ROBERT SIEGEL, HOST:
Serious and pressing violations of Chinese labor laws. That's what inspectors found at China's Foxconn factories, the biggest suppliers of parts for Apple products. Popular products like iPhones, iPads and iPods. The report of labor violations comes from an audit just released by the Fair Labor Association. That's a nonprofit labor rights group. Apple agreed to have the association inspect some of Foxconn's facilities after The New York Times reported worker abuses there.
I'm joined by Auret van Heerden, who is CEO of the Fair Labor Association, who's in New York to talk about the audit. Welcome to the program.
AURET VAN HEERDEN: Thank you.
SIEGEL: And, first, tell us about what I gather was a key finding here, which was excessive overtime. How great is the problem of workers working in excesses of, I believe its, 60 hours a week at Foxconn facilities?
HEERDEN: It's true that Foxconn has made a lot of progress over the last couple of years, mainly managing overtime. But when we tracked it over the course of the last 12 months, we found that they had exceeded the FLA code standard and the Apple code standard of 60 hours a week, in a number of months. And those corresponded pretty much to the peak production periods.
SIEGEL: Other violations of labor standards?
HEERDEN: Well, the interesting thing with hours of work is that the Chinese legal limit is lower than the code limit. According to Chinese labor law, you shouldn't be working more than 49 hours a week. And so, Apple and Foxconn, when we presented our findings to them, they said that they wouldn't just work to get into compliance with our code limits, they would actually press further and go for full legal compliance. I don't know of another company that has made such a public commitment.
There are two reasons why I do believe this will happen. The first is that we will have assessors go in periodically to verify the progress. So they have a commitment to introduce this by July 2013. And we will track it all the way through to completion. And secondly, having made the commitment so publicly, I really don't think that Apple and Foxconn will miss this because the eyes of the world are on them.
SIEGEL: Given the finding about overtime, will implementation of the association's audit result in workers who are currently working for Foxconn working fewer hours and making less money, and more workers being employed to cover their high demand periods?
HEERDEN: That's a very good question, because they need to aim for something like 20 percent cut in hours. And that would translate into a cut in pay. And Foxconn are well aware that if they did cut pay, of course, they would lose hundreds of thousands of workers. And so, they can't afford to do that.
SIEGEL: So, to comply with the commitments they've made, they're going to have to pay more for labor.
HEERDEN: Effectively, yes. And they're going to hire - have to hire a lot more workers to make up for those lost hours. So, this does represent a significant investment.
SIEGEL: And so, given your expectations at the outset of this audit and what you found, did Foxconn pass?
HEERDEN: We don't use a pass/fail rating because every single facility we go into needs improvement. And that includes facilities we go into in the United States. So, we find an average about 17 issues worldwide which need to be addressed, serious issues. So the Foxconn findings are ballpark. They're not out of the range at all. And this will be an ongoing effort to just continuously improve.
SIEGEL: Well, Mr. Van Heerden, thank you very much for talking with us once again about it.
HEERDEN: Thank you.
SIEGEL: That's Auret Van Heerden who runs the - he's the CEO, rather, of the Fair Labor Association. His group conducted an audit of more than 35,000 workers at Foxconn factories in China that supply Apple. He also says the audit found no child labor, and that the company has made progress addressing employee health and safety concerns.
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