In the past Samsung has faced serious ethical issues emanating from its Chinese and Korea suppliers. The world’s leading Smartphone manufacturer can only build a reputable image in the global business environment by addressing the labor issues emanating from the suppliers. Stakeholders in the contemporary business environment are reluctant to engage firms whose practices are raising ethical concerns. The fierce competition among producers in the global market is necessitating cost cutting measures making many producers sacrifice the workers’ welfare to increase profitability. The major labor issues facing the company’s suppliers in China and Korea are child labor, hazardous working conditions, underpaid employees, and lack of proper audit. The company has implemented different measures aimed at addressing the highlighted issues although interest groups continue to accuse the company of unethical practices.
Engaging underage persons in production activities is a serious labor malpractice globally. There are international child protection laws that protect children from economic exploitation. Any company that engages the underage in production activities dents its image. In the past, Samsung has been accused of engaging minors in production activities. Making the company among the world’s best working environment is a core element of Samsung’s vision 2020 (Savov, 2012). The company issues a sustainability report each year that fails to adequately address the issue of child labor. In the year 2013, the company conducted an audit to Shinyang Engineering Co Ltd, one of its main suppliers, to investigate the allegations of child labor. The audit did not reveal child labor in the supplier an outcome that angered child labor watchdogs. A survey conducted by China Labor Watch in the year 2012 revealed that seven children that were below the age of sixteen years were working for one of Samsung’s main suppliers in China. The company reacted by tightening its labor policies to ensure its suppliers do not engage in child labor. In the year 2013, the company for the first time halted engagements with one of its Chinese suppliers alleged to be engaging children in production activities .
Hazardous Work Environment for Employees
The 2014 sustainability report released by Samsung revealed that the company is still struggling to provide ideal working conditions. Provision of ideal working conditions puts managers in an ethical dilemma due to the ramifications of such practices. It is the legal obligation of all employers to provide safe working conditions. However, providing the safe working environment is a costly engagement since the employers are forced to provide the necessary safety equipments and infrastructure. An independent audit conducted on 100 Samsung’s suppliers revealed that 59 suppliers out of 100 audited failed to provide a safe working environment(Lee, 2014). One of the main violations observed was a failure to provide protective gear such as protective goggles and earplugs. Samsung has been putting pressures on suppliers to implement workplace safety measures. In addition, the company has been providing training and protective equipment such as fire extinguishers to the suppliers to enhance workplace safety.
Underpaying employees is a common problem facing manufacturers globally. Governments have been establishing minimum wage laws to protect the workers from exploitation. The minimum wage varies among countries and manufacturers prefer operating in environments that are characterized by low minimum wage. Apart from the minimum pay regulations, there are laws governing overtime pay. Some employers exploit the loopholes in the overtime pay to underpay the workers. An independent audit conducted in 100 Samsung’s suppliers revealed that most suppliers were not complying with the permitted overtime working hours in China, a practices led to the underpayment of the workers(Lee, 2014). The audit also revealed noncompliance with the minimum wage rate in the Chinese suppliers. The company has been working hard to ensure the suppliers do not underpay their employees. It identifies specific areas of improvements and demands the suppliers to improve if they are to continue engaging the company.
Lack of Proper Audits
The issues of underpaid employees, unsafe working environment, and child labor can be addressed through proper periodic audits on the suppliers. Such audits would enable the company to address the three issues on a timely basis that would keep lobby groups away. The fact that the existing audit process implemented by Samsung has failed to address the issue implies that they are not reliable. The 2014 incidence where the China Labor Watch identified child labor incidences in some of the company’s suppliers is a clear indication that the company lacks proper labor audits. It is worth noting that the company had implemented an audit on Chinese suppliers before the independent audit that revealed that all Chinese suppliers comply with child labor laws (Lee, 2014). It is, therefore, clear that Samsung lacks proper audit.
In conclusion, Samsung’s labor practices raise serious ethical concerns. Underpaid employees, unsafe working environment and Child labor continue to dent the company’s image in the global business environment. The company lacks proper audit that can ensure violations are identified and addressed on a timely basis.
Lee M.(2014). Samsung’s China Labor Problems Persist. Retrieved from http://blogs.wsj.com/korearealtime/2014/07/01/samsungs-china-labor-problems-persist/
Lee Y.(2014). Samsung halts business with supplier in China on child labor concern. Retrieved from http://www.reuters.com/article/us-samsung-elec-child-labour-china-idUSKBN0FJ05Y20140714
Savov V.(2012). Samsung finds widespread labor issues among Chinese suppliers. Retrieved from http://www.theverge.com/2014/7/1/5860138/samsung-sustainability-report-2014