Indepedent Investigation of Apple Supplier Foxconn Highlights

Protecting Workers’ Rights Worldwide

Independent Investigation of Apple Supplier, Foxconn Report Highlights

MARCH 2012

I. Introduction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¿QGLQJV RI )/$¶V QHDUO\ PRQWK ORQJ LQYHVWLJDWLRQ UHYHDOHG VHULRXV DQG SUHVVLQJ QRQFRPSOLDQFHV ZLWK )/$¶V D)&E(,.3'%=)7'%)-%=)47+3*<H DV ZHOO DV &KLQHVH ODERU ODZ ,Q DGGLWLRQ WR WKH ¿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

II. Methodology !"'%.$$'$$)&$%>'*")7#3.,,?%.47%3.&'-+,,?%3)47+3*'7% .4%.$$'$$>'4*%+$#49%/02:$%M+$*.#4.1,'%=)>(,#.43'% >'*")7),)9?%5M=N6%.$%C',,%.$%.4%.4)4?>)+$<% &'(&'$'4*.*#8'%C)&E'&%('&3'(*#)4%$+&8'?%)-%>)&'%*".4% OP<GGG%&.47)>,?%$','3*'7%/);3)44%C)&E'&$<%&'-'&&'7% *)%#4%*"#$%&'()&*%.$%*"'%M=QRS%C)&E'&$:%$+&8'?%)4% C)&E-)&3'%('&3'(*#)4%.47%$.*#$-.3*#)4@% !"'$'%$+&8'?$%.$E'7%C)&E'&$%.1)+*%*"'#&%('&3'(*#)4$% RI ZRUNLQJ KRXUV ZDJHV DQG EHQH¿WV KHDOWK DQG VDIHW\ C)&E#49%'48#&)4>'4*<%.47%*"'%.*>)$("'&'%C#*"#4%*"'% -.3*)&?@%!"'%M=N%>'*")7%';.>#4'$%3)>(,#.43'%#$$+'$<% 1

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III. Findings and Remedial Measures Contents Report Highlights ............................................................................... 1 Foxconn Investigation Report ....................................................... 4 Process ................................................................................................... 4 A. Compliance Assessments .................................................. 5

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B. Worker Satisfaction Survey ............................................... 6 A) Working Hours Investigation Results ......................................................................... 6 A.

Principal Findings............................................................. 8

C.

Hours of Work .................................................................... 8

D.

Compensation ................................................................... 9

E.

Interns .................................................................................. 9

F.

Industrial Relations ........................................................10

G.

Health, Safety & Environment....................................11

FLA Recommended Actions & Remediation Plan.................12

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Appendices 1.

SCI Findings (Guanlan, Longhua, Chengdu)

2.

SCOPE Workforce Perception and Satisfaction Report

3.

SCOPE Survey Data

4.

Understanding FLAâ&#x20AC;&#x2122;s Assessment Methodology

6()*6#/+@C6$*"/(#4()*45$")#<+4?#:+94&#3>#I96>#J0#F8JK0# <:$6(#C4+%(/%$")#<+4?(4&L#C*>A#M:$6(#4(59/$")#:+94&# *"5#&%*3$6$N$")#C*>0#-+./+""#<$66#"((5#%+#$"/4(*&(# (@C6+>@("%#%+#@*$"%*$"#/944("%#6('(6&#+,#+9%C9%0# C4+59/%$'$%>#*"5#D9*6$%>A#!"#%:(#"(.%#>(*40#%("&#+,# %:+9&*"5&#+,#(.%4*#<+4?(4&#<$66#"((5#%+#3(#4(/49$%(50# %4*$"(5#*"5#*//+@@+5*%(5#*%#%:(#&*@(#%$@(#*&#:+94&# <+4?(5#*4(#C4+)4(&&$'(6>#4(59/(5#C(4#<+4?(4A# B) Health and Safety

2XU DVVHVVRUV LGHQWLÂż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emedial Action: :RUNHUV DUH WKH ÂżUVW OLQH RI GHIHQVH LQ

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C) Industrial Relations and Worker Integration

Remedial Action:'5"6%",,')2-'2;/**8'+)2+'+)*'!"#$%&'

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Remedial Action: 5"6%",,')2-'2;/**8'+"'*,)2,%*'("/=*/-7'

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D) Compensation and Social Security Insurance

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Process

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Box 1: SCI Assessment Logistics Foxconn Facility

Guanlan (Feb 14â&#x20AC;&#x201C;17)

Longhua (Mar 5â&#x20AC;&#x201C;8)

Chengdu (Mar 6â&#x20AC;&#x201C;9)

# OF ASSESSORS

# OF ASSESSORS

# OF ASSESSORS

Lead Assessor

1

1

1

Co-Auditor

3

3

2

Worker Interviewer

3

1

2

7

5

5

73,004

66,680

38,393

Workers Interviewed Onsite

230

353

558

Workers Interviewed Offsite

21

66

96

Management Interviews

20

30

58

Assessment Duration

3.5 Days (308 hrs)

4 Days (220 hrs)

4 Days (212 hrs)

FLA Staff Participation

2

2

2

FLA Accredited Monitoring Org.

Openview

Openview

SCSA

Payroll and Time Records Review

12 Months

12 Months

12 Months

TOTAL Worker Count

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TABLE 1

Characteristics of the Workforce at Three Foxconn Facilities, March 2012 GUANLAN iDPBG1

LONGHUA iDSBG1

CHENGDU SHZBG2

73,237

66,680

38,393

% male

67%

63.11%

64.01%

% female

33%

36.89%

35.99%

23.1

23.1

23.4

Operators (%)

90.7%

91.12%

82.31%

Managers (%)

0.1%

0.07%

0.08%

Line/floor supervisors (%)

6.4%

4.91%

6.63%

Engineers/engineers (%)

2.8%

3.9%

10.98%

Permanent/regular (%)

96.9%

99.81%

100%

Interns (%)

0.1%

0.19%

Other (%)

3%

Total number of workers Gender

Average age (years) Employment by occupation

Employment by status

Young workers (16 to <18 years) (%)

3.6%

4.91%

5.51%

Migrant workers3 (%)

99%

99.17%

14.22%

29.3%

37.52%

69.61%

Living in the dormitories (%)

Note: Information as of March 5, 2012. At the time of the FLA SCI assessment at Guanlan (mid-February 2012), employment was 73,004.

1 Assembly 2 Components & Assembly 3 A migrant worker is defined in FLAâ&#x20AC;&#x2122;s Workplace Code of Conduct as a person who migrates or who has migrated from one country to another or in some cases between regions or provinces of a country with a specific purpose of exercising an economic activity from which they will receive a wage. The above reference is to internal migrants.

SOURCE: STATISTICS PROVIDED BY FOXCONN.

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"$%#3'.1'.(#!.1#"$%#)+-!)#)!:#+&#3D0#K%.-$8!&42#"$!"# !&%#'.*+)*%1/#H!-$#3'.1'.(#!)2+#'.-)61%2#!.#!.!)52'2#+,# "$%#&++"#-!62%2#!.1#&%-+88%.1!"'+.2#,+&#'88%1'!"%# !-"'+.#+&#262"!'.!7)%#'89&+*%8%."A#1%9%.1'.(#+.#"$%# "59%#+,#3'.1'.(/#

;<=#3'.1'.(2#-!.#7%#-!"%(+&'>%1#'."+#":+#8!'.#"59%2?#

Immediate Action Required:#@$'2#-!"%(+&5#!99)'%2#

Employment Functions

"+#1'2-+*%&'%2#+&#3'.1'.(2#!"#"$%#:+&49)!-%#"$!"# .%%1#'88%1'!"%#!-"'+.#7%-!62%#"$%5#-+.2"'"6"%#!.# '88'.%."#1!.(%&A#&'24#"$%#:+&4%&2B#7!2'-#&'($"2A# "$&%!"%.#"$%'&#2!,%"5#!.1#:%))C7%'.(#+&#9+2%#!#-)%!&# $!>!&1#"+#"$%#%.*'&+.8%."A#!.1#7%-!62%#"$%5#!&%# -)%!&)5#.+"#'.#-+89)'!.-%#:'"$#"$%#3D0#E+&49)!-%# <+1%#+,#<+.16-"#!.1#)+-!)#)!:2 Sustainable Remediation Required:#@$'2#-!"%(+&5# !99)'%2#"+#3'.1'.(2#"$!"#&%F6'&%#!-"'+.2#"!-4)'.(# "$%#6.1%&)5'.(#&++"#-!62%2#'.#!#)+.(C"%&8#!.1# 252"%8!"'-#8!..%&

3'.1'.(2#,&+8#"$%#;<=#022%228%."2#+,#"$%#"$&%%# 3+G-+..#,!-"+&'%2#!99%!&#'.#,6))#!2#!99%.1'-%2/#3+&# %!-$#3'.1'.(A#"$%&%#'2#!#&%,%&%.-%#"+#"$%#H89)+58%."# 36.-"'+.#'.*+)*%1A#"$%#"59%#+,#3'.1'.(#I'88%1'!"%# !-"'+.#+&#262"!'.!7)%#&%8%1'!"'+.JA#!.#%G9)!.!"'+.#+,#

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

Employment Function Scores Score by Employment Function

TABLE 2 Average Score 100%

89% 80

72% 72%

85%

79%

77%

80%

79%

77% 68%

67%

64%

60

57%

53% 53%

92%

86% 87% 73% 71%

75%

68%

72%

73%

87% 74%

58%

40

20

0

Recruitment, Compensation Hiring and Personnel Development

Hours of Work

Termination and Retrenchment

Industrial Relations

Grievance System

Workplace Conduct and Discipline

Health and Safety

Environmental Protection

Fu Tai Hua Industrial (Shenzhen) CO. LTD, Guanlan Fu Tai Hua Industrial (Shenzhen) CO. LTD, Longhua Hong Fu Jin Precision Electronical Technology (Chengdu) Co., Ltd., Chengdu

7

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!"#$%&'()'*#%#+%,+(#%,-.-/','.#%01.*#"+.(2%#$'% 3$'.4$'.%5+*-#"+.(%671-.5-.%-.8%9+./$1-:%)'&0+&,'8% ;'##'&%#$-.%#$'%,+&'%&'*'.#%<$'./81%0-*"5"#=2%>$"*$%"(% .'>'&%#$-.%#$'%#$'%#>+%0-*#+&"'(%".%3$'.4$'.?%

indicated that had been periods when they worked 11 or more consecutive days.

The monthly legal limit on overtime hours (36 hours) was exceeded in Chengdu by about half the workforce in July 2011 and January 2012. In Guanlan almost 80% of

Principal Findings

the total workforce exceeded the legal limit on overtime

)/$ DVVHVVRUV LGHQWLÂżHG VSHFLÂżF LVVXHV WKDW $SSOH DQG @+A*+..%.''8%#+%-88&'((?%3+,'%+0%#$+('%>'&'%".(#-.*'(% +0%.+.B*+,)5"-.*'2%(+,'%>'&'%/-)(%#$-#%&')&'('.#%-%&"(C% +0%.+.B*+,)5"-.*'2%(+,'%>'&'%(",)5=%-&'-(%+0%>'-CB .'((%".%.''8%+0%(#&'./#$'."./?%D%8'#-"5'8%&'E"'>%+0%-55% WKH ÂżQGLQJV IDFLOLW\ E\ IDFLOLW\ LV LQ WKH DWWDFKHG 6&, &')+&#(?%%D5(+%-##-*$'8%"(%#$'%!+&C0+&*'%F'&*')#"+.%-.8% 3-#"(0-*#"+.%G')+&#2%>$"*$%)&'('.#(%#$'%,'#$+8+5+/=% -.8%('5'*#'8%&'(15#(%0&+,%#$'%>+&C'&%)'&*')#"+.%(1&E'=(?

H.%>$-#%0+55+>(2%>'%(1,,-&"4'%(+,'%+0%#$'%C'=2% FRPPRQ ÂżQGLQJV RI WKH 6&, DVVHVVPHQWV GUDZLQJ -5(+%+.%#$'%&'(15#(%+0%#$'%>+&C'&%)'&*')#"+.%(1&E'=(%-(% -))&+)&"-#'?%%I$"(%"(%.+#%-.%'A$-1(#"E'%&'E"'>%+0%#$'% ÂżQGLQJV WKRVH DSSHDU LQ WKH LQGLYLGXDO 6&, UHSRUWV DSSHQGHG WR WKLV UHSRUW 7KH PDLQ ÂżQGLQJV UHODWH WR $+1&(%>+&C'82%)-&#"*15-&5=%+E'&#",'%-.8%&'(#%8-=(J%#$'% VRFLDO VHFXULW\ EHQHÂżWV DYDLODEOH WR ZRUNHUV HVSHFLDOO\ ,"/&-.#%>+&C'&(:J%#$'%',)5+=,'.#%+0%".#'&.(2%=+1./% >+&C'&(%6KLBKM%='-&(%+0%-/':%-.8%($+&#B#'&,%>+&C'&(J%#$'% (=(#',%+0%>+&C'&%)-&#"*")-#"+.%-.8%&')&'('.#-#"+.J%-.8% ZRUNHUV VDIHW\ DQG KHDOWK 2XU DVVHVVPHQWV GLG QRW ÂżQG "((1'(%&'5-#'8%#+%*$"58%5-;+&2%0+&*'8%5-;+&%+&%)-=,'.#%+0% #$'%5'/-5%,".",1,%>-/'?

hours between September 2011 and January 2012. In Longhua, most of the workers (77.1%) worked overtime beyond the legal limit between March 2011 and February 2012.

The root causes include high labor turnover, which undermines efficiency, and gaps in production and capacity planning. A majority of the workers worked fewer than 60 hours per week (regular hours plus overtime) in early 2011, but in November and December 2011, 34% and 46% of the workforce respectively worked up to 70 hours per week and 37% did not receive the required 24 consecutive hours of rest in a seven-day period during the peak season (November 2011- January 2012).

When asked in the survey how they feel about working hours, 48% thought that their working hours were reasonable, and another 33.8% stated that they would like to work more hours and make more money.

17.7% of the respondents felt that they worked too much. Correlating the views of employees on hours of work and contentment levels from the survey suggests that after a certain number of hours, employees are not more content if they work additional hours. The diagram below groups workers: (1) working fewer

Hours of Work

than 52 hours per week; (2) working between 52

There are two issues here â&#x20AC;&#x201C; the FLA Code Standard of

and 59 hours per week; and (3) working 60 or more

60 hours per week in total (regular plus overtime) and

hours per week, and compares them with respect to

the Chinese legal limits of 40 hours per week and a

contentment, loyalty and attachment to the factory,

maximum of 36 hours overtime per month (effectively

and working relationships. Employees who worked

nine hours per week). All three factories exceeded

52 hours or less weekly were slightly more content,

the FLA Code Standard and the requirements of the

more loyal and had better relationships at work. The

Chinese labor law at some point in the last 12 months.

relationship above was confirmed when participants

During peak production periods, the average

shared views at the focus groups on working hours,

number of hours worked per week exceeded the FLA

breaks and shift arrangements. While employees

Code Standard of 60 hours. Also, there were periods

remain concerned about long working hours, they

in which some workers did not get one day off in

welcome them because of the boost to their pay.

seven days. This is confirmed by the worker survey:

In all focus group discussions about working hours,

the sample of workers surveyed indicated average

employees raised concerns that stricter working hour

weekly working hours of 56 hours, average maximum

regulations would lower their income.

weekly working hours of 61 hours, and occasional long periods without a rest day; nearly half of the employees

8

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Â

Compensation

not see these as work and accordingly did not pay for

The SCI assessors found that wages are paid on time

them.

and are above the applicable legal rates. The legal

Chinaâ&#x20AC;&#x2122;s Social Insurance Law, adopted on October

minimum wage in Shenzhen is RMB1500, while

28, 2010 (effective July 1, 2011), requires that five

the starting wage at Foxconn is RMB1800. After the

types of social insurance cover all workers: work-

probation period, wages go up to about RMB2200.

related injury, health, social security, unemployment

Sick leave payments are higher than the local law

and maternity. Unfortunately, the system is still

requirement, with workers compensated 70% as

patchy and presents significant structural obstacles

opposed to the minimum law requirement of 60%.

to providing effective coverage. The main problem

Overtime hours were also paid at the appropriate

faced by many employers and workers is that of

premiums.

transportability of benefits between provinces. Social

With respect to satisfaction with wages, 64.3% of

security, medical and unemployment insurance

workers thought that their salary was not sufficient to

require contributions from both the employer and

cover their basic needs. The discontent with salaries

the employee. However, migrant workers may not

was more pronounced in Chengdu where the legal

be able to claim those benefits in their hometown if

minimum wage is lower; 72% of workers at Chengdu

they retire or become unemployed. It all depends on

said their salaries did not cover basic needs. (According

whether the two provinces in question (where they

to the survey respondents, the average monthly salary

work and where they have residence) have established

in Chengdu was 2,257 RMB, compared to 2,687 RMB in

the institutional mechanisms to transfer the relevant

Longhua and 2,872 RMB at Guanlan.)

funds. Government is slowly patching the holes in the

The system used to measure overtime has an issue in that it uses a unit of 30 minutes for unscheduled

national social insurance safety net but they still affect a large number of migrant workers in China.

overtime (for 14% of workforce) and does not pay

At the Shenzhen facilities only 1% of the workforce

workers for fractions of a unit they may have worked. In

are local, while the migrant workers are not enrolled in

other words, a worker who puts in an extra 29 minutes

the unemployment and maternity insurance systems.

may not get paid for that time, and a worker who

The reason for this is that all migrant workers in

puts in 59 minutes may only be paid for 30. This does

Shenzhen are unable to claim these benefits because

not apply to overtime that is scheduled in advance. A

they do not have Shenzhen residence cards. At the

similar issue regarding payment arises with respect to

Chengdu facility, the problem does not present itself

team meetings that take place before or after work and

because most of the workers are from in-province;

training that takes place outside working hours. These

therefore, all those workers are fully covered.

generally last about 10 minutes and management did Working Hours and Loyalty, Contentment and Relationship at Work Comparison between groups with different working hours Group Working Fewer Than 52 Hours/Week Group Working Between 52 to 59 Hours/Week Group Working 60 Hours or More/Week

The problem is not so acute in the case of maternity, because the Shenzhen authorities allow women to register and claim benefits when they become pregnant, even if they had not paid into the system

Attachment to Factory & Loyalty 3.8

previously. Therefore, the major problem is that there are no transfer mechanisms in place between most provinces in China for unemployment insurance.

3.6 3.4

Interns

The issue of work by interns has been the source

3.2

of much controversy in China in recent years and 3

represents a major concern for external stakeholders.

We therefore made a special effort to understand and assess the risks of the internship system at Foxconn.

Relationship at Work

Contentment

Internship agreements for vocational school students are three-party agreements involving the

9

www.fairlabor.org

Â

Industrial Relations

The FLA assessment methodologies examine not only whether policies and procedures exist, but also whether they are being implemented. In assessing the degree of implementation, we consider whether the line staff have received proper training to carry out the policies and procedures, whether they follow them in practice, and most important, whether the policies and procedures are communicated to all concerned.

Communication is a two-way process, and we assess to what degree workers are integrated into the processes that govern the workplace. The more workers school, Foxconn, and the intern. For college students,

participate in those processes, the more they are

the agreement is signed directly between Foxconn and

accepted, trusted and effective. Our surveys regularly

the intern. Internships are for three to six months and

show that workers’ integration correlates positively

a teacher accompanies the interns. In 2011, 2.7% of

with increased loyalty, lower turnover and greater job

the workforce of Foxconn Group consisted of interns,

satisfaction.

an average of 27,000 interns per month. Their average tenure was 3.5 months.

We measure the degree of communication, consultation and negotiation, and combine the scores

The intern labor force is seasonal, peaking in the

under the heading of Worker Integration. A low score

summer months when most students seek internships

for worker integration typically means that workers

(5.7% of the workforce consisted of interns in August

were not consulted when policies and procedures

2011). At the time of our March 2012 assessment,

that directly affect them were designed. Or, if they

519 interns worked in the three factories assessed,

joined at a later date, the workers were not made fully

including 126 at the Longhua facility and 58 in

aware of those policies and procedures. A low score

Guanlan. The working hours of interns should not

would also indicate that workers are not participating

exceed eight hours per day, five days per week, and

in, or engaging with, committees and processes

interns should never work seven days straight. Our

regulating conditions of work such as health and safety

assessors found that interns worked both overtime and

committees, grievance processes and union activities.

night shifts, violations of the regulations governing

Workers had very limited knowledge of the

internships.

structure, function and activities of the worker

Foxconn provides interns with work-related

participation bodies within Foxconn. When we

injury and health insurance, and personal accident

investigated the industrial relations system at Foxconn

and liability insurance is provided by their schools.

we found that even though a union exists, a large

Under Chinese labor law, interns are not defined as

majority of workers seemed unaware of its activities

employees and legally, no employment relationship

and of the collective bargaining agreement. Only

exists between the factory and the interns. This

32.7% of the respondents in our perceptions survey

means that the general protections of the labor law

stated that workers elect worker representatives, while

do not apply to interns, including the social security

20% believe that management elects them.

benefits that normal workers receive. While regulations

Another 42.3% do not know how the committees are

applying to interns exist in Guangdong Province and

formed. Workers are equally divided on the question

the Ministry of Education has issued policy regarding

of whether worker representatives participate in the

interns, their employment status remains vague and

factory’s decision-making processes: 12.8% said they

represents a major risk.

don’t; 17% said that they do; and a large majority (70%) did not know. This low level of awareness may be explained, in part, by the turnover rate of workers. Yet the bottom line is that too many workers are not aware

10

www.fairlabor.org

of the system of worker representation, which reduces

workers; and assist in mediation and labor disputes.

the potential for workers’ integration.

In addition, the law requires that the union ensures

A majority of the members of union committees

that workers are made aware of labor laws and

are drawn from the ranks of management. There are

regulations. The Foxconn union does publish booklets

188 representatives on the main union committee, of

explaining its role and activities, but our survey data

which 54 are operators and multi-skilled workers, 29

show that these have not raised workers’ awareness or

are line leaders/supervisors and the remaining 105

participation rates.

are engineer or staff level. This committee sits at the

Health, Safety and Environment

top of a four-tier pyramid of thousands of subsidiary bodies that stretch all the way down to 15,810 action

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teams at production line level at the Shenzhen facilities

!"#$%&"%'$'!(%!#)"*$&$('+#),"&(-.,('#/%-#),/&!$&('0#

(9,447 of them on Apple production lines). There are

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another 3,258 action teams in Chengdu. Although

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the Foxconn union holds elections, the candidates

8"9&"%%#2/'#/6,((-#!"#!/:(#!"#$4),"5(#)(,;",4/%&(#

are often supervisors or managers nominated by

$%#!2$'#/,(/0#<%#4/%=#$%'!/%&('#!2"'(#/&!$"%'#2/5(#

management. While this is a common situation in

/*,(/-=#3((%#&"4)*(!(-0#

Chinese factories where unions are present, it does not

12(#$''.(#";#/*.4$%.4#-.'!#7/'#";#)/,!$&.*/,#

meet the standards of the relevant ILO Conventions or

&"%&(,%#!"#.'#3(&/.'(#";#!2(#(9)*"'$"%#/!#!2(#

of the Trade Union Law of China and the Regulations

>2(%6-.#'$!(#*/'!#=(/,0#12(,(#$'#/%#"%6"$%6#

on Collective Bargaining.

6"5(,%4(%!#$%5('!$6/!$"%#$%!"#!2(#&/.'('#";#

The Shenzhen Municipal Implementing Regulations

!2(#(9)*"'$"%#!2/!#$%$!$/**=#,('!,$&!(-#/&&(''#!"#

for the Trade Union Law of the People’s Republic

!2(#3.$*-$%6#&"%&(,%(-#3.!#".,#/''(''",'#7(,(#

of China specify that the Chair, Deputy Chair and

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committee members should be nominated and

!2/!#%"#7",:#$'#3($%6#&"%-.&!(-#!2(,(0##12(=#7(,(#

elected by union members without interference

/*'"#/3*(#!"#5$'$!#"!2(,#3.$*-$%6'#$%#72$&2#/*.4$%.4#

from management. They also state that the legal

$'#&.!+#-,$**(-+#6,".%-#",#)"*$'2(-0#12(#'!/%-/,-#

representative, managing director, deputy director,

")(,/!$%6#),"&(-.,('#$%#!2('(#'(&!$"%'#2/5(#

personnel department director or any of their relatives

3((%#'!,(%6!2(%(-#/%-#!2(#&"%&(%!,/!$"%#";#-.'!#

should not hold office as trade union chair, deputy

)/,!$&*('#$%#!2(#/$,#,(6.*/,*=#4(/'.,(-0#?(#*"":(-#

chair, standing committee member, committee

/!#!2(#;,(@.(%&=#";#4(/'.,(4(%!'+#!2(#&/*$3,/!$"%#";#

member or member of the trade union fund audit

!2(#$%'!,.4(%!'+#!2(#!,/$%$%6#";#!2(#'!/;;#,(')"%'$3*(#

committee. The intent of these provisions is clearly to

;",#!2"'(#4(/'.,(4(%!'#/%-#!2(#:(()$%6#";#,(&",-'0#

avoid the conflicts of interest that might arise when

A.,#/''(''",'#-$-#$-(%!$;=#'"4(#4/&2$%('#/!#72$&2#

managers represent workers on union committees

'(%'",'+#2""-'#",#3/,,$(,'#%((-(-#!"#3(#&"%%(&!(-#

and to ensure that unions more effectively reflect and represent workers’ needs and interests. Although the Foxconn managers sitting on union committees may not hold the exact positions mentioned in the Implementing Regulations, they are nevertheless members of the management team and not workers.

The Implementing Regulations also instruct local unions to organize and hold workers’ assemblies or congress meetings; ensure that the resolutions adopted are carried out; conduct collective bargaining and oversee the performance of collective contracts; represent union members in consultations with the employer on all matters that affect the interests of

11

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FLA Recommended Actions & Remediation Plan )RU HDFK ÂżQGLQJ IURP WKH 6&, DVVHVVPHQW WKH )/$ KDV &$6*#$#-*/'*-#"3#/*("&&*,6$!'",-#!"#:..8*#$,6#?"@(",,# ',#!1"#($!*4"/'*-K#LMN#'&&*6'$!*#$(!'",#/*J%'/*6O#$,6#LPN# -%-!$',$;8*#/*&*6'$!'",#/*J%'/*69##:..8*#$,6#?"@(",,# +$0*#./"0'6*6#!+*#?Q:#1'!+#$#("&./*+*,-'0*#/*&*6'$!'",# SODQ WKDW DGGUHVVHV HDFK RI WKH ÂżQGLQJV ZKLFK LV $!!$(+*69#A*8"1#$/*#-"&*#$-.*(!-#"3#!+*#/*&*6'$!'",#.8$,# SUHSDUHG E\ $SSOH )R[FRQQ LQ UHVSRQVH WR WKH ÂżQGLQJV +'4+8'4+!*6#',#!+*#./*0'"%-#-*(!'",9 Hours of Work

Foxconn has agreed to move beyond compliance with the FLA 60-hour/week standard to achieve full compliance with Chinese law regarding hours of work (limit of 36 hours of overtime per month) by July 1, 2013. This means reducing overtime hours from 80 per month to 36 while protecting worker pay. Foxconn will have to hire and train a significant number of extra workers, build accomodation for them, and develop a compensation package that addresses the income lost through reduced hours.

Compensation

Foxconn has accepted that the policy and practice relating to unscheduled overtime and work-related meetings outside of regular working hours need to be changed. In the future, workers will be paid for overtime in units of 15 minutes and for work-related meetings outside regular hours will be compensated.

Given the concerns expressed by workers about whether wages cover their basic needs, the FLA recommends a follow-up study to document spending patterns and the actual costs of the components of a basic needs wage.

We discussed the issue of unemployment insurance for migrant workers extensively with Apple and Foxconn, and they have agreed to a two-track remedial strategy. The companies will investigate alternative private options to provide unemployment insurance to migrant workers and work with government agencies to expedite the transportability of benefits.

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Interns

We will continue to make periodic checks on the

Foxconn has proposed to adapt its system to ensure

implementation and review of the standard operating

that interns enjoy the protections necessary for a

procedures by Foxconn in order to ensure that the

productive, healthy and safe educational experience.

workers involved have the appropriate training

Given that students find internships valuable and

and personal protective equipment, that the dust

that Foxconn is in a position to offer a significant

concentrations are measured at the appropriate times

number of internships at above-market conditions

and remain within safe levels, and that the correct

a set of recommendations have been endorsed by

documentation is maintained.

both Foxconn and Apple and those can be found in an annex to this document.

Industrial Relations Foxconn has agreed to develop an action plan to align

Next Steps

union activities with the provisions of the Shenzhen

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Municipal Implementing Regulations for the Trade Union Law, to enhance workers participation in committees and other union structures, to ensure that nominations and elections take place without management involvement and to engage committees in decision making processes. Workers will all receive a copy of the Collective Bargaining Agreement and new workers will receive information about the union and union activities during their orientation process.

Health, Safety and Environment The key to improved performance in this area is to enhance workersâ&#x20AC;&#x2122; engagement in the health and safety committees and to make those more active in the formulation and implementation of policies and procedures. The turnover of workers makes it necessary to refresh the training of workers frequently.

FOOTNOTES ?

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