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Ethics defined is simply principals of right and wrong, or good and bad. Many people believe that ethics are personal, religious and social behaviours, but this is not the case. In today’s business world ethics are critical to the work environment, as all members of organisations follow a framework including public acceptance, policies and procedures which are generally guided by law. Business ethics are moral principles that guide the behaviour of and within the organisation the importance of business ethics is more important than ever in today’s society.
To operate in a moral and ethical manner is essential for the company to further benefit in the future to come. The code of conduct is designed by the company to utilize integrity based decision-making and to achieve satisfaction for the organisation internally and externally. Working in an ethical manner benefits the organisation through the satisfaction of their employees, investors and customers (Global Post, 2013).
But ethical practises go beyond the expected morals in an organisation.
In this day and age businesses are more willing to make an impact on their community by giving to social programs, investing in developing countries and lobbying for political change (Udemy, 2013). It’s important that all businesses strive to achieve higher standards of ethical and morality for future generations. Apple Inc. is a multinational American corporation which originated on 1st April 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. Apple designs and manufacturers’ electronics, computers and software, the most popular hardware products are Macintosh including the iPod, the iPhone and iPad.
With 284 retail locations across 10 different countries Apple is the largest technology organization in the world. Apple’s code of conduct states; ‘Apple suppliers are required to provide safe working conditions, treat workers with dignity and respect, act fairly and ethically, and use environmental responsible practises where ever they make products or perform services to Apple’(Apple Inc. 2014).
Unfortunately Apple has disregarded some of their ethical standards and caused big ethical issues for the company 2011 Apple was criticised and the issues caught the public eye for appalling ethics through forced overtime, child labour and other inexcusable working conditions in their manufacturing factories in Southern China, operated by a manufacturing company Foxconn (Wopschall, 2013). Poor work conditions and high suicide rates of Apple employees in Southern China shortly leaked to the public. This publicity shocked many and Apple then vowed ‘to clean up their supply chain’ (ref). As a result Tim Cook, Chief Executive of Apple implemented processes in place to control the working conditions and improve constraints in the factories. Apple the technology giant has now given Pegatron a contract for manufacturing goods due to the high volume of product demand. With negative public criticism surrounding Foxconn Apple is veering away from the unethical conduct that went on.
Sadly once again there have been cases of similar activity in Pegatron's factories. In 2013 an undercover investigation took place by China Labor Watch (CLW) from March until July. There were many interviews conducted with workers outside the factory which released information regarding the factories violations. The investigations where undertaken at three factories Shanghai, Riteng and AVY, all three factories included a total of about 70,000 workers. The investigation identified ethical standards that were being breached, as workers were earning approximately $1.50 per hour ($268 per month) which is not sufficient funds to live on; this has led to working overtime with 11 hour days, six days a week (total 66 hours per week) with majority of the time spent standing up. China’s law confirms 49 hours per week is the limit of working hours and overtime is limited to 36 hours and must be paid correctly (CLW, 2013). Apple were trying to cover this by forcing workers to sign forms indicating that overtime hours were less than what they were (CLW, 2013).
In addition pregnant woman were working these absurd hours, effectively breaking Chinese laws that restrict employers to ask pregnant woman to work more than 8 hours a day. In the Pegatron factories there were over 10,000 underage and student workers aged between 16 and 20 years, they were placed in the production rooms alongside the adults completing the same job, although being an intern (student) the wages lessened due to school deductions whilst other underage workers didn’t receive payment on time (CLW, 2013). Many of the underage workers whom were under 18 years were hired through third party agents; this made it easier getting through the recruiting process. Child labor is inappropriate and should not be tolerated we are in the 21st century and for many years had activists working to eliminate slavery. There are no exceptions and for such a large company like Apple this unethical behaviour is unacceptable.
The factories provide dormitories for workers due to the long hours which cost $19.65 per month for an eight person dorm. Founded through investigation by CLW the dormitories housed 8-12 people, the rooms were dirty and crowded, and the bathrooms and urinals were very unhygienic. In the shower blocks there was two dozen showers shared between hundreds of workers (CLW, 2013). After a long day of hard work these workers didn’t have much to look forward to other then a line up for a quick cold shower. Sadly workers had little ability to push for better conditions because they did not know how independent unions functioned (NY Times, 2012). CLW revealed the number of violations in Apples supply chain, a total of 86 labor right violations, 36 which were legal and 50 ethical. The investigation that took place only last year 2013 released what violations were occurring inside the factories; dispatch labour abuse, woman’s rights violation, underage labour, contract violations, insufficient training, excessive working hours, insufficient wages, poor work conditions, poor living conditions, labor health and safety concerns, abuse by management and environmental pollution (CLW, 2013).
Throughout pegatrons factories International and Chinese laws have been continuously broken, not only have Apple been breaking these laws but breached their own standards. In their social responsibility code of conduct ‘Apple requires its suppliers to operate in accordance with the principals in this Apple supplier code of conduct and in full compliance with all applicable laws and regulations’ (Apple Inc. 2014). As proven a business’s greatest asset is their employees no matter where you stand in the hierarchy everyone still plays a part so all should be appreciated equally. Workers abide by organisation policies and procedures and will perform in an environment with integrity and strong ethics, and will not take advantage if they have pride and believe in what they are doing. How can you expect the workers to perform to the best of their ability if they are taken for granted and depreciated.
These large factories find ways to reduce expenses by cutting corners, pushing employees to work longer and faster, and replacing chemicals with cheaper alternatives. So far the end result for the workers has been unfair and unethical. When new products are released such as the Apple iPhone 5, more pressure is put on the manufacturing chain. Apple sold 5 million iPhone over one weekend and sold approximately 10 times the amount by the end of the quarter (Wopschall, 2013). This demand was high because of the volumes of product needed resulting in employees forcing themto work faster and longer, and within these factories employees will be replaced at the drop of a hat if they lack efficiency. The violations don’t stop there as Apple continues manufacturing, environmental and safety standards are being breached. Apple was contacted by the Institute of Public and Environmental Affairs (IPE) due to their poor environmental performance.
Apple was asked to increase management of their environmental performance of factories in its supply chain. There were major concerns which needed observation and attention as they were chronically out of compliance with the environment regulations (Udemy, 2013). The factories were discharging toxic metal like copper and nickel, breaching international safety standards, ignoring health concerns and disposing hazardous waste incorrectly (Udemy, 2013). Once inspections started more problems rose with storing and handling of hazardous chemicals and the disposing and recycling wasn’t up to standard by law. Stated on Apple’s website is a list of efforts to manage the environment performance of its suppliers, which includes greenhouse gas emissions and removing of toxic substances. Apples code of conduct has detailed rules to control hazardous substances, solid waste, water-waste and air emissions (Apple Inc. 2014). Failing to comply with these rules as Apple has not prevented pollution.
Part of the manufacturing process for the iPhone and iPad uses high density PCB fabrication which requires a lot of power and water to produce, the chemicals etching the laminate can result in environmental violations due to the large quantities of air and water pollution (Udemy, 2013). Apple’s environmental responsibilities should be abided by, also noted by IPE Apple doesn’t have an actions productivity review to record their suppliers environment performances. With no legitimist records you are unable to evaluate processes and implement improvement and change. Ethical issues in Apple factories and ongoing public criticism it’s time for Apple to address the problems properly, not just a quick fix. Over the last three years Apple has made efforts and small improvements to better working conditions for their employees.
However the work environments still remains unhuman and proven through investigations which only took place last year there is still a lot of corruption occurring in these factories where standards are breached. The excessive hours of overtime workers are doing needs to be managed and controlled with strict working hour limits, once reach the overtime limit employees are unable to continue working overtime. In research overtime constraints were implemented but were not followed up and controlled. New policies and procedures should be implemented in all factories with regular inspections to ensure employee’s conditions are of appropriate standards and abide with China’s Legislation. This of course leads to better pay rates so workers can survive without feeling the need to work ridiculous overtime. Also it’s very important that Apple make efforts to minimise illegal underage workers, understandably the factories will always have young workers through internships.
However it’s Apples responsibility to manage their students offering opportunities and work experience, therefore I believe constraints should be put in place to limit the number of internships accepted in the factories at one point in time. Apple needs to create a strategic plan to clean up the factories inside and out, to improve environmental practises and develop factory cleanliness. Looking at the staff quarters is a good start to this process, what can be improved at low cost like general hygiene in the rooms and bathrooms. Assessing the number of people living in the quarters as it’s essential to track and not overcrowd the rooms. Future development or renovations to improve comfort, having enough shower blocks and bathroom facilities to accommodate the number of employees living in. If the standards are lifted not only in the staff quarters but also the factories this will provide workers with more pride, therefore staff will be happier and perhaps less turnover will occur.
All over the world organisations and individuals have been working towards environmental sustainability to better our future. Reasons for implications of laws and regulations are aimed at safe and ethical use and disposal of all hazardous substances. Apple needs not to ignore the fact that their suppliers are not working in alignment of their environmental responsibility. What is restricting the factories to improper disposal of hazardous waste and recycling, there is no excuse for the factories to dispose and recycle incorrectly as all organisations have responsibilities. If the original processes of reaching environmental standards isn’t working. Then clearly it needs to be updated and if new infrastructure needs to be implemented then so be it. Apple should be portraying a positive influence on environmental sustainability.
Especially because people all over the world are buying their products with promises by their attainment of values that Apple as a company exceed customer expectations which goes beyond the hardware you purchase from a store. The importance of ethics in the business world is following moral principles and adhering by the code of conduct as founded through investigations Apple has displayed some appalling ethical behaviour, pursuing child labor, working overtime, breaching environmental standards and other excusable conduct. Making changes is not going to happen overnight, but with ethical decision making and focus towards morality, Apple will be on the right track to implement a better working environment internally and externally.
Training should be pursued for employees to gain a greater understanding of what ethical standards and behaviours are expected under the Apple code of conduct. If consequences are in place for workers who breach the code perhaps this would give them more incentive to follow the ethical and moral pathway that apple has perceived. Along with Apple organisations around the globe they must pride on ensuring ethical standards are included in their policies and procedures and align with legislation. This will promote and educate people on ethical standards and ensure sustainability is achieved.
Apple Inc, ‘Apple Supplier Code of Conduct version 4.0’, January 2014, retrieved on 1/04/14 from: https://www.apple.com/supplier-responsibility/pdf/Apple_Supplier_Code_of_Conduct.pdf Business Ethics Case, Cody Wopschall, ‘Apple Inc, Severe Employee Abuse’, 2013, retrieved on 2/04/14 from: http://businessethicscases.blogspot.com.au/2013/04/apple-inc-severe-employee-abuse-2011.html China Labor Watch, ‘Apple's Unkept Promises: Investigation of Three Pegatron Group Factories Supplying to Apple’, July 2013, retrieved on 8/04/14 from: http://www.chinalaborwatch.org/pro/proshow-181.html David Mielach, Business News Daily, ‘Is It Ethical To Own An Iphone?’, February 2012, retrieved on 5/04/14 from: http://www.businessnewsdaily.com/1979-owning-iphone-ethical.html Global Post, The Benefits and Importance of Ethics in the Workplace, 2013, retrieved on 8/04/14 from: http://everydaylife.globalpost.com/benefits-importance-ethics-workplace-7414.html The Guardian,"Apple's Chinese workers treated 'inhumanely, like
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