Executive summary
Major global companies such as Apple have lately been criticized for engaging with offshore or outsourced suppliers that have been found to be involved in mistreating their workers as well as engaging in work-related malpractices. The outsourced companies have been accused of intimidation as well as other labour rights violations against their workers. The other major global corporations, such as Nike and Reebok, have e also faced similar accusations previously. Indeed, Apples outsourced factories have been accused of engaging in sweatshop operations where employees often work under excessive long hours or overtime, sub-minimum wages and abusive management.
As a result, the company brand image has been negatively dented and is associated with labour malpractices. Most significantly, the company sales volume around the globe has drastically reduced, so make its profits. Moreover, the company competitors have also taken advantage of its afflictions to introduce their products in the global market place and increase their sales.
Therefore, the purpose of this dissertation is to identify and discuss the mechanisms through which these global corporations, in particular, Apple might implement to reduce the negative association with these offshore suppliers and improve the working conditions as well as the welfare of their workers. Most importantly, is to improve the corporation brand image constantly being eroded by these criticisms. Moreover, the dissertation is aimed at providing practical recommendations to Apple management regarding the management of the off-shore suppliers in order to reduce the incidences of violations of labour rights.
Introduction
Since time immemorial, firms have presented poor working conditions to the employees. The employees have done nothing in regard to these working conditions. Strikes have been called for when a tragedy occurs but have been called off before any impact is made. This is what happened in the United States during the Industrial Revolution as well as at the end of the 20th Century. The poor working conditions are no longer experienced in the United States, apart from the agriculture sector. However, in the poor third world countries, the poor working conditions are still being experienced everywhere. Large firms have now transferred their factories from The United States in order to avoid the strict employment regulations within the country.
These firms are seeking cheap labour from such third world countries as Taiwan, China, South Korea and Vietnam. These firms will reap cost-saving benefits from these countries as they are offered cheap labour and offering high-cost products. To their surprise, the public has been awakened by the media leading to their downfall for such malpractices. Apple has not escaped the criticism either. This dissertation explores the situation in Apple’s offshore suppliers and their exploitation of employees to fetch higher profits. The dissertation explores how Apple has engaged off-shore suppliers who treat their workers poorly. It recommends mechanisms that can be implemented in order to improve the working conditions of workers as well as avoid improve the public image in regards to association with off-shore suppliers.
Dissertation Objectives
This dissertation objectively aims to:
- Analyze the poor treatment of workers that Apple’s offshore suppliers engage in
- Identify previous recommendations or efforts that Apple has made in regard to the violation of labour rights by off-shore suppliers.
- Identify mechanisms that Apple can adopt in order to improve its associations with off-shore supplier engaging in these malpractices.
- Formulate recommendations that will enable Apple to manage off-shore suppliers to reduce the violation of labour rights
Literature review on labour rights violations
Off-shoring, equally dubbed as off-shore outsourcing is a prevalent phrase used in describing a common practice amongst corporations that are situated within the United States that tend to contract with business enterprises located beyond the United States. The aim of outsourcing is to make such companies perform services which might have otherwise been performed by the in house workers who occupy white-collar jobs such as the designers of computer systems. Similarly, the term as been used in most of the United States companies that off-shore blue-collar workers jobs in auto assembly lines and textile. This implies that off-shoring has occurred for a longer period of time. However, by extending off-shore services from the manufacturers to the suppliers or service providers, companies have constantly faced heightening public policy concerns. For instance, in the U.S., workers encountered forgone employment opportunities and job losses.
Besides, despite the greater demand for employment opportunities, companies that adopt off-shore outsourcing as their business strategies have encountered numerous criticisms from both the public as well as the media. Most of these criticisms relate to the violation of labour laws which include minimum wages, poor working condition, few free working hours, abusive management, excessively long working hours and underage employment. Scholars have summed all these under sweatshop operations. For the United States policymakers, the utilization of sweatshops labours has been a major concern. Even though sweatshops are commonly found in foreign countries, researches indicate that U.S. based corporations that outsource services to off-shore suppliers have been significantly impacted by the vice.
In the off-shore outsourcing context, however, the issue of violating labour laws and regulations has been eminent. This is depicted in the form of forced overtime as well as unhealthy and hazardous working conditions. According to Lee et al. (2007), the number of suitable working hours is largely determined through state accords. Nearly every state has its own national laws which dictate the minimum period for resting and the maximum number of hours that an employee should work per week. The laws limit the maximum consecutive number of hours that an employee might aim to meet. Therefore, reliant on the state, working time might considerably differ based on a number of factors linked to the expectations and needs of both the employees and employers.
The recommended work hours
Before the establishment of ILO, the global working classes considerably demanded 48 hours per week, implying eight hours a day. The generalized application and extension of the eight hours a day to the workers represented a kind of transformation that no other reform could match in value. It offered the workers some spare time to share concepts, ideas and unite with the families. In general, it safeguarded the well being and health of the employees given that overlong working hours proved to be detrimental to the moral and material welfare of the employees as well as to the economic efficiency. The ILO industrial work hours’ convention number one of 1919 predetermined the principle of 48 hours per week and 8 hours daily not excluded the overtime hours. Based on Lee et al. (2007) claim, initially the convention intended to limit the hours of work in the manufacturing sector by restraining the overtime hours.
Basically, the establishment of the initial 48 hours week standard emanated to be very significant as it reinforced safety and health rights of workers. Empirically it has been proved that over fifty hours work week is harmful to the health of workers (Spurgeon, 2003). Adequate non-work or leisure time has been accepted to be essential for workers well-being. The underlying principle remained an integral component of various national policies which aims at maintaining work time within such limits. Thus, according to recent research conducted by ILO, long working hours, as witnessed in off-shore outsourcing, can be defined in three different ways:
- Hours which exceed those that employees wish or desire to work
- Hours that exceed the maximum work hours afar which negative consequences on the employees are very apparent including crucial safety and health effects
- Work hours that exceed standard legal hours which determine the socially suitable work time levels
The ILO work hours’ reduction recommendation article 16 of 1962 asserts that overtime denotes every hour that is worked above the usual hours (Spurgeon, 2003). Given that off-shore suppliers violate labour regulations, this dissertation follows ILO overtime definition to assert hours which are worked above the statutory normal hours that establish the socially suitable level.
Excessive overtime
Scholars have tried to ascertain what is meant by the phrase excessive overtime. The term is believed to identify not just the work hours that exceed the national statutory regulations defined maximum work time hours or the relevant international standard working time, but similarly the work hours which seem to contain negative upshot s on the employees. The workers issue as regards to the exposure to potential safety and health risks concerning long working hours materializes as the main point which distinguishes overtime from excessive overtime.
The 1933 Working Time Directive of the European Union asserts that enhancement or improvement of the health, hygiene and safety of the workers at workplaces is a goal that ought not to be subordinated entirely to the economic concerns. Spurgeon (2003) claims that even though the accruing risks might vary based on the way the hours appear to be structured, the characteristics of individuals and the nature of work, strong evidences have been given showing that workers are exposed to potential health risks if they work for over 48 to 50 hours weekly. This dissertation will further explore these issues by giving relevant and real-life examples or cases.
The excessive and forced overtime problem, particularly in the offshore supply chain as depicted in the electronics and garment production industries has been a protracted topic of concern. The problem which emanate in form of the violation of labour regulations and employees rights has persisted with little inquiry on the causal dynamics as well as little proposals for targeted solutions or remedies. Therefore, there is the crave for investigating the contemporary approaches to the overtime problem as well as its ensuing impacts so as to device innovative and novel methods that could be used to overcome the labour and workers rights and regulations violation in the offshore supply chain.
Overtime Rationale
In the developing countries, it is a common practice to expect workers in the manufacturing industries to work excessive overtime (Dawson et al., 2004). In China for instance, a survey that was carried out by an autonomous non-profit making organization called Verite in the fiscal 2004 which monitors the abuses of international labour rights in the offshore supply chains and production sites found worrying results. In fact, the investigation results depicted that out of the 142 Chinese supplier factories, over 93% reportedly practiced ‘excessive overtime’ from the fiscal 2002 to 2003. A similar case was reported in Indonesia. In the latter country, inside the PT Dae Joo Leoports Factory, workers were obliged to work a minimum overtime of two hours daily. They often finished the assigned task very late in the night so as to accomplish the universal buyers’ production deadlines. Most employees reported that the managers pressurized them to work during night shifts and do overtime. A report by the Workers Rights Consortium (2003) showed that any worker who complained was penalized.
Literature reveals that, from the perspective of employers, there is an incessant pressure on most offshore suppliers and companies to increase products and service quality while cut down the operation costs in order to maximize the fixed capitals. This in turn results into reduced numbers of workers and increased operational hours to generate the requisite quantity of output. The corporations and their allied offshore suppliers are required to deliver several commodities to different clients to meet the needs of different groups of customers. However, some of the placed demands are in comparatively small volumes but are intended to meet the cultural diversities of global buyers. Besides, fluctuations in orders placed by buyers might give rise to unpredictable peak seasons. The offshore supplying companies’ management could endeavor meeting such tight deadlines that various universal buyers impose by frequently creating overtime for the workers (JICAWR, 2005).
According to ILO (2009) report, from the perspective of workers, most employees from the developing countries wish to voluntarily or freely work overtime given that they earn low hourly wages. This implies that, insufficient employment which involves insufficient earnings is correlated to the excessive work hours (Lee et al., 2007). Better Factories Cambodia carried out a research which showed that workers claimed that shorter work-weeks, reduced working hours as well as no overtime resulted into universal economic hardships during crisis. Kang and Dannet (2010) assert that the reason was attributed to the fact that their low salaries were not enough to sufficiently meet the budgeted basic needs. In Philippines, Mehran (2005) conversely reported that over 90% of the employees work beyond the normal forty eight hours a week so as to earn more.
Verite (2004) reported that in China, 53% of employees who work in the garment industry affirmed that the primary motivation to work overtime is extra income. However, 36% of the employees stated that overtime was compulsory while 5% claimed that they worked overtime to finish their quota or to avoid punishments. Furthermore, in China whereas employees hardly opt to labor excessive hours, they prefer working longer hours as compared to the limits of works that the Chinese National Law sets so as augment their wages. To enforce the work hours as the legal limits set would imply that the hourly wages of the employees would considerably decline (Foster & Harney, 2005).
The root causes of Work overtime
In the offshore supply chains and industries, it is not the management decisions that make workers to work overtime. In fact, delays are usually encountered in the supply chains with respect to the acquisition of materials or the unskilled workers low productivity level which necessitates overtime. Besides, some buyers when faced with the last minute changes in style tend to shun tackling the issue of overtime to have their placed orders eventually shipped in. Stoop (2005) claims that this may be aggravated by lack of collaboration amid the production departments, auditing departments and the buying companies.
The incidences of overtime which results into the violation of labor laws and workers rights can be attributed to quite a number of causative factors including:
- The countries diverse working cultures
- Low skilled employees which give rise to low productivities
- Bad planning or overbooking by the vendors of the corporations
- Quality problems which results in reworking the products
- Inadequate capacity to adapt to order fluctuations during low and high seasons
- Emergency productions
- Supply chain delays including short lead times particularly in reorders, last minute alterations in styles and late materials arrivals
Causes of emergency productions
From Verite (2004) report, emergency productions accrue due to quality problems, customs or transportation problems, power outages, equipment and communication problems as well as delays in raw materials receipts. Last minute market demands production requirements can as well cause emergency productions which lead to the violation of labour regulations and workers rights by the offshore suppliers.
The causes of overtime including short lead time, lack of future orders security and last minute changes in style habitually instigate from and are deeply rooted in the buyers working practices. Verite (2004) suggested that one solution to this eminent problem could be for the outsourcing corporations and buyers to change their buying practices. Nevertheless, the factory managers in the offshore supply chains equally have some overtime responsibilities. For example, overbooking emanates to be a usual occurrence in offshore supply chain companies. Offshore suppliers can partly solve this problem via arranging for well paid overtimes and partly thru subcontracting. The offshore successful supplying companies have a problem related to the fact that they are never sure with the consistency of order flows. Thus, they generally hesitate in the capacity expansion investments. Given that the excessive overtime costs are normally underestimated, the offshore supply chain management ought to device systems that might assist in the calculation of orders benefits and costs. Such systems could enable them to avoid overbooking and decline less profitable orders.
The need for overtime
The violation of labour laws and regulations in offshore supply chains are found to anchor on the issue of forced and voluntary overtime, child labour, low wages and few free times. Various surveys have examined the quantity of time the workers will require to work overtime. Verite (2004) asserts that crave for overtime working hours significantly varies reliant on the social, physical and economic perspectives.
From the financial and economic view point, most employees strongly wish for overtime. In reality, report by Verite (2004) indicates that over 40% of the survey participants avowed that they would wish to work a range of 15 to 20 overtime working hours a week. The majority of the respondents however reported that they would wish not to extend their respective work hours above sixty (60) working hours a week.
The physical well being is similarly an essential facet that should be taken into consideration when deliberating on the issue of overtime. When the physical needs of the workers are taken into consideration, most workers are reported to desire to work below twenty hours overtime a week. Actually, quite a number of workers are reported to have said that they would want to work between five hours and zero spare work hours. Very few offshore supply chain workers showed some interests in working beyond twenty overtime hours a week.
The family relationship and the social aspect is also an imperative facet that should be considered when making overtime decisions. Over 50% of the workers who argue from the social perspective say that they would wish to work less than 5 hours weekly overtime. Just a small number of workers are open to working beyond weekly overtime of five hours. The study actually proved an essential step that outsourcing companies should consider when engaging offshore suppliers in the business operations. For instance, when a corporation is bound to outsource its services, there is the need to ensure that the preferred number of employees overtime hours are put into consideration while negotiating with buyers and employers and setting up novel working schedules in the offshore supplying companies. There should be a clear demarcation between compulsory and voluntary overtime that company’s team management sets.
In the manufacturing offshore supplying industries, overtime is deemed as a problematic and significant issue. This is particularly true in the offshore supply chains situations where greater efforts are needed for the improvements. Recently, various corporations that outsource their services to offshore suppliers have come under immense criticisms and mounting pressure from various interest groups and a wide range of stake holders. The partaking business entities are required by such interest groups to deal with worrying trends of diminishing labour standards within the universal offshore supply chains (Dowson, Hetmann & Kerin, 2004). Of great essence is working excessively for longer hours without breaks in the offshore supply chains which depict labour laws and regulations non-compliance in such companies. Therefore, there is the demand for further investigation on this issue so as to offer practical recommendations and measures to improve on the workers employment conditions.
Overtime impacts on workers safety and health
Impacts of long working hours on the health of workers
Various evidences have been offered to show how long working hours are detrimental to the psychological well being, longevity and health of workers. Studies by White (1987), Spurgeon (2003) and Kerin (2003) showed that work hazards including repetitive motions, noise and chemicals affect the well being and health of workers indirectly. The studies further showed that overtime indirectly results into stress and fatigue related diseases whereas workers health are directed affected by excess overtime. Scores of studies tend to classify the long working hours effects as either long term or short term. The long term effects of long working hours in the offshore supply chains entail cardiovascular diseases such strokes and heart attacks, disability retirement, as well as musculoskeletal disorders (Verite, 2004). On the other hand the short term effects consist of high blood pressure, sleeping problems, fatigue and accidents or injuries.
The following conclusions were drawn by Spurgeon (2003).
- Long working hours might result into musculoskeletal disorders and pre-term birth in workers
- Long working hours are correlated to increased health threatening coping behaviours and somatic symptoms including irregular and poor diet as well as increased smoking
- Regularly working beyond 50 hours a week or even above 60 hours a week seems to increase the cardiovascular disease risks
- Regular work above 48hours a week constitutes considerable occupational stress that increases the mental health problems risks and reduces job satisfaction
With respect to physical health, employees who work for longer hours frequently complain of fatigue. Even though the fatigue concept is extremely difficult to gauge, NIOSH (National Health for Occupational Safety and Health) report asserts that overtime as depicted in the offshore supply chains causes stern fatigue problems in 15.41% of the employees working more overtimes (Dawson, Heitmann & Kerin, 2004). A research conducted by Verite (2004) to determine the correlation amid fatigue and extended overtime amongst Chinese garment industrial workers showed that employees stated increased exhaustion subsequent to working overtime hours ranging from 2.5 hours to 3.5 hours daily for a month. Out of the total respondents, 18% indicated that they had eye strains, 9% indicated that they depressive or sadness feelings and 8% had back problems. Besides, 25% of the offshore supply chain industrial workers claim that long hours at work causes increased health and medical problems. Workers tiredness hence increases with increments in the number of daily overtime hours.
In the physical health realm, considerable evidences indicate strong positive correlations between cardiovascular disease risks and long working hours. A study carried out by Uehata (1991) in the Japan’s karoshi (death from overwork) where seven women and one hundred and ninety six men suffered from fatal cardiovascular attacks showed a positive correlation between the amount of work time and the illnesses. From those who die from the karoshi, two thirds are reported to have toiled for over sixty hours weekly or over fifty hours of overtime monthly (Verité, 2004).
Often, long hours of work are cited to be a considerable cause of workers tress. However, occupational stress as depicted by the offshore supply chain workers might cause negative behavioral patterns namely poor irregular diet, alcohol consumption, smoking and cognitive difficulties including loss of concentration and poor memory. Long working hours as stipulated by Spurgeon (2003) are further associated with exhaustion, insomnia, nausea and headaches. For instance a study conducted by Maruyama and Morimoto (1996) on the length of time that Japanese middle managers worked showed those who worked for longer hours had poor lifestyles typified by irregular sleeping patterns, meals and daily life.
Overtime health complaints and financial compensation
A correlation seems to exist between offshore supply chain workers health and overtime compensation. An investigative study on the relationship amid rewards such as career opportunities, job security as well as salary and work overtime found that intimidation and high value rewards together with continuous pressure to work overtime causes threefold boost in somatic complaints. This is in comparison with low work overtime pressure combined with higher reward values (Van der Hulst & Geurts, 2001). Another research study conducted by Siu and Donald (1995) to determine the correlation amid offshore supply chain and garment workers payments and overtime found that Hong-Kong men receiving no payments for the toiled overtimes had numerous health grievances in comparison with other male workers receiving some payments for overtime work.
Prolonged contact with noxious chemicals
An interview conducted by Verite (2004) to legal and medical experts at local southern China institutions to collect data on the effects of protracted exposure to noxious chemicals and long working hours showed some positive results. In fact, the study established that there are serious and immediate effects on the health of workers which result into some cases of death or even prolonged hospitalization. The report incorporated nerve damages amongst electronics and shoes workers who are immensely exposed to a chemical such as n-hexane. There were cases of miscarriages amongst pregnant women employees who had close exposure to benzene. Shoe industrial unit workers exposed to glue felt paralyzed and numbness in their feet and hands. Garment workers who had long time exposure to dimethylformamide were sick, had jaundice and vomited while high blood pressure was common amongst workers who toiled for longer hours without breaks. Within a time span of 14 and 15 work days hours, two workers were reported to have suddenly died in a shoe plant.
Long working hours, frequent workers intimidation, little or no payments coupled with less free working time have been proved to have negative effects on the mental health of the offshore supply chain employees. ILO carried out a research study on the effects of long hours of work. The results depicted that working for more than eight hours daily might cause higher tress levels and mental health problems (Spurgeon, 2003). Similar to fatigue however, stress as commonly witnessed in the offshore supply chains materializes to be a difficult concept to measure and define. Forced overtime and workers intimidation in many cases tend to be linked with unmanaged workloads. Thus, it becomes extremely intricate to separate the stress associated with long hours of work from any other source of pressure.
Mental disorders in the offshore supply chains are commonly caused by depressions. Sanderson and Andrews (2006) asserts that depressed offshore supply chain workers have considerable cases of reduced work productivities and increased absenteeism. In the fiscal 1990s, Greenberg et al., (1993) conducted a study in the United States which showed that the annual depression cost in terms of reduced productivity and work loss that was passed to the employing corporations was approximately $43.70 billion. This implied that, as workers intimidations and work hours increase, the emotional stability of workers decreased, sadness or depression rises and low work spirits crops in. In essence, after employees have worked for 3.5 hours of forced overtime daily for a period of one month, workers reported increased incidences of low spirits or low morale.
Workers intimidations, low or no payments, child labour and forced overtime as seen in the offshore supply chain could lead to a major mental disorder known as bipolar disorder which accrues due to low morale and excessive overtime. A study by Kesseler et al., (1994) showed that workers suffering from bipolar disorders tend to lose sixty and half work days in comparison with twenty work days that are lost by workers due to major depressive disorder. Another research led by Americans established that employees suffering from bipolar disorders have considerably long term disability absences, short term disability and greater sick leaves in comparison with workers lacking bipolar disorders (Gardner et al., 2006).
Reports and various research studies indicate that the most stern effects of forced or voluntarily long working hours without payments coupled with workers intimidation accrue in form of suicides and sudden deaths. For instance, a report filed by the Japanese National Policy Agency (JNPA) showed that in the financial year 1991, the total number of industrial workers who committed suicide was 922. In the fiscal 1996, the number industrial suicides increased to 1,257. A multiple number of factors are established to be behind such death incidents. In karoshi cases, even though no suggestions were made to relate the death incidents to forced labour and voluntary long working hours without rest, it is undoubted that a significant factor that led to such sudden deaths was occupational stress. Work related sudden deaths and suicides equally seem to characterize the spectrum end of the psychological harms that might emanate from intimidations and excessive work demands (Spurgeon, 2003).
Effects of workers intimidation and forced excessive overtime on workers health
The research results on a study conducted by Ezoe and Morimoto (1994) established that when Japan offshore supply chain factory workers are given or forced to undertake extra works that were just extensions of the routine productions, risks associated with mental health problems increased. On the other hand, research study by Maruyama and Morimoto (1996) proved that offshore supply chain workers occupying the managerial professional job positions that are intrinsically exposed to more than ten works hours daily with significant general strain are likely to report lower qualities of life and high levels of stress. In German and UK cases, it is evidenced that if healthcare workers such as nurses and doctors are forced to work longer hours without rest and with low remuneration packages, they are likely to develop mental health problems and high stress (Houston & Allt, 1997; Kirkaldy et al., 1997).
From the above cases, it should be noted that workers intimidation, forced overtime with little or no payments, child labor and long term exposure to poisonous chemicals ought to be avoided in the offshore supply chain industries where work seems to be highly stressful either mentally or physically. To realize this, offshore supply chain industry managements should avoid continuous scheduling of employees. In fact, there must be a clearly implemented strategic system for rotating employees instead of limiting excessive overtimes with little payments and more intimidations to certain workers only. Moreover, workers in the offshore supply chain industries ought to be consulted by the U.S. based outsourcing concerning their work time, any form of intimidations and forced overtime without pays as well as irregular or unpredictable working hours especially where such factors seem to be above the control of the workers (Spurgeon, 2003).
The impacts of forced long hours of work and intimidation on the safety of workers
Numerous evidences have been proffered showing that offshore supply chain industrial workers working for long effective hours with little or no payments but with increased intimidation experience increased accidents rates and poorer performances. This is because of the strong correlation amid fatigue and working time (Harrington, 2001). Further studies reveal that there is an association between rates of workplaces accidents and the amount of time worked. A report by Hanecke et al. (1998) indicated that out of the documented 1.2 million workplaces accidents reported in the fiscal 1994, most of them occurred in the evening and more often after the 9th work hour. Between the ninth and twelfth work hours, workers tend to have declines in vigilance, lower cognitive functions, increased fatigue and decreased alertness feelings which result into increased rates of injuries. For instance, report on Hong Kong machine operators hand injuries depicted that workers who toiled for averagely elevens hours daily without rest encountered the highest hand injury rates.
Most workplace accidents take place either indirectly or directly due to errors made by human beings. According to the assertions made by Spurgeon (2003), such industrial accident incidences are closely associated with the biological cycles. Froberg (1977) added to this by establishing the correlation amid workers performance and body temperature. Increase in workers alertness occurs when the body temperature rise and this increases the levels of performances. The reverse is also true.
The impacts of forced long hours of work on the social lives of employees
Long hours of work coupled with intense intimidation and little or no payment as often occurs in the offshore supply chain industries have proved to have some detrimental effects on the family and social lives of the workers. In many culture for instance, family dinner is perceived as the solitary every day occasion which permits a consequential family togetherness. Therefore, parents who are bound to work forced or voluntary long hours under intimidation hardly get time to participate in such a unifying occasion. Childcare arrangements in addition need to be properly planned so as to accommodate the parents working schedules. It is nevertheless very difficult for women who are engaged in forced night shifts and voluntary overtimes to accomplish their dual reproductive and productive roles together with the typical greater domestic obligations.
In most offshore supply chain industries, quite a number of the workers are women having greater domestic obligations and elder or childcare responsibilities. It is reported that forced long working hours without rest does not permit female workers adequate time to spend time with their families and perform their domestic responsibilities. Women holding senior managerial positions and are therefore forced to work for more than fifty hours weekly tend to face difficulties in their family affairs. Most offshore supply chain female managers claim that their respective family lives are suffering a great deal while a considerable 25% have the feelings that their marital associations are greatly threatened. A corresponding study by Spurgeon (2003) reported that women occupying senior less positions and do not face work intimidations as well as forced overtime are less concerned with their family lives risks.
Forced overtime, workers intimidation, low remuneration packages and labour productivity
Workers intimidation, low remuneration packages and forced or voluntary overtimes do not merely lead to negative health effects on workers and generate high workers dissatisfactions along with increased accidents rates, but also related closely to workers efficiencies (Hurst et al., 2005). Basically, in the offshore supply chain industries, workers’ productivity is measured through the per hour total pieces per worker. Researches reveal that there is a correlation between labour productivity and the worked overtime. This implies that, there is a direct relationship amid forced or voluntary overtime and productivity. However, provided workers can perform similar quantity of work due to improved productivity, the issue of working extra time will be a thing of the past.
Spurgeon (2003) found that workers intimidation, poor working conditions and forced excessive overtimes in the offshore industries could lead to workers dissatisfactions, high accidents rates, reduced efficiencies and poor workers health which in turn give rise to high employees’ turnover. Despite the positive relationship, some studies have shown that workers intimidation, low payments and forced overtime hardly increases the proportion of the total outputs. In some instances, offshore companies that extend the hours of work with low or no payments experience absolute reductions in the levels of outputs in the long-rung periods (White, 1987). Thus, forced excessive overtime, workers intimidation and poor work conditions only reflects on the linkage that exists between offshore supply chains labour productivity and occupational safety and health.
At work, safety and health are greatly affected by the levels of forced or voluntary overtime. Studies by Kerin (2003) and Spurgeon (2003) found a positive correlation amid higher incidences of repetitive strain injuries, on job injuries, high blood pressure and high cardiovascular disease incidences which occur as a result of poor occupational safety and health conditions and forced overtime. Forced overtime in the supply chains cause increments in the rates of workers sicknesses and absenteeism. This consequently significantly impacts on production scheduling and planning as well as workers productivities. While explaining the correlations amid offshore supply chain companies’ profits, productivities along with workers safety and health, O’Donnell (2000, p.215) stated that the performances of workers are high only if the employees are emotionally and physically able to effectively work by showing crave of working.
O’Donnell (2000, p.216) in his study model showed that safety and health improvement programmes play significant roles towards the improvement of the psychological and physical well-being of employees. This in turn reduces presenteeism and absenteeism, the former being a situation where the worker is really at work yet the mind is not set to work. To reduce workers absenteeism, offshore supply corporations must promote healthy working conditions in order to prevent diseases. Similarly, offshore supply chain corporations should help in the management of the workers chronic and acute health problems to improve on the employees’ motivations, creativity, and performance which overall increases productivity. If offshore supply chain corporations offer good environmental safety and health conditions, there are chances that the rate of accidents will decrease thereby reducing the cost of catering for the injuries and accidents. Besides, offshore supply chain corporations need to promote corporate culture on health (Kirkcaldy, Trimpo & Cooper, 1997).
The costs of forced long hours of work, workers intimidation and poor work conditions
From the offshore supply chain employers, there are various disadvantages which are tied to forced overtime, workers intimidation, poor working environment and long hours of work without rest. For instance, forced overtimes entail extra costs that are settled at premium amounts. Workers often concentrate on the amount of time they spend instead of giving attention to the achieved outputs. The motivation for workers to do their jobs is reduced due to increased cases of accidents, stress, sicknesses and tiredness. To reduce incidences of negative media and public criticisms, offshore supply chain industries should take the following decisive measures:
- Minimize the need for workers intimidation and overtime when trying to meet the customers’ demands
- Increase productivity during the normal work hours
- Review operations and policies to ensure that no excessive overtime and workers intimidation is encouraged
- Appropriate number of employees should be hired to accomplish yearly, monthly, weekly and daily placed demands
- Train and encourage workers to promote a corporate culture of better and conducive work environment
Analysis and discussions
A lot of overseas suppliers have been found to have sweatshop working conditions. Sweatshop is a term used to refer to labor violations and is characterized by three elements; poor pay, unhealthy working conditions and long working hours. These sweatshops hinder workers from enjoying their freedom as well as expressing their needs. Although the malpractice is in the agricultural and garment industries, Apple has been accused of relating with suppliers with such working conditions. Apple received allegations that one of its products- iPod was manufactured in China under sweetshop conditions.
Foxconn, an off shore supplier of Apple owned by Hon Hai, came under fire for unusual suicides among its employees. The firm is the world’s leading producer of electronic products for such companies as Apple, Nokia and Dell. An investigation by university students from Taiwan, Hong Kong and China revealed that, the company employs 900,000 laborers aged 16-24. Majority of these laborers are student interns from technical schools who seek employment during summer holidays (Guardian, 2010). These students work for up to two years earning 1200 yuan ($ US 180) per month. Nine suicides were committed in the dormitory adjacent to the factory where most of these workers lived. These workers jumped from the factory buildings due to humiliating working conditions and abusive language used by the management.
To curb these suicides, the management covered the premises with suicide nets which prevent stressed workers from jumping into their deaths. The laborers are also expected to sign a “no suicide” pledge. Foxconn has a “Destress Room” for the stressed workers. These are found within “Soul Harbour Studio” which offers counseling services to the workers. The Destress Room on the other hand has punching dolls which a laborer can punch to vent his anger out. Earlier the management had appointed Buddhist Monks who blessed the laborers. They had also provided a hotline which the laborers used to ask for help. But even with all these measures the workers went on committing suicides. April this year, a worker jumped from the top of the dormitory killing himself. Recently (in June) another worker, (Xie) jumped from the roof of a dormitory. Claims were made that the police had asked his colleagues to clear the evidence. This shows how the management has succeeded in winning the police into their authoritative and harsh style of management (Guardian, 2010).
Foxconn was also accused of hiring underage students but hid them during the audit process by the Fair Labor Association. Some of these students were from the university. Foxconn partnered with a local university to offer internship as a compulsory curriculum, in June this year. The students were promised a monthly wage of 1550 Yuan (US$ 243). This translates to 705 Yuan (US$ 118) after the deduction of such expenses as food, travel and accommodation. The However, the students complained that they learnt simple tasks meant for high school students such as shaving the rim of a phone. Two explosions from aluminum dust were experienced in the factory due to brushing of iPads and iPhones (Lee, 2007). One of the explosions occurred in Chengdu facility as a result of poor ventilation in the factory. Four workers were killed and 18 of them were injured. The workers work for six or seven days standing in poorly ventilated factories (Guardian, 2010). One has to drop something on the ground so as to bend while picking it up. This is the only way a worker can get a break from the long hours of standing. When asked, Apple argued that they were carrying out investigations regarding the matter.
According to Guardian (2010) 73.3% of Foxconn’s workers work for 10 hours a day. Foxconn breaches the labor laws by allowing an average of 83.2 hours a month instead of the official 36 hours. The most affected are the students. The laborers are given unrealistic targets which force them to work for unpaid overtime. The production time has been reduced and high output expected from the workers corresponding to the few working hours. Due to unrealistic targets, the laborers are always under pressure. As a result, 47.9% of the laborers suffered mental stress, 24.1% of the female laborers had irregular menstruation periods while 12.7% of the laborers suffered fainting spells.
The low pay has forced most of the laborers to live in dormitories. The living conditions in these dormitories are poor too. Each laborer receives a living space of approximately two square metres. The laborers are expected to pay approximately £11 per monthly for this space. Poor quality of food is offered leading to numerous cases of diarrhea. A dish of rice costs fifty pence. These laborers cannot afford the high profile entertainment services; as a result they feel alienated. This alienation of workers has caused stress that has led to the numerous suicidal cases. Workers are only given ten minutes to visit the toilets or bathrooms. To do so, one must sign a certificate. The long queues found in the toilets prevent some of the laborers from using the facility. The laborers are not allowed to laugh, walk, sleep or talk while at the work place. The workers must arrange the chairs neatly and should not cross specific yellow lines. The laborers are also expected to keep their uniforms neat.
A laborer who violates any of these rules calls for not more than 127 punishment ranging from official warning to discharge. This is done in order to make the laborers more committed to their duties. These laborers are only allowed to enter the work premises after numerous checks at the entrance point. Foxconn is a “no go zone”. The security force at the entrance is tight. The police force is not allowed to the premises. If workers ring them their calls are diverted to the security division. The police are allowed to the premises when the workers are rioting to calm them down and disperse them (Guardian, 2010).
In May 2010, fire broke out at Foxconn’s premises, in a computer assembly location. The workers who were injured were treated within the factory. This was to prevent entry of the media into the saga. The media is not allowed into the premises either. This is to protect the reputation of the company that has been messed up with over the years. The fence on the windows prevented the workers from escaping. This reveals the poor environment in the premises that can be hazardous in times of calamity.
There exist hierarchical ranks at Foxconns (Guardian, 2010). Those ranking highly are free to execute both physical and verbal abuse to their juniors. The trade unions do not assist them either. Workers complain to them but they are out to extend the management’s exploitation. They praise the regime’s mistreatment of the laborers. Resignation from Foxconn is a complex process. One has to seek 15 approvals from the top management. The signatories are dictated by the labor requirements of Foxconn. The management is a “Military-style “one which requires the workers to obey their orders in a training camp.
The tasks carried out at Foxconn are monotonous. These tasks include; shearing aluminium from the periphery of the Apple logo or wiping the screens. This can go on for an average of ten hours. The wages earned are too little to pay tax. Some laborers work for 24 hours while others are forced to stand throughout their shifts. The workers receive their pay on the 10th of every month. This salary is not enough to buy luxuries. The starting salary is so low that these laborers would have to work for two months to afford an iPad. There is only enough to eat. 64% of these workers complained that the amount earned is not enough to meet their basic needs (Guardian, 2010).
Workers at Foxconn admire falling ill so as to get a sick off from work. These workers take advantage of sick leave approvals so as to get some rest. While at work the laborers refer to the trolleys used to pull bulky items as “BMWs”. They cannot afford “BMWs”, but can only dream of one day buying their own “BMWs”. This motivates them to work harder. They don’t dream of owning the gadgets they make. However, the benefits and sick off days are reserved for senior workers. This was according to a student employed in the factory. The seniors are selfish and benefit at the expense of the junior workers. While these juniors work like machines and languish in poverty, they enjoy luxuries and good life. They are resented for this (Guardian, 2010).
The workers treat each other coldly. They are unfriendly to one another. Some of the laborers do not know the names of their roommates. They feel they are of their level and hence no need to be friends. However, Foxconn provides a remedy for this. It gives a reward of $1000 to any laborer who can mention a colleague’s name. This has made these workers interested in knowing their colleagues and eventually formed friendships. They lack people to talk to when they are depressed. Superstition is their character trait as well. If a worker hurts his finger on a machine, some of the workers would think that the machine is cursed and would not use it.
The laborers dream of growing rich one day. To fulfill their dreams, they buy raffle tickets. They also invest in horse-racing gambling. The internet cafes located outside the factories provide a form of entertainment. The miserable male laborers who lack lovers watch online pornography at these cafes.
A report by New York Times showed that, the workers stand for long hours causing swelling of legs. The report further showed that a poisonous chemical substance had caused serious accidents on 137 laborers in Eastern China. This had happened after the workers had been ordered to use the chemical in cleaning iPhone screens. Another report revealed that 100 workers in these offshore shops had been harmed by toxic substances. The report further revealed that, these laborers had had been forced to work for 15 hours a day at a monthly pay of £27. Foxconn is now planning to expand to Pearl River Delta. This was according to a report released by Reuters in October 2010. This is because they feel the cost production is lower in those regions as compared to Shenzhen. Labor wages are much lower and there are more people willing to serve the hard living conditions (Guardian, 2010).
There exist communication gaps. The communication lines are not clear and this brings about poor communication between the workers and their employer. The workers do not have a mechanism to air their views and complaints. The authoritative nature of the management does not allow the workers to speak out and any attempt to do so is faced with brutality. This has made the workers result into such mechanisms as riots. Just recently, the workers rioted from their dormitories over early dismissal from work. They feared they might receive fewer salaries. The workers are not involved in decision making processes of matters concerning them. The early dismissal reveals this clearly.
In April 2012, 20 workers at Shenzhen factory protested from the rooftop over relocation of the factory to Huizhou. This is a city located in Guangdong in the North. The protesters pressed the management to find them employment within Shenzhen or else they lay them off. A few days later, laborers at Taiyuan factory, in Shanxi province went on strike over pay row (Guardian, 2010). This happened because the management had pledged to increase all employees’ pay apart from those at the entry level.
This year, 200 employees at Foxconn were treated to a trip to Taiwan. The management would cater for all the costs involved. The workers received free iPods as a reward for their good work and their hardworking nature. This was a small portion compared to the huge number of workers employed at the factory. This shows how the management is discriminative in carrying out its duties. Only a few out of the huge crowd receive favors. This might invoke resentment among the rest of the workers as they would want to receive the same treatment for the services they give.
Instead of improving the working conditions Foxconn projected to add more 300000 robots, this year. There are already 10000 robots in the factory. The robots would perform the hard tasks such as assembling, welding and spraying that were more risky and tougher. The workers had complained of these routine tasks. The company wants to increase the robots to 1000000 in the next three years.
Foxconn’s president Terry Gou promised to improve the wages and reduce working hours but this never happened as the company was not in a position to concede as their rivals would take advantage of the confusion to poach their clients. The only remedy taken by the management was forcing workers to sign a “No Suicide” pledge. The working conditions that had caused desperation to the point of committing suicide have not changed. Foxconn has now expanded and moved to the inland cities. More workers come seeking employment despite the poor working conditions (Guardian, 2010).
However, Terry Gou is not worried by the poor working conditions at Foxconn. While giving a highlight of the paid trip on a Taiwanese TV program, Gou was featured telling the workers there is nothing wrong with sweatshops. He urged them that sweating and bleeding is necessary for the sake of the future generation. He further said that the workers received what they deserved (Wooden et al., 2009). Foxconn is not the only Apple’s sweatshop. Poor working environment was also found in Suzhou facility. The facility is owned by Wintek, a supplier of Apple. In 2010, an accident occurred at the facility injuring 137 workers after a chemical substance, n-hexane, that cleans the screens of iPhone dried faster than expected.
A gas explosion at Riteng Computer Accessory in Shanghai resulted in injury of 61 laborers. The accident occurred in December 2011, during a trial of aluminium iPad panels. The accident would not have occurred there was proper ventilation at the factory. These poor working conditions seem to go on at Foxconn and other offshore suppliers. The workers have no hope of improving their lifestyles and when their employers enjoy luxuries, expensive gadgets, high profile lifestyle and big titles; they continue languishing in poverty.
Practical measures that have been taken by the company
As mentioned before Apple has to deal with the problem of working conditions such as overtime in their supply chain factories. In most of these supply units, there are unpredictable and uncontrollable requirements for better working conditions. For instance, the amount of overtime per worker depends on the orders that are made and the target quantity that has to be achieved per week (Wooden et al., 2009). Thus, the reports indicated that overtime in most of these supply units is a way through which high quantity orders as well as fluctuations during peak seasons are met.
The reports also indicated that overtime at certain levels can be beneficial to these supply units as well as the major company. Besides meeting the fluctuation demand for the company, employees also have the opportunity of earning extra pay (Li & Zax, 2003). However, in most cases, poor working conditions such improper management of excessive overtime leads to low productivity, fatigue-related injuries and accidents, increased chances of errors, suicides and other social related problems that could ultimately damage the brand image of the company. The company has put in place measures that must be undertaken by the supply chain factories in order to deal with these problems.
Management systems
Amongst other problems faced by these supply factories excessive overtime has come out to be the major employees’ problem and it is caused by poor human resource management, inefficient internal production systems as well as inadequate internal communications. Therefore effective and efficient internal management plays an important role in decreasing the excessive overtime which in turn increases the workers’ productivity. A good management system comprises of improved work structure and schedules, better control and recording system that would monitor the overtime (Li & Zax, 2003). Apple internal experts predicted that the increase in productivity in some of their supply unit chains would only increase if better management systems are put in place. Even without technology, efficient time management system and utilization has remained to be the key factor in improving the labor productivity through numerous methods that reduces the non-productive time.
Healthy work schedule design
As many workers in most of these supply chains argue that overtime is unavoidable especially during peak order times, healthy work schedules are substantial for the well-being of the workers as well as the labor productivity (Harrington, 2001). The result will be the long-term profitability of these factories as well as the company as a whole. According to the company internal expert analysis, healthy work related issues are important objective that cannot be subordinated to the considerations of economic benefits. It is not sufficient to discourage singly the excessive working hours.
In addressing the problem of overtime, it is important to develop better time-accounting systems that include the maximum number of hours, optimal start and stopping times, the optimal budgeting methods and rest breaks (Wooden et al., 2009). Moreover, the supply factories are required to develop systems that could measure the needed inputs for specific tasks and monitor workloads. These systems should be combined with incentives as well as proper objectives for the line mangers. To achieve the target objectives, the line managers should identify work processes that would replace the long hours working culture with smart working conditions.
The supply chain companies are also required to allocate other time between the paid work schedules for other activities such as care work, leisure and social activities. This is not only aimed at improving the workers welfare but also to improve the company image through social responsibility by the workers (Spurgeon, 2003). In addition, the personnel managements of these companies are required to allocate workers time for holidays and advancement through training and educational expansions through incentives. This will provide motivation to the employees which in turn would lead to increased productivity. Further, healthy work schedules should also include ways to deal with non-work time consuming activities such as maternity leaves, sick leaves and other related activities.
Structural improvements
The supply chain production units are also encouraged to take structural adjustments in order to reduce the need for excessive overtime. Generally, the Apple management requires these factories to take three courses of action towards these structural adjustments. These include using shift systems, changing the remuneration systems as well as changing the production methods.
The shift system is aimed at reducing the excessive overtime as well as improving the health and living standards of the workers. It is true that most of the outsourced production units need shifts to maximize the production of high-tech machines. Therefore, it is recommended that such factories introduce the three shift system to make excessive overtime virtually impossible. In designing the night shifts, the human resource managements are required to consider minimizing the night shift as much as possible in order to reduce the harmful impact on the employees’ health (Houdmont et al., 2011). It is expected that the changes to the three shift system together with increased hourly wages will increase the employee’s benefits and reduce costs the firms. However, the human resource managements should be aware and ways of dealing with the disadvantages that come with such changes.
The remuneration system is also another important human resource management policy element that is aimed at reducing the excessive overtime. The reports indicate that workers in most of these supply chain units rely on overtime payment to compensate for low wage levels during the normal hours. In most cases workers are reluctant to reduce the amount of overtime worked or may go slowly during the normal hours so as to increase the overtime hours. This type of problem can only be solved through the application of performance-based payment system (Spurgeon, 2003).
The performance can be attained through individual production or unit or group production. However, the system need to be understood and remain transparent or else it may lead to conflict among the workers who may feel that they are unfairly treated. Those supply factories that are strictly line based are also required to restructure so as to adopt the performance based system of payment. These supply factory managers are also required to look into the types of tasks. Those employees charged with complex tasks should be remunerated differently or have their pay increased based on the complexity of the task (Li & Zax, 2003).
Changing the production system set up through the application of technology is aimed at limiting the need for overtime. This strategy is targeting those suppliers with Inflexible lines systems in which tight situations normally occur thereby creating difficulties in planning. These companies are advised to introduce more flexible production liners in combination of more efficient team work to drastically reduce the amount of time needed for target production.
Overtime record and control
The company also needs its outsourcing suppliers to improve their proper recording of the overtime in order to improve the working situations in their factories. Proper recording of the overtime is believed to the first step in controlling the excessive overtime. The rationale behind this argument is that proper tracking and recording of overtime by management creates awareness of those factors causing overtime and when it is needed in the factory. This awareness will make the management team to control and ultimately reduce overtime (Spurgeon, 2003).
Decent occupational health and safety conditions
Occupational hazard reduction and provision of better occupational health and safety environment will improve labor productivity within these supply chain factories. Although the costs of improving health conditions have been cited by these outsourced companies as the major drawback towards this endeavor, report indicate that the costs are not as high as they are being portrayed. In fact, the hidden cost of suicides, labor related injuries, death and diseases are higher than the cost of prevention therefore apple has put in place regulatory measures for its outsourced suppliers that will improve their workers occupational safety and health (Houdmont et al., 2011).
These actions are not only designed to promote smart regulatory actions by the company but also to change the safety culture of its supply chain. Also the company has encouraged its outsourced suppliers to adopt the government safety and regulatory measures that is aimed at changing the private sector behavior with the leased resources possible (Foster & Harney, 2005). Moreover these companies are required by apple to make their compliance decision for their potential benefit instead of actual penalties that may accrue from various governments.
To achieve this, company need its supply chain companies to design specific training programs for their employees aimed at improving their occupational safety and health conditions in different kinds of work places (Houdmont et al., 2011). The company internal experts believe that this will increase the employee’s desire to directly work and improve their performance hence the companies’ productivity. This will in turn improve the Apple brand image.
Training and educational programs
Most of the supply chain companies are located in countries where workers are not aware of their working rights such as working in decent and safe working environment as well as to be paid accurately for their overtime work. For this reason, Apple has taken steps in ensuring that the workers of most of its outsourced suppliers are better educated and informed especially in the application of safety occupational procedures and equipment particularly in those companies where there is high risk of contamination and accidents (HR Magazine, 2006).
Apple believes that managers together with their employees need to appreciate the importance of health and safety working environment. This will ultimately improve the morale of workers, generate the company loyalty and improve the brand image of the company. Besides, health and safety standards Apple have encouraged their supply chain companies to transparently provide information concerning the pay rates as well as the overtime premiums to their workers. Reports indicated that 90% of the outsourced company’s workers neither know their legal overtime rates nor do they know that they are supposed to be paid according to the legal overtime premiums (HR Magazine, 2006).
Collective action
The reports indicated that there is a huge gap existing between the policy procedures and policy implementation aimed at improving the working conditions of most of the Apple outsourced suppliers (Lee, 2007). The Apple to change the working cultures of its supply chain companies, it has to advocated for the collective negotiations as an effective method of improving the working conditions. Apple has encouraged the workers in its supply chain companies to collectively negotiate for actions that they deem are necessary at improving their working conditions. Collective negotiation is believed by the company to be one of the best methods of pressuring these outsourced companies to take working conditions as well as the need of individual works into consideration.
On the other hand, the company has also entered into negotiation with its competitors for a common action against the improper working conditions in their outsourced companies. This will be taken as a common working conditions policy by the major world organizations rather than be seen as the one company policy (Li & Zax, 2003). Apple believes that common control of these supply chain company by competing global organizations is an effective way in improving the working conditions. Moreover, the common stand will also pressure various governments to put in place various legislations that are aimed at improving the working conditions of the private sector.
Monitoring and key adjustments
The company will also continuously evaluate the effectiveness in the adoption of new systems for better working conditions it its supply chain. Apple will also continue evaluating the effectiveness of the processes and outcomes of the new systems that they have put in place for their outsourced companies (Lee, 2007). While evaluating the new systems and work procedures, apple will also take into consideration if such systems meet the factory needs and at the same time whether such constitutes the required working-time arrangement. In addition, the company will also re-evaluate and track the factors that are deemed to have impact on health, safety and the well-being of their outsourced supplier’s workers. The company will continuously assess health and safety conditions, overtime work, remunerations, environmental hazards and the compliance practices of their supply chain companies.
Key recommendations
Since the company aims at improving its global image it must ensure that workers in its suppler factories receive all the required compensations that not only includes the regular hourly salaries but also overtime benefits and premiums. In addition, the company must ensure that all its supply factories improves their communications as well as support for their management to ensure compliance to better working conditions such as the occupational safety and health conditions as well as overtime. Further, the company must also ensure that technical assistance and training are provided to the supply factories especially on production management so as to reduce the need for excessive overtime. Moreover, the company must ensure support for these supply factories to create internal planning as well as mechanisms that are aimed at improving the working conditions including reducing the excessive overtime, decreasing the frequent lateness on changes in design specifications.
Besides, Apple must ensure that its supply factories are compliant with better working legal practices such as occupational health and safety standards in various countries in which they operate. The company must ensure that these factories train their workers on their rights, safety and health precautions as well as the pay rates and overtime premiums. In addition, the factory measures such as the management support of the employee’s voluntary decisions on work related issues, elimination of unlawful punitive measures such as salary reductions and work point demerits are undertaken by these factories. Most importantly, Apple should support the workers controlled safety committees in these factories. Though it is a requirement for Apple to take these measures to improve and protect its brand image, each of the stakeholder’s responsibility would be useful in creating a sustainable industry that offers decent working conditions for all the workers around the world.
Conclusion
Apple Inc. has acknowledged the unethical behavior of some of its outsourced suppliers around the globe. In the suppliers responsibility report released this year, the company specified unethical practices that are being performed by most of its outsourcing units ranging from child labor to long extreme working hours. Even though the company has managed to build its integrated manufacturing and design facilities in numerous parts around the globe, some of its outsourcing units has contributed to the corporate ills that must be dealt with at all levels. The global network has enabled the company develop and launch its products in the major global markets. Some of its products that have been produced in these outsourced suppliers have provided the company with a cost saving advantage which has resulted into huge profits.
Even though the company is reaping huge benefits as a result of outsourcing, it is now emerging that there is underlying consequences that will take the company years to deal with.
The employment of over forty minors by some of its suppliers and the series of suicide cases at Foxcon facility as well as waste release issues in some of its facilities have severely dented the company global image and its operations. The vulnerability of these global companies to the unethical practices of their supply chains have been perceived as a hindrance to the global expansion. Therefore the company has taken various measures such as improving the management systems within its supply factories, designing healthy work schedules, encouraging the structural improvements, coming up with proper overtime record and control, advocating for decent occupational health and safety conditions, training and educational programs for these factory employees, encouraging collective action together with competitors and the factory employees as well as monitoring the implementation of these key proposed adjustments.
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