Wall Street Journal: H-P Steps Up Supplier Oversight in China

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher

By Paul Mozur

8 February 2013

BEIJING—Hewlett-Packard Co. said Friday it would tighten restrictions on the use of student interns and temporary workers by its suppliers in China in a bid to reduce abuses of an often-exploited loophole in Chinese labor law.

But one labor group said it wasn't clear how effective the measures would be given the role of local officials, agencies and suppliers in funneling such workers into factories.

In China, students at vocational schools and temporary workers are often used as a low-paid supplement to the full-time workforce at factories. Labor groups say such workers are particularly vulnerable to abuses such as long hours and punishment if they decide to quit. In October Hon Hai Precision Industry Co., the assembler of gadgets for the like of H-P and Apple Inc. also known as Foxconn, acknowledged it hired interns who were as young as 14 at one of its China plants.

H-P said Friday it would limit the number of student workers allowed to work at suppliers' plants and specified that students must work at jobs relevant to their study. The California-based personal-computer maker also said students working at suppliers' factories must be allowed to leave work at any time upon reasonable notice without punishment and must have access to reliable and reprisal-free grievance mechanisms.

HP said to enforce the guidelines, it will carry out regular audits and collect information from suppliers on a more frequent basis. H-P announces audits in advance to its suppliers and conducts them in the presence of management, according to its 2011 report on supply-chain responsibility. The latest measures were reported on Friday by the New York Times.

The announcement comes ahead of an amendment to Chinese law, which goes into effect on July 1, designed to protect student and temporary workers. The changes to China's Labor Contract Law say students and temporary workers must be paid on the same basis as full-time employees. It also increases fines for companies and schools violating the law and strengthens the licensing requirements for employment agents.

Apple, maker of iPhones and iPads, said last month some elements of internship programs run by its suppliers are poorly run, adding, "in 2013, we will require suppliers to provide the number of student workers along with school affiliations so we can monitor this situation more carefully."

Manufacturers often disregard Chinese law, hiring underage interns or hiring "temporary workers" on a full-time basis to reduce wages and social benefits. The use of student and temporary laborers is highly ingrained within the electronics manufacturing industry, said Geoff Crothall, a spokesman for China Labour Bulletin, a Hong Kong-based labor rights organization.

"I don't know how a party like Apple or HP can police that," said Mr. Crothall, adding that a company like H-P if asked is going say that interns take the jobs of their own volition. "Suppliers] already insist all placements are voluntary, but if you talk to student interns they will say something different."

An H-P spokesman in China referred questions to its Palo Alto offices.

In China vocational schools have become widely popular as a training ground for students hoping to get skilled jobs in the country's manufacturing industry. But labor groups say many students receive almost the same pay after going through a vocational school as they would if they had gone to work at factories directly. Some vocational schools have also been found to make graduation contingent on internship programs, in that way forcing students into factory jobs, at times unrelated to their fields.

Although labor groups have said that recent steps taken by HP and Apple are positive, they often argue that labor abuses are also linked to the economics of the global electronics-manufacturing supply chain, by which branded companies pay as little as possible to suppliers.

"What tends to happen is they pay very little, and squeeze [suppliers'] profit margins and as a result supplier factories squeeze the workers," Mr. Crothall said.

In 2011 HP carried out 17 audits in China and since 2009 it has required companies that have violated working-hour regulations in the past to track and report the number of hours employees have worked.

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