USA / China: Apple Releases Its 2013 Supplier Responsibility Audit Results – Labor and Human Rights Excerpt
Apple released on January 24th its 2013 Supplier Responsibility Report, disclosing the results of its audit program for 2012 and revealing a number of labor and human rights violations, including evidence of 74 underage workers at one facility and over 100 underage workers among its audited supplier facilities.
Highlights from Apple’s 2013 Report:
Apple conducted 393 audits at all levels of its supply chain—a 72 percent increase over 2011—covering facilities where more than 1.5 million workers make Apple products. This total included 55 focused environmental audits and 40 specialized process safety assessments to evaluate suppliers’ operations and business practices. In addition, 27 targeted bonded labor audits were conducted to protect workers from excessive recruitment fees.
Taking on the industry-wide problem of excessive work hours, Apple achieved an average of 92 percent compliance with a maximum 60-hour work week. Apple will now be tracking more than 1 million workers weekly and publishing the results monthly on their website.
In 2012, Apple became the first technology company to join the Fair Labor Association (FLA). At Apple’s request, the FLA conducted the largest-scale independent audit in its history, covering an estimated 178,000 workers at Apple’s largest final assembly supplier, Foxconn. The FLA’s independent findings and progress reports have been published on its website.
Apple extended their 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.
Apple increased investment in their 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 Apple’s efforts to protect the rights of workers who move from their home country to work in Apple’s suppliers’ factories, Apple 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.
Excerpt from “Apple Supplier Responsibility, 2013 Progress Report” for Labor and Human Rights
“Audit Results
Our suppliers are required to uphold the rigorous standards of Apple’s Supplier Code of Conduct, and every year we raise the bar on what we expect. Our audits, as well as feedback from the local community and external experts, often make us aware of new opportunities to improve working conditions and further strengthen our Code. As a result, when we return to suppliers that have been audited in the past, we often find new areas for improvement. We audit all final assembly suppliers every year. And we audit additional suppliers based on risk factors, including conditions in the country in which a facility is located or a facility’s past audit performance. Many of the suppliers we evaluate for the first time tell us they have never been audited—which gives Apple the opportunity and responsibility to work with them to improve their social and environmental performance.
An Apple auditor leads every onsite audit, supported by local third-party auditors who are experts in their fields. Each of these experts is trained to use Apple’s detailed auditing protocol and to assess requirements specified in our Supplier Code of Conduct. During a typical audit, Apple’s auditing team reviews hundreds of records, conducts physical inspections of manufacturing facilities—including factory-managed dormitories and dining areas—and conducts interviews with the workers themselves. At the same time, we evaluate the facility’s senior managers, including their policies and procedures, their roles and responsibilities, and the training programs they provide for workers, line supervisors, and managers. Our auditors then grade each facility on its level of compliance with our Supplier Code of Conduct.
When we complete an audit, we review its findings with the facility’s senior management team. And when an audit reveals violations of our Code, we require the facility not only to address those specific violations, but also to change any underlying management systems to prevent problems from recurring. Apple tracks the progress of all corrective and preventive action plans, with the expectation that all issues will be closed within 90 days of the audit. We then verify that action has been taken.
Apple considers the most serious breach of compliance to be a core violation. Core violations include instances of underage or involuntary labor, falsifications of audit materials, worker endangerment, intimidation of or retaliation against workers participating in an audit, and significant environmental threats. All core violations must be remedied immediately. If a violation is particularly egregious, or we determine that a supplier is unwilling or incapable of preventing recurrence of a violation, we terminate the relationship. When appropriate, we also report the violation to the proper authorities.
Each year, Apple audits suppliers in five broad categories: labor and human rights, health and safety, environment, ethics, and management systems.
Labor and Human Rights
| Category | Practices in Compliance | Management Systems Compliance | Significant Findings and Actions Taken |
| Anti-discrimination | 79% | 69% | 34 facilities required pregnancy testing and 25 facilities conducted medical testing such as Hepatitis B tests. We classified these practices as discrimination—even if permissible under local laws. At our direction, the suppliers have stopped discriminatory screenings for medical conditions or pregnancy. We also required them to establish clear policies and procedures to prevent recurrence. |
| Fair treatment of workers | 96% | 91% | |
| Prevention of involuntary labor and human trafficking | 85% | 81% | |
| Prevention of underage labor | 95% | 83% | |
| Working hours | 92%* | * | *In 2012, we changed our measurement on working hours to one that is more meaningful and effective. We gauge our progress by tracking real-time work hours weekly for over 1 million employees in our supply chain, publishing the data every month. As a result of this effort, in 2012 our suppliers have achieved an average of 92 percent compliance across all work weeks, and the average hours worked per week was under 50.As part of our audit program, we continue to audit facilities on their compliance to this metric, measuring sample data from the previous year. Where we find gaps in our audit, we require facilities to ensure workers’ weekly working hours are no more than 60 hours and to analyze work-hour data and conduct in-depth investigations on the root causes of excessive working hours. In addition, we continue enrolling facilities in our work hour program. |
| Juvenile worker protection | 62% | 52% | Our code requires our suppliers to provide special treatment to juvenile workers. 63 facilities did not provide free health examinations to juvenile workers. At 29 facilities, juvenile workers were assigned to work in positions that are not suitable, such as a job involving heavy lifting. Facilities were required to develop corrective action plans and preventive measures such as providing free health exams to juvenile workers, developing standard procedures for hiring and managing juvenile workers, and not permitting overtime work. |
| Wages and benefits | 72% | 68% | 102 facilities did not pay night-shift workers the appropriate pay for legal holidays due to an incorrect interpretation of the law. For example, if Wednesday is a national holiday, a night-shift on Tuesday that starts at 6 p.m. and ends at 2 a.m. should have the final 2 hours paid at holiday rates rather than normal night-shift overtime rates. At 21 facilities, overtime pay was incorrect and at 15 facilities the base wage used to calculate overtime was insufficient. We required facilities to pay overtime premium strictly following the national law and update these requirements in their internal system to avoid recurrence. We also required these facilities to repay workers for past inaccuracies. 90 facilities used deductions from wages as a disciplinary measure. While disciplinary pay deductions are legal in some countries, they are a violation of Apple’s Supplier Code of Conduct. We require all of our suppliers to compensate workers for any illegal deductions and wage deficiencies, including base wage, overtime wage, disciplinary fines, downtime payment, and any other legal benefits or illegal deductions. In 2012, our suppliers repaid a total of more than US$2.3 million to their workers. |
| Freedom of association | 98% | 95% | |
| Overall compliance | 77% | 73% |
Prevention of involuntary labor and human trafficking: 8 facilities were found with bonded labor. Suppliers were required to pay back any excess foreign contract worker fees, totaling US$6.4 million in 2012. We also required suppliers to implement robust procedures to prevent recurrence. We conducted 27 bonded labor focused investigations in 2012.
Prevention of underage labor: 11 facilities were found with underage labor, with a total of 106 active cases and 70 historical cases. In all but one case, the facilities had insufficient controls to verify
age or to detect false documentation, but there was no intentional hiring of underage labor. In one case, our detailed audit concluded that the extent of the violation was pervasive, finding 74 cases at one facility, so we terminated business with the supplier. All facilities were required to attend our
Prevention of Underage Labor Training and follow our Underage Labor Remediation Program. We require suppliers to 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.
Link to the full report, click here.
So what happens now to the Apple supplier who violated human trafficiking law? I hope that the government will abe to resolve this vulnerable issue. This should be an eye opener to all.
It is important that suppliers take seriously the codes of conduct that are stated by the brands whom the supplier is dependent for sales. The brand, Apple in this case, had offered numerous workshops for managers of their suppliers, but this particular supplier apparently continued to disregard the stated expectations of the brand. While a painful lesson for this particular supplier, it hopefully will serve as a example for other suppliers who happened not to be in the group audited and to other suppliers working for other brands. I suspect that after some time, if significant changes have been instituted by this supplier, they will be allowed to regain their supplier status. They have the opportunity at that point to become a model for others. If they do not take the situation seriously and continue in their practices of labor and human rights violations, their sales will likely be seriously impacted.