Another day, another cautionary tale of third-party due diligence. Tech giant Samsung has announced that it suspended its dealings with a supplier pending an investigation into allegations it used child labor. The move follows a report by the non-profit watchdog China Labor Watch, its investigation of the Shinyang Electronics in Dongguan, China, and accusations of improper labor practices.
“The production orders of Samsung are seasonal, and suppliers like Shinyang will alter the strictness of hiring practices in order to adapt to Samsung's demands,” a statement from the group says. “During the busy season, and in urgent need of labor, Shinyang hires child labor and underage student workers. These minors will usually only work for a period of three to six months, toiling for 11 hours every day without overtime pay, and the factory does not purchase social insurance for them as required by law. These young workers usually leave when the factory as it enters the off-season, and the factory does not need to provide any sort of severance pay”.
On June 30, Samsung published its 2014 sustainability report. It reported that the company inspected working conditions at 200 suppliers in 2013and “no instances of child labor were found”.
“After allegedly inspecting hundreds of suppliers, Samsung did not find one child worker,” China Labor Watch wrote, countering that its own investigation uncovered their use and more than 15 labor violations, including a lack of pre-job safety training and protective equipment despite the use of harmful chemicals; discriminatory hiring; overuse of temp workers; workers made to sign blank labor contracts; illegal resignation requirements; potential audit fraud; broad company regulations that establishes the pretext to punish workers for almost any behavior; a lack of any union; and poor living conditions.
Samsung reacted swiftly to the allegations. An investigation launched after the China Labor Watch report was released last week found evidence of an illegal hiring process. “If the investigations conclude that the supplier indeed hired children illegally, Samsung will permanently halt business with the supplier," the company said in a statement.