Samsung, Panasonic quick to address worker abuse claims

Electronics giants Samsung and Panasonic have responded sharply to an investigation by The Guardian of alleged worker exploitation in their supply chains in Malaysia.

The newspaper spoke to more than 30 Nepalese labourers making Samsung and Panasonic products in Malaysia, who said they are underpaid, have had their passports confiscated, are forced to work 14 hours straight and even face restricted toilet breaks.

Subcontractors provide Panasonic’s workers, while the majority of the Samsung workers were hired through a labour supply firm, although some said they are employed by the brand, according to reports. 

Many of the workers claim to have paid up US$1,250 to recruitment agencies in Nepal to secure the jobs, despite Samsung and Panasonic both saying practices such as this and confiscating passports are prohibited.

In a statement, Samsung said there was “no evidence” of exploitation, but that it would investigate.

“As a committed member of the Electronics Industry Citizenship Coalition (EICC), we comply fully with the EICC's Code of Conduct and have found no evidence of violations in the hiring process of migrant workers hired directly by our manufacturing facility in Malaysia,” the statement read.

"We are currently conducting on-site investigations of labour supply companies we work with in Malaysia and the migrant employees hired by these companies. If any violations are uncovered, we will make immediate corrective actions, and moving forward we will suspend our business with companies that are found to be in violation."

Panasonic told The Guardian it “will conduct a full investigation into the claims".

"We are taking these allegations very seriously and if, in fact, we discover that one of our suppliers has violated such laws or regulations, we will ensure and require them to take necessary corrective action immediately," the company said.

"We expect all of our suppliers to strictly comply with our CSR policy and declaration. These expectations are outlined in Panasonic's contracted terms and conditions with each supplier. We do not tolerate breaches of these terms."

The allegations come at a particularly turbulent time for Samsung, following its ongoing Galaxy Note 7 crisis.

Alec Peck, APAC crisis lead at Hill + Knowlton Strategies, told Campaign Asia-Pacific that issuing quick statements was a must for the brands.

"Whenever this kind of issue breaks, especially when there’s a third party involved as seems to be the case this time, it's very important to get out with an immediate statement at least showing the issue has been raised," he said. "They have absolutely done the right thing to get out on the front foot.

"It’s particularly difficult for Samsung, coming so close to the Note 7 crisis. It’s precisely what they wouldn’t wish to have happened. But they’ve done the right thing by acknowledging there’s an issue to be investigated. They are not acknowledging anything else at this stage, which is also the right thing to do." 

Labour exploitation has a long history in Asia, with brands often claiming they were unaware of the abuses due to the opacity of subcontractors and third-party labour suppliers.

Just last week, China Labor Watch accused Mattel, Hasbro, Disney and Fisher-Price of exploiting factory workers following an undercover investigation. It said workers regularly experienced 11-hour days, seven-day working weeks, miserly pay and poor living conditions.

“Those who earn high profits from toys have done so by oppressing the interests of workers, and as such, their negligence should be subject to public and moral condemnation,” the group said in a statement.

Apple, Dell and HP were entangled in the controversy around the suicides at the Foxconn factory in China in 2010, as customers of the facility. The appalling conditions that led to the collapse of the clothing factory in Rana Plaza, Bangladesh still lives in the memory, as does the condemnation of Irish retailer Primark that used it.

Peck said: "You can’t hide behind the subcontracting issue anymore. Brands, especially multinationals, need to be transparent and ensure their whole supply chain is behaving appropriately. 

"The comms path that needs to be followed is almost irrelevant to the results of the investigation. The brands need to be transparent and react quickly. Announce the investigation, announce interim results, be transparent when the investigation ends and act accordingly." 

More recently, Nestle won plaudits in Thailand for admitting to labour abuses in its fish supply chain, and producing a detailed plan to deal with it.