Recently Apple computer company and one of its main subsidiaries, the Taiwan-based technology provider, Foxconn, agreed to be audited. The auditors from the independent Fair Labor Association did not look into the accounting books, but into the company’s working conditions.
The investigation was one of the largest ever undertaken into a U.S. company’s business operations outside the country. It followed years of allegations about poor standards at Chinese factories where workers assemble iPhones, iPads and other popular consumer items.
As a result of the audit, Apple and Foxconn admitted many problems and agreed to find solutions.
That is just what they should be doing. Of course, the two companies and their many contractors are only bringing things into line with what labor law in China, Taiwan and America actually stipulate. More important, the agreement marks a major step forward for the 1.2 million workers who work in China’s cheaper labor market assembling the consumer goods sold in developed markets. The companies agreed to begin hiring new workers, eliminating illegal overtime, upgrading safety and improving housing and cafeterias.
Given better access than before, the auditors found multiple violations of labor law that included, among other things, tens of thousands of workers being forced to submit to unpaid overtime and to work very long hours.
Allowing workers to be interviewed about wages, benefits, health, safety and the atmosphere inside workplaces is extremely important. Recognizing this and taking action marks a significant advance in business ethics.
For Apple and Foxconn, submitting to an audit and agreeing to comply with the findings was a departure from the coverup and denial by companies eager to exploit the cheap labor in China and other developing countries.
Both companies decided that transparency benefits workers’ lives as well as their public relations.
This case also shows again that labor laws and workplace codes are generally in place but that compliance is what really counts. Both of these corporations should be commended for taking a longer-term view of how they can operate best by focusing on how their workers are treated.
Following the law does not harm long-term profitability; it enhances it.
This case can serve as a precedent for other companies that produce goods for high-priced markets with low-cost labor. If they do likewise, the potential to improve the lives of a vast number of workers throughout Asia is immense.