Microsoft Response to Chinese Labor Abuses Lacks Details

Following reports of abusive labor conditions at KYE by the National Labor Committee, the factory in China that manufactures Microsoft's Basic Optical Mouse — and a variety of other products for other companies — Brian Tobey, Microsoft's Corporate Vice President, Manufacturing and Operations, Entertainment and Devices, has posted the following response on the Official Microsoft Blog:

As a company that sells a wide range of hardware and devices, we take very seriously our corporate responsibility to ensure that the manufacturing facilities and supply chain operations that we use comply with all relevant labor and safety requirements and ensure fair treatment of workers. We have rigorous standards in place, and have established a robust supplier Social and Environmental Accountability (SEA) program.

We were therefore very concerned when we saw a report by the National Labor Committee (NLC) alleging that conditions at a factory operated by KYE in Dongguan, China, were adversely impacting workers. KYE assembles and packages hardware products for Microsoft and a wide range of other companies.

As a result of this report, we have a team of independent auditors en route to the facility to conduct a complete and thorough investigation. If we find that the factory is not adhering to our standards, we will take appropriate action.

We should note that as part of Microsoft’s ongoing supplier SEA program, an independent auditor has been inspecting the KYE factory annually. In addition, Microsoft personnel conduct quarterly on-site assessments, and receive weekly reports from KYE on key labor and safety criteria that we monitor as part of our supplier SEA program. Over the past two years, we have required documentation and verification of worker age, and no incidence of child labor has been detected. Worker overtime has been significantly reduced, and worker compensation is in line with the Electronic Industry Citizenship Coalition standards for the Dongguan area.

Despite these earlier findings, we take the allegations raised this week quite seriously. Another comprehensive on-site audit of the facility will be conducted next week, with a specific goal of investigating the allegations raised in the NLC report. In addition, we will have monitors on site pending the results of the inspection.

We will take all appropriate steps to ensure the fair treatment of the KYE workers.

There are several contradictions in Microsoft's statement. Firstly, if the corporation claimed that it had found no problems in KYE's factory conditions during independent annual inspections, then why did it feel the need to "significantly reduce" worker overtime? Kernaghan stated that overtime is not obligatory, but the $0.52-an-hour wage forces the plant's workers to work 80 hours-plus a week in order to make a decent living.

Microsoft says it relies, at least in part, on KYE to provide its labor and safety reports on its own factories.

The annual inspection of the factory by an independent auditor failed to uncover the abuses catalogued by the NLC report. Did the inspector not do a good job, or did Microsoft ignore his findings? What actually was the auditor charged with looking for? That no one was suffering abuse, or that workers were not asleep or improperly assembling mouses during the long working hours?

Microsoft has used the KYE factory since 2003, however, it has only required proof of age of its workers for the past two years. What was the policy between 2003 and 2008? And whose task was it to collect the information? If it was up to the management at KYE, then why wouldn't they doctor the results, or leave out the details of the underage employees?

Microsoft claims that "worker compensation is in line with the Electronic Industry Citizenship Coalition standards for the Dongguan area." There are no such standards specifically for the Dangguan area. The Electronic Industry Citizen Coalition is a worldwide body with worldwide standards. It acknowledges local law but goes further. Here is its code of conduct. Point 3 states this:

Studies of business practices clearly link worker strain to reduced productivity, increased turnover and increased injury and illness. Work weeks are not to exceed the maximum set by local law. Further, a workweek, should not be more than 60 hours per week, including overtime, except in emergency or unusual situations. Workers shall be allowed at least one day off per seven day week.

According to the NLC report, workers at the KYE plant get three days off each month.

Point 5 of the EICC's code of conduct states this:

The Participant's disciplinary policies and procedures shall be clearly defined and communicated to workers. There is to be no harsh and inhumane treatment, including any sexual harassment, sexual abuse, corporal punishment, mental or physical coercion or verbal abuse of workers: nor is there to be the threat of any such treatment."

According to a first-person eyewitness cited in the NLC report:

"Every day we have to gather together after work and hear the foreman speak. There was one boy who joined the factory not too long ago who fled the work area; he decided that he didn't want to stay there one more minute. Our foreman discovers that he is gone and ruthlessly says: "watch me punish him later!"

Microsoft says that it will take "appropriate action" if its auditors discover unpalatable working conditions, but there is no mention of ceasing to use the KYE plant in Dongguan City. Microsoft is the third largest corporation in the world, so it surely has the resources to pull out of its contract with KYE, should it be found guilty of human rights abuses, something that Microsoft's SEA program must cover. However, the NLC does not want Microsoft to pull out of China and put people who need work out of their jobs.

Fast Company contacted Microsoft and requested a phone call to clarify some of the unanswered issues, but no one from Microsoft was directly available for further comment.

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15 Comments

  • DAvid Schnell

    Louis: The only bad thing about this situation you left out is that some of the products they make are soon to be obsolete and if KYE does not innovate, the workers lose their jobs. We know the problems, at least KYE and Microsoft are trying to do something about them.

  • Louis Tchertoff

    Foreign owned companies in China are subcontracting more and more these days. They are closing down their own Chinese factories and creating slave labor by transforming their engineers into 100% exclusive subcontractors that are less subject to control by the local authorities than foreign investments who have to apply the law.
    In order to understand the working conditions at KYE one only needs to know the annual staff turn in percentage. China is changing quickly and the workers do not accept these kind of dire conditions and low pay so gladly. A high annual staff turn of over 40% will indicate unacceptable working conditions or ruthless managerial control.
    The fact that it's cheaper does not mean more will be sold, it just creates more junk in our garbage bins.

  • Ashton Lafferty

    Come on now...Foxconn, Samsung, Best Buy, HP and others use KYE. Let's spread the indignation out evenly. Heck, Foxconn and Samsung together and you've got Apple, indirectly at least. But shhhhhh, let's pretend it's all Microsoft.

  • Dave Crisp

    If Microsoft takes the alternative of pulling out of the factory one of two things happens. A less responsible, smaller company that is less responsive to complaints is likely to move in, paying even lower wages because the factory now will struggle to keep jobs OR the jobs and livelihoods will be simply lost. The sad/potentially positive fact is when you globalize you're entering regions where working conditions and wages have been even worse than when you start to pay and put jobs in. (If having the jobs flowing in from Microsoft is so bad, why are we so upset at losing them?) These countries introduce legislation to come up to more like world standards, but that doesn't happen overnight. In fact one part of the process is for Microsoft to get hammered for not doing enough and start to do more. Then other employers in the area (foreign and indigenous) have to pony up, too, and before too many years pass the region is providing more livable wages and conditions. It's a process, but not totally fun or easy for anyone. It's also part of what we in the industrialized world can share in an awkward sort of two-steps-ahead, one-back sort of way at some expense to us of cushier jobs and high wages... again not fun for anyone, but part of taking a bit of a hit to raise wages in underdeveloped regions a lot. If we're lucky, 50 years from now it will be history just as 6 and half 12 hour work days are now history in North America... unless you're one of those 'fat cat' managers we love to hammer. Just some thoughts. Where others see 'corporate speak' I tend to see a company that's improving from year to year, maybe not as fast as we'd like, but still improving... and trying to find a balance between saving jobs and demanding change.

  • Kirsten Anderson

    For MS to announce that they are going to inspect next week is so ridiculous because of course with warning all will seem well at the factory. The only way to inspect facilities is by surprise. We source toys that are not made in China as there is a big demand for them. However, it isn't the county that produces the toys that causes safety or labour issues it is the company that contracts out that sets the standards knowingly or not.

    Kirsten

    www.villagetoyshopc.ca

  • Chris Reich

    Don't we all know when government or business launches an investigation they already know the outcome? They are sending a team to investigate immediately! Good grief.

    If Microsoft could get the labor price down even further they would.

    Frankly, I have little sympathy for any company that takes jobs to China.

    We will pay the price anyway---the company gets fat, we get cheap toys but as jobs are lost the government tries to hold up a paper trading economy---thus $13 Trillion in debt. So, does the consumer really save? Nope.

    But Bill and Melinda can pass out money and garner plenty lip impressions on their behinds as they dole out salvation to the 'under developed' countries. There is nothing new to this story.

    Isn't Melinda one of Fast Company's most creative (or innovative or progressive or best smelling or something) people of the century? Why? For coming up with brilliant ways to pass out money? Smooch.

    If we would start supporting companies trying to compete with 50 cent labor, we might have a more solid future.

    Corporate and personal greed will bring the whole house down if we don't get it together.

    Chris Reich
    www.TeachU.com

  • Michael Kusuplos

    Legally, Mircosoft has done more than it is required to do. With that said, it appears that they, Mircosoft, could be doing much more to oversee the production of the products that they have "Outsourced".

    Willing to venture a guess that when the Mircosoft inspection team does show up at this factory in China that the pictures will look much different!

    Unfortuantely, this is one of those less than favorable results of our Globalization Process.

  • Michael Kusuplos

    Legally, Mircosoft has done more than it is required to do. With that said, it appears that they, Mircosoft, could be doing much more to oversee the production of the products that they have "Outsourced".

    Willing to venture a guess that when the Mircosoft inspection team does show up at this factory in China that the pictures will look much different!

    Unfortuantely, this is one of those less than favorable results of our Globalization Process.

  • Michael Kusuplos

    Legally, Mircosoft has done more than it is required to do. With that said, it appears that they, Mircosoft, could be doing much more to oversee the production of the products that they have "Outsourced".

    Willing to venture a guess that when the Mircosoft inspection team does show up at this factory in China that the pictures will look much different!

    Unfortuantely, this is one of those less than favorable results of our Globalization Process.

  • Frank Hall

    This goes to show it takes more than an administration change to reverse the growing trend of corporate greed and corruption. I still think the best way to address this sort of problem is to "vote with our $$$". I continue to not buy products from China where possible (I need to work harder at it... anyone know of a good site for finding non-Chinese substitutes?). I've also tried to not purchase MS products (fairly successfully) because I don't like their "competitive" strategies. This article has strengthened my resolve to continue my transition from MS products to open source products like Ubuntu and OpenOffice! Thank you FastCompany.

  • Michael Kusuplos

    Legally, Mircosoft has done more than it is required to do. With that said, it appears that they, Mircosoft, could be doing much more to oversee the production of the products that they have "Outsourced".

    Willing to venture a guess that when the Mircosoft inspection team does show up at this factory in China that the pictures will look much different!

    Unfortuantely, this is one of those less than favorable results of our Globalization Process.

  • Michael Kusuplos

    Legally, Mircosoft has done more than it is required to do. With that said, it appears that they, Mircosoft, could be doing much more to oversee the production of the products that they have "Outsourced".

    Willing to venture a guess that when the Mircosoft inspection team does show up at this factory in China that the pictures will look much different!

    Unfortuantely, this is one of those less than favorable results of our Globalization Process.

  • Todd Singleton

    "but there is no mention of ceasing to use the KYE plant in Dongguan City"

    Of course not. Move the contract to a company that pays a decent wage? Are you insane? That would mean MS only makes $6 per mouse they sell instead of $16. What do you think this is? Communism? No, it's capitalism where profits trump everything, including the quality of human life.

  • Dave LeFevre

    I'm glad that Microsoft didn't respond with ManagementSpeak Corporate B.S. when it came to this. Oh wait... they did respond that way, didn't they. This countries moral values are screwed up by our widespread corporatism, and entities like M.S. can't even call a spade a spade and admit when something is wrong.