Regarding Samsung’s Action Plans to Review Working Conditions at Chinese Factories

Update to the August 9th 'Samsung to investigate working conditions at HEG Electronics' post

The following are audit results regarding a field audit Samsung Electronics made into working conditions at an HEG Electronics facility in Huizhou, China, which is a supplier to the company. These audits were conducted in August 2012 in response to a report by China Labor Watch. Samsung Electronics also outlined actions we will take as a result of the findings.

Samsung holds itself and its supplier companies to the highest standards. We have a zero tolerance policy on child labor violations and are therefore conducting field audits to ensure all our facilities in China, whether supplier facilities or fully-owned facilities, are compliant with applicable labor laws and Samsung’s labor and employment right policies. Although Samsung routinely audits its facilities, an urgent and broad plan is being developed to ensure our policies are being met.

Due to the high turnover rate at the HEG facility, around 30% per month, the audit encountered some limitations. However through on-site investigations, we audited all HEG employees including face-to-face ID checks, reviewed HR records, and conducted 1:1 interviews with student workers.

Samsung investigators did not identify any underage workers during the site audit at HEG Electronics in Huizhou, but we identified workers under the age of 18 on site. These workers are over the age of 16 and are student workers or interns, and their presence is legal.

The audit identified several instances of inadequate management and potentially unsafe practices. A system of fines for lateness or absences was found to be in operation. Instances of overtime beyond local regulations, or over 9 hours per week, were identified. Certain health and safety measures were inadequate, such as a failure to provide access to a medical clinic.

Samsung has demanded that HEG immediately improve its working conditions. We have formally notified the company that it must comply with all applicable labor laws and Samsung’s labor and employment right policies. If HEG fails to meet Samsung’s zero tolerance policy on child labor, the contract will be immediately severed.

We are implementing a rigorous plan to address any potential violations.  Samsung recognizes it must continually and thoroughly ensure all sites within its supply chain are fully compliant with Samsung’s policies.  We will:

• Complete on-site inspections by the end of September for all 105 supplier companies in China who solely produce products for Samsung.  Inspections will be conducted by a team consisting of around 100 Samsung employees who will be dispatched from Samsung headquarters to China.

• Review by the end of the year, via documentation, 144 more supplier companies in China that produce products for Samsung and other companies to determine if they are compliant and prioritize any additional investigations or on-site inspections that may be required.
 

• Contract with the Electronic Industry Citizenship Coalition (EICC) for regular on-site inspections of all supplier companies in China in 2013 and beyond.
 

• Establish new guidelines that include business principles, codes of conduct, contractual obligations, and management training for supplier companies.
 

• Appoint a dedicated team within each regional subsidiary and HQ to oversee labor policies and working conditions at supplier companies to safeguard monitoring and enforcement processes in the future.  
 

• Through these efforts, if supplier companies are found to be in violation of our policies and corrective actions not taken, Samsung will terminate its contract with those supplier companies.

Despite the recent Der Spiegel report on working conditions at our own manufacturing facilities in China, Samsung is in full compliance with its strict zero tolerance policy on child labor. We are taking additional steps to reevaluate our working hour practices, such as instances of overtime when new lines are built or new products begin the manufacturing process.

Samsung abides by all labor and human right laws in each region it operates and strictly enforces bans on child labor, forced labor and workplace discrimination.

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Findings from the Samsung Electronics Field Audit of HEG in Huizhou, China

1. Audit period: August 9, 2012 to August 31, 2012
2. Audit method: On-site investigation of all HEG employees through face-to-face ID checks, review of HR records,

                              1:1 interviews with student workers
3. Audit team: A team of 30 Samsung employees from headquarters in Korea and the local subsidiary,

                         including environmental safety professionals
4. Audit Scope: Employee age, employee conditions, workplace safety, working hours, meal policy
5. Audit results:

Employee Age

Samsung conducted an audit of HEG’s facilities to identify the presence of workers under the age of 16 through 1:1 interviews but was unable to confirm the existence of workers under 16 years old.

Although the Samsung inspectors did not identify any underage workers while they were on site, there are currently student workers or interns under the age of 18 years old on site, comprising approximately 19% , or 520 people, of HEG’s workface. In Guangdong Province, where the HEG facility is located, student workers can legally comprise up to 30% of the total workforce.

► Samsung informed HEG that the use of child labor is strictly prohibited and Samsung will immediately terminate its contract with HEG if any instances of child labor are discovered.

Employee Conditions

A system of penalties and rewards for lateness and absence, which had been banned in China in 2008, was identified to be in operation. 
 

► Samsung demanded HEG abolish inappropriate and unlawful HR policies.

HEG’s preferential employment policies toward female workers, between the ages of 16 years old to 30 years old, on its mobile phone assembly line are permitted under Chinese law.
 

The average hourly rate paid to student workers is 10 Yuan per hour, equivalent to around 1,740 Yuan per month. The minimum wage in Huizhou, China is 950 Yuan per month.

Workplace Safety

The mobile phone assembly line has a low accident rate.

Only a simple medical examination was conducted when employees entered the company, rather than the mandated annual checkup. Access to first aid material and a medical clinic was inadequate and did not meet local regulations.
 

► Samsung demanded the establishment of an on-site medical clinic and adequate first aid provisions be provided.
 

Working Hours

It was confirmed that many HEG employees were found to be exceeding the legal limit of overtime, of nine hours per week or 36 hours per month, and some employees were working for 26 to 28 days per month.

► Samsung demanded that HEG create compliance plans and systems for observance of court-dictated over time regulations be put in place.

Meal Policies

HEG provides two meals per day free of charge for all employees. For the third daily meal, 5 Yuan per day is deducted from their income. Three meals per day are provided free of charge to student workers.

During the night shift (20:00 to 08:00) a one hour meal break was offered at 01:00. But when employees worked overtime, there was insufficient time for breakfast.

► Samsung demanded HEG resolve the issue over meal deductions for meals not taken through the issuance of meal coupons for greater flexibility in meal times.

The dormitory, compared to other companies in the region, has good facilities.