How Apple, Foxconn, and others can address labor abuses in overseas factories

Why do we keep hearing about labor abuses in overseas factories like those of Apple-supplier Foxconn? Auditing and inspections are inadequate to solve the problem. Requiring companies to examine and publicly report on risks along their supply chains can help eliminate violations.

Opinion

The New York Times’ recent investigative report of poor working conditions at Apple supplier factories in China hit the airwaves with a bang. Shortly thereafter, The Guardian reported on abuses of workers producing sportswear in Bangladesh for Nike, Adidas and Puma. Though Mike Daisey’s account of Apple factory abuses has been exposed for containing fabricated details, the underlying story of deplorable labor conditions remains true.

Accounts of labor rights abuses in overseas factories have been emerging since the mid-1990s, when Wal-Mart’s Kathie Lee Gifford clothing line was found to be using child labor, as were some of Nike’s contract factories in Asia, to take just two examples. Those early exposés led multinational corporations to establish supply chain management systems, which in turn spawned a cottage industry of factory inspections.

So why do we keep seeing these stories, particularly among big brands that have been attempting to get a grip on their supply chains for years? One important reason is that, while auditing and inspections have called attention to the need for companies to address human rights abuses in their supply chains, these processes suffer from significant weaknesses and – on their own – do not solve the problem.

First, they do not address structural elements or root causes underlying labor violations. These include consumer demand for ever-better, ever-cheaper merchandise, and brands’ drive to meet (and, yes, create) that demand. This demand translates into pressure on suppliers.

Buyer companies’ sourcing practices (last-minute changes, cut-rate prices paid for items, unrealistically large orders in short timeframes) have been shown to exacerbate or even cause poor conditions and rights abuses in factories. Managers dare not refuse an order from a customer such as Apple or Nike.

Second, periodic inspections of the sort typically performed at these factories cannot catch or solve persistent and often “invisible” problems. Issues such as discrimination, sexual harassment, or violations of a worker’s right to form or join a trade union are much harder to detect in planned inspections or drop-ins.

Further, the inspections cottage industry has fostered fraud among some factory managers (who might, for example, coach workers on what to say to auditors). The system has created a tick-box mentality among brands, who want to be able to check off “inspection done,” when the situation on the shop floor is often too complicated to be captured accurately in spot checks.

Third, weak regulations in producing countries often led, in the first place, to multinational brands’ decision to source from those countries. And these lax regulatory environments play a fundamental role in the perpetuation of serious labor rights violations in these factories.

So the blame for ongoing labor rights violations can be shared all around: among consumers, buyer companies, factories, and governments. All of the above has been known for several years, and recent news coverage underscores a number of these elements.

On the positive side, some companies – Nike among them, in fact – have moved away from an over-reliance on auditing.  A few companies have also begun to review their purchasing practices and how they affect labor conditions.  Gap, Inc. has been a forerunner in this area, establishing an internal process to address, for example, how late changes to production orders can lead to excessive overtime in factories or unauthorized subcontracting.

A small number of companies, such as H&M, have put resources into training workers on labor rights, on the idea that informed and empowered workers are the most effective barrier to labor rights abuses.

Now Apple and its supplier, Foxconn, have promised to take remedial measures at three factories in China. This was in response to a report released in late March by the Fair Labor Association (FLA), which Apple had asked to investigate allegations of labor abuses in Foxconn factories. The report detailed overtime, health and safety, and other violations, as well as problems with worker representation systems.

FLA described its investigation as “much more than an audit,” and an “in-depth, top-down and bottom-up examination of the entire operation.” Some labor rights activists have taken issue with the investigation and Apple’s promises, pointing out that the company has made similar pledges after past exposés.

And still, periodic auditing of factories remains the norm for many multinational companies. It is easier to hire auditors than to re-examine – much less reform – a  business model based on creating and feeding consumer demand for inexpensive goods produced quickly.

Recent developments may signal change. New legislation in California requires large retail and manufacturing companies with a certain amount of business in that state to report publicly on measures they’ve taken to keep human rights violations such as forced labor and human trafficking out of their supply chains. A proposed federal-level version of that law is before the House.

The new law and the proposed legislation, which are focused on egregious human rights abuses, would not necessarily expose all of the problems revealed in the Apple case. And some companies (including Apple, though only relatively recently) already do this reporting voluntarily. But (mandatory) transparency for companies’ supply chain practices should be welcomed for several reasons.

In requiring companies to examine and publicly report on risks along their supply chains, such laws will remove any excuse for not knowing who one’s suppliers are and what they are doing. They might encourage buyer companies to form longer-term, closer relationships with their suppliers – an important factor in addressing persistent labor rights abuses.

They will send a message to buyer and supplier companies alike that what goes on in supply chains will be open to systematic, public scrutiny. This aspect has the added value of leveling the playing field and applying the same compliance standards to all.

And as transparency around supply chains rises, it should facilitate open and honest assessment of the human rights consequences of our current consumption and production models. It’s about time.

Elizabeth Umlas is a human rights researcher based in Geneva.