Labor

Some of the most common nonconformances to HP’s Electronic Industry Code of Conduct (EICC) relate to the labor and labor management systems provisions. As a result, several of our capability-building programs focus on these areas.

Asia Pacific

Labor relations disputes

In 2008, Good Electronics made allegations of serious labor relations disputes against one of HP’s second-tier hard disk drive suppliers in Thailand. Workers at the factory had attempted to form a trade union, but management at the factory intervened to prevent it, culminating in 71 union activists being dismissed and the union being deregistered. After international pressure from HP and others, Thailand’s labor courts overturned the deregistration. Subsequently, HP and our first-tier supplier organized discussions between the union and the second-tier supplier that led to the dismissed workers being reinstated.

However, in spring 2009 the union submitted a letter of complaint to HP and two of its first-tier suppliers alleging labor rights violations and a breach of the agreement. Further discussions followed, and HP and its first-tier suppliers launched a program to resolve the communications problems between the second-tier supplier’s management and the union. The program involves ongoing communication training and regular talks between the two parties. Good Electronics considers the current situation to show “favorable” signs of constructive industrial relations.

The lessons from these incidents were shared with others. HP, with other companies in the region, organized a supplier conference to share open and constructive discussions of workplace and labor relations challenges specific to Thailand. The conference also featured discussions surrounding the global economic crisis and associated pressures on labor relations in the electronic industry. Topics included “government support for dealing with labor disputes” and “roles and responsibilities of management and trade unions.”

Approximately 135 industry representatives from 56 companies attended. HP worked on the event with three major hard disk drive manufacturers who are members of the Electronic Industry Citizenship Coalition and the hard disk drive industry association.

International labor migration

Many companies throughout Southeast Asia employ foreign workers through labor agencies. These workers are vulnerable to poor conditions and discrimination because they are unfamiliar with local laws and regulations.

HP’s decision to withdraw business with a supplier in Thailand brought a specific case to light. The exit process revealed Burmese workers at the factory who were allegedly working in Thailand illegally. Previous audits from 2006 had not uncovered any issues with migrant workers, so this information was new to HP. A local NGO demanded benefits such as equal treatment for these workers akin to those that Thai workers would have received. HP has worked with the supplier and its other customers to help these workers receive appropriate compensation. The NGO is satisfied with progress to date, and we continue to meet with them and the factory on a regular basis to ensure full resolution of the issue.

In response to concerns about migrant labor in our supply chain such as this, in 2009 we joined Business for Social Responsibility and other leading brands in the IT and retail sector on a project to share best practices in managing migrant labor in Malaysia. The project also aims to create a global framework standard for suppliers to evaluate their migrant worker labor policies and practices. In 2009, the group canvassed Malaysian stakeholders from civil society, suppliers and government, to understand their concerns relating to migrant labor. In July 2009, a workshop in Kuala Lumpur also helped identify best practices. The standard, which will be developed in conjunction with international labor organizations, will be released in 2010. Once it has been finalized, HP will explore how to disseminate the tools to suppliers in areas presenting higher risks of labor issues among migrant labor.

Unacceptable working conditions

We collaborate with our suppliers on audits. Sometimes, however, unannounced audits are needed to uncover serious issues.

In February 2009, the National Labor Committee (NLC) in the United States released “High Tech Misery in China,” a report detailing human rights and environmental problems at a Chinese supplier to HP and other brands.

After the NLC reported its findings, HP made clear to our first-tier supplier in this case and the second-tier supplier that our expectations regarding conformance to HP’s Electronic Industry Code of Conduct extend to all our suppliers, not just those that are first tier. Utilizing the Electronic Industry Citizenship Coalition’s audit process, we collaborated with several other major information technology companies that were also customers of the first-tier supplier to perform a comprehensive third-party audit of the second-tier supplier, within two weeks of the NLC report’s publication. The second-tier supplier’s management cooperated throughout the process, giving the auditors unrestricted access to workers, staff, records and the facility.

The audit identified several nonconformances, some of which reflected the issues identified in the NLC report. The supplier in question subsequently developed a comprehensive corrective action plan (CAP) to address the nonconformances. A follow-up audit revealed improvements in many areas, but also showed that further corrective actions were required. HP continues to work through our first-tier supplier to help the second-tier supplier conform with the Electronic Industry Code of Conduct, including quarterly reviews of its progress in addressing the audit findings.

Greater China

Worker-management communication

Effective worker communication is part of HP’s Electronic Industry Code of Conduct because an informed workforce, good communications and an effective feedback system are essential for efficient operation in any organization and result in better decision making, greater employee understanding and commitment and improved industrial relations. Results of our supply chain SER audits in China reveal that workers may not know how to report human rights or labor violations and fear retribution for doing so. The provision of accessible and confidential grievance mechanisms provides workers with a channel for reporting concerns and is a key component of human rights management.

In 2009, HP completed a pilot worker training project with two suppliers, Chicony and Delta, to improve worker-management communication. Our nongovernmental organization partner is Students and Scholars Against Corporate Misbehavior (SACOM), a Hong Kong-based worker training NGO. SACOM is supported by its training partners Labor Education & Service Network (LESN) and Chinese Working Women Network (CWWN).

The training was designed to help workers understand their labor rights and to give them a channel for communicating concerns about their working environment. It also aimed to ensure that HP’s EICC reaches workers as well as management at our supplier factories. Our training focused on:

• Raising labor rights awareness
• Establishing worker hotlines and teaching employees to manage them
• Resolving labor issues, with tailored instruction for worker representative committees
• Counseling skills and techniques for organizing communications programs.

Approximately 4,500 workers have been trained or are in training, and in one case workers were introduced to an independently run hotline to report concerns. During the pilot period, workers reported a broad range of concerns which were communicated anonymously to factory management to be resolved. HP has adapted the pilot project for other factories in China (see photo) and will continue to implement similar programs in 2010.

The project has been recognized by the UN Special Representative of the Secretary General on business and human rights as a good example of a company providing non-judicial grievance mechanisms. The Harvard Law School is now assessing HP’s pilot against the principles for grievance mechanisms described by the UN Special Representative. The principles require that such mechanisms be legitimate, accessible, predictable, equitable, rights-compatible, transparent and based in dialogue and/or mediation. The Harvard analysis will be available early in 2010 and will help HP to determine next steps in the implementation of similar projects.

Excessive working hours

HP considers excessive working hours, as all major nonconformances, unacceptable. We are working to eliminate all instances, but the issue continues to be a challenge, particularly in China. We have learned, however, that some suppliers with these nonconformances are much closer to conformance than others. Understanding suppliers’ progress toward conformance helps us develop the best path for continuous improvement.

In 2009 we piloted key performance indicators (KPIs) to help us with this. They focused on eleven sites at six suppliers where audits revealed excessive working hours. We asked those suppliers to record their one-month and three-month averages as well as the number of workers in each month working more than permitted by HP’s Electronic Industry Code of Conduct. This helped us understand the distribution of overtime since 2008. The KPIs helped us identify spikes and dips in overtime more easily, so we were also able to base discussions of the root causes of excessive working hours on the data.

By tracking instances of excessive hours and a lagging average, we have been able to address particular cases. In 2010, we will integrate these KPIs into our corrective action plans for suppliers with excessive working hour nonconformances in all regions. We expect 25 percent of our high-risk suppliers (by spend) with working hours nonconformances to be reporting against these by the end of 2010 (see Goals).

Latin America

HP-trained labor agencies in Mexico

Supply and demand in Mexico’s electronic industry changes rapidly. The industry copes with these fluctuations through outsourcing, a process which is now widespread—some of HP’s suppliers use up to 70 percent of temporary contract workers. Labor agencies that supply these workers rarely undergo the same audits as our production suppliers, so there is a danger these workers operate without recourse to appropriate social benefits.

Awareness of these issues on the part of some of HP’s production suppliers in Mexico has already resulted in them reducing their use of contract workers, while others have started hiring contract workers directly. HP works with these suppliers to ensure appropriate practices.

HP Guadalajara also uses labor agencies to hire temporary workers. We have been part of an industrywide initiative in Mexico, along with members of the Electronic Industry Citizenship Coalition and Mexico’s electronic industry group CANIETI, to conduct third-party assessments of labor agencies. Training organization CADELEC scores the agencies according to the provisions of the Electronic Industry Code of Conduct and gives comprehensive training to the agencies on the areas in which they do not score well. Three of HP’s labor agency suppliers have been through this assessment. Two of them have been through the subsequent training and will be re-assessed to measure improvement in 2010. The third will participate in training in 2010. HP has also conducted modified on-site audits of five of our labor agency suppliers. The audits revealed a lack of appropriate management processes and limited knowledge of social and environmental responsibility practices. HP has already addressed some serious issues, including discrimination, and NGOs have acknowledged improvements.

For information on recognition of HP’s work in Mexico, see the Awards page.