labor Remediation Program. Suppliers must return underage workers to school and finance their education at a school chosen by the family. In addition, the children must continue to receive income matching what they received when they were employed. We also follow up regularly to ensure that the children remain in school and that the suppliers continue to uphold their financial commitment.

In 2012, we found no cases of underage labor at any of our final assembly suppliers. While we are encouraged by these results, we will continue regular audits and go deeper into our supply chain to ensure that there are no underage workers at any Apple supplier. Many suppliers tell us that we are the only company performing these audits, so when we do find and correct problems, the impact goes far beyond our own suppliers.

Tools for responsible hiring
Last year marked the third year of our Prevention of Underage Labor training program, an initiative to help suppliers identify and prevent underage labor. We conducted training for 84 suppliers that were chosen because their facilities are located in provinces at high risk for underage labor. The training outlines methods and provides tools for implementing and sustaining effective age verification processes. It also specifies the steps suppliers must follow if underage labor is found during an audit.

An independent auditor checks identification and other documents to verify the age and status of workers at a facility in Shanghai. Suppliers are required to maintain all relevant documentation and to produce it during audits.
New in 2012, we provided a guidebook to help with identifying legal IDs and assessing recruitment practices of third-party labor agents. We also added a layer of support beyond the classroom. After the training, suppliers now assess their internal and external risks and create action plans to revise policies for preventing underage labor. Then we follow up to review their new systems. For suppliers that need additional help, industry consultants provide onsite support in implementing action plans and improving management practices.

In addition, we give at-risk suppliers the names of labor agents that have been associated with the recruitment of underage workers. We also offer guidance on working with other agents, including ensuring that the agent has appropriate licenses and permits, conducting regular audits of the agent’s recruitment practices, and reporting violations to Apple and the local government.

Excessive recruitment fees and bonded labor
Third-party labor agencies help many suppliers recruit contract workers from other countries. The agencies often use multiple subagencies, which in turn do business through smaller local agencies in the workers’ home countries. Workers are often required to pay fees to each of these agencies to gain employment. And many find that they have taken on huge debt even before they start the work. As a result, they must hand over a high proportion of their wages to recruiters to pay this debt, and they have to remain at the job until the debt is paid. We consider this a form of bonded labor, and it is strictly prohibited by our Supplier Code of Conduct.

“Apple’s approach to addressing the enormous vulnerability faced by migrant workers makes it one of the leading companies tackling this issue. Critically, the company has extended its efforts to a root cause of the problem, namely abusive recruitment practices in workers’ home countries. The result is tangible, financial benefit to migrant workers.”
(Dan Viederman, CEO, Verité)

When we find violations, suppliers must reimburse excessive recruitment fees – anything higher than the equivalent of one month’s net wages – for any eligible contract worker found working on Apple projects. Knowing that factories in certain countries are more likely to employ foreign contract labor, we target these factories for bonded labor audits, and we help them modify their management systems and practices to comply with our standards. Apple is the only company in the electronics industry to mandate these reimbursements, and our suppliers have reimbursed a total of US$13.1 million to contract workers since 2008, including US$6.4 million in 2012.

Sourcing conflict-free materials
Apple is committed to using conflict-free minerals, and we’ve joined the Public-Private Alliance for Responsible Minerals Trade, a joint initiative among governments, companies, and civil society to support supply chain solutions to conflict minerals challenges in the Democratic Republic of Congo. As one of the first electronics companies to map its supply chain for conflict minerals, we actively survey suppliers to confirm their smelter sources. As of December 2012, we have identified 211 smelters and refiners from which our suppliers source tin, tantalum, tungsten, or gold.

Apple suppliers are using conflict-free sources of tantalum, are certifying their tantalum smelters, or are transitioning their sourcing to already certified tantalum smelters.

Conclusions …

What we can see is that Apple built an appropriate infrastructure for keeping generally accepted human rights.
This is just the first step every company had to initiate, not only if manufacturing is outsourced but also if suppliers are local companies and obviously in the company itself as well.

We all know that guidelines are only one side of the coin. The other side is called control. If you have ever been in an Asian country (where Apple’s most important suppliers are located) you would know that controlling guidelines is extremely hard. Differences in cultures, language difficulties, and corruption make it nearly impossible to ensure compliance with all these guidelines. I know what I’m talking about because my 2nd residence is Thailand.

Anyway, here are the highlights of Apple’s Supplier Responsibility 2013 Report

We conducted 393 audits at all levels of our supply chain – a 72 percent increase over 2011 — covering facilities where more than 1.5 million workers make Apple products. This total includes 55 focused environmental audits and 40 specialized process safety assessments to evaluate suppliers’ operations and business practices. In addition, we conducted 27 targeted bonded labor audits to protect workers from excessive recruitment fees.

Taking on the industrywide problem of excessive work hours, we achieved an average of 92 percent compliance with a maximum 60-hour work week. We are now tracking more than 1 million workers weekly and publishing the results monthly on our website.

In 2012, Apple became the first technology company to join the Fair Labor Association (FLA). At our request, the FLA conducted the largest-scale independent audit in its history, covering an estimated 178,000 workers at our largest final assembly supplier, Foxconn. The FLA’s independent findings and progress reports have been published on its website.

We extended our worker empowerment training programs to more workers and more managers. In 2012, 1.3 million workers and managers received Apple-designed training about local laws, their rights as workers, occupational health and safety, and Apple’s Supplier Code of Conduct. That’s nearly double the number of workers trained by this program since 2008.

We increased our investment in our Supplier Employee Education and Development program — which offers workers the opportunity to study business, computer skills, languages, and other subjects at no charge — expanding from four facilities to nine. More than 200,000 workers have now participated in the program.

Continuing our efforts to protect the rights of workers who move from their home country to work in our suppliers’ factories, we required suppliers to reimburse US$6.4 million in excess foreign contract worker fees in 2012. That brings the total repaid to workers to US$13.1 million since 2008.

The FLA …

Many large companies are members of the Fair Labor Association (FLA). Activities of the FLA are targeted to audits of the company’s suppliers, mainly located in foreign countries. Reports are published on the FLA website.

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Members of the FLA are e.g. Apple (as the first technology company), adidas, asics, Fruit of the Loom, H+M, Nestle, Nike, Puma, S.Oliver, etc. Apple’s main competitor Samsung is not an affiliate of the FLA. The list shows that most of the members are companies active in the garment industry.

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The FLA regularly reports about audits (announced and unannounced) and everyone can download the reports in Adobe PDF or Microsoft Excel file format.
Apple’s membership in the FLA shows the companies efforts to take care of the environment in which it’s products are manufactured.

Wages …

Up to this point it can be excluded that Apple’s suppliers are not involved in supporting child labor, excessive hiring methods, or unacceptable working conditions although some other reports stated this whereby sources cannot be reliably assessed.

The international community clearly considers . The following international conventions and declarations recognize the need for workers to receive a living wage

United Nations Declaration of Human Rights (1948), American Declaration on the Rights and Duties of Man (Organization of American States, 1948), European Charter (Council of Europe, 1961), United Nations International Covenant on Economic and Social Cultural Rights (1966) and American Convention on Human Rights in the Area of Economic, Social and Cultural Rights, Additional Protocol (Organization of American States, 1988). According to Article 23 of the United Nations Universal Declaration of Human Rights (1948)

Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity.

An important reason why living wage is not more widely applied is that there is neither a generally accepted definition of what a living wage is, nor is there a generally agreed methodology on how to measure a living wage. Partly because of this, many companies do not attempt to pay their workers a living wage and many governments do not seriously consider worker needs when they set legal minimum wages.

This might be a challenge for Apple and other companies but it’s not part of their responsibility.

Summary …

About 79% (35% in China) of Apple’s suppliers are located in Asia but none in Africa which shows the highest percentage of child labor in the world.
Chinas administration is seen as authoritative but that doesn’t necessarily mean that the companies located in this country are infringing human rights. I don’t have any objective information about the 135 companies in China regarding fair wages and acceptable working hours. So one only can trust what Apple publishes in it’s reports (see related links). But what we can say is that even in Germany many people cannot earn their living although they are full-time workers.

Looking at the stats, nearly all Asian countries with Apple suppliers still have child labor in the agricultural sector but there is no evidence for child labor in the industrial sector like it’s still the case e.g. in Bangladesh, Pakistan, and India.

So Apple does a better job than many other companies.

Related links …

Apple Supplier List 2013

2nd Foxconn Verification Status Report, May 2013

Fair Labor Association

Minimum wages by country

Estimating a Living Wage, A Methodological Review

Thanks for stopping by.


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