Will Apple follow in Nike’s failed footsteps?

The latest issue of the Boston Review features a thought-provoking essay by MIT Professor Richard Locke entitled “Can Global Brands Create Just Supply Chains,” as well as a series of responses (including one I authored that this blog draws from). Locke surveys several decades of efforts to improve global labor standards. Using Nike as the primary case study, Locke concludes that private, voluntary regulation—the leading approach he says has emerged to address working conditions that fall short of basic labor standards—has essentially failed.

My response notes the many parallels between the Nike case study and the current situation regarding Apple. As with Nike, Apple’s elevated commitment to improving labor standards has been largely driven by the desire to mitigate what had become a public relations nightmare undermining its brand—in Apple’s case a series of New York Times and other high-profile stories describing the brutal living and working conditions faced by the workers making its products. As with Nike, Apple’s primary response has been private regulation, another way of saying that the company is pushing for reforms itself, through its Supplier’s Code of Conduct, expanded audits of its suppliers and conversations with its suppliers.

The Nike results, according to Locke: “while some factories appear to have been substantially or fully compliant with Nike’s code of conduct, others have suffered from persistent problems with wages, work hours, and employee health and safety.” Somewhat similarly, Scott Nova and I reached the following conclusion in our recent analysis of Apple’s latest supplier responsibility: “Apple’s own data from this and previous reports demonstrate that the rights of workers continue to be violated on a routine basis in Apple’s supply chain, and it is not clear that the modest progress reported shows Apple to be on a path to deeper reform.”

Locke’s article points to the underlying cause behind the failure of private regulation—the conflicting motivations of the companies themselves. The interests that companies may have in improving labor standards are often in conflict with their interests in keeping production of their goods on extraordinarily tight schedules and at low costs.

Apple has displayed this conflict of interest. At the same time Apple has publically emphasized that it is serious about improving labor standards, it appears to have continued to use supply chain practices, such as excessively burdensome production schedules, which undermine such standards. And its recent supplier responsibility report fails to assess this important connection; the report does not discuss the potential need for or nature of any potential changes to its own purchasing practices.

The major reforms to working conditions promised by Apple are not scheduled to be implemented until July 2013, so it is still possible that Apple might succeed where Nike has failed. This possibility is more likely if Apple somehow overcomes its conflict of interest and reforms its own purchasing practices. But what other steps, beyond the current reliance on a private regulatory approach whose track record is checkered, might enhance the likelihood of reforms at Apple suppliers? Locke’s main general suggestion for advancing successful reforms is a renewed emphasis on government action. Most of Apple’s production, however, occurs in China; particularly in the near term, significant advances in that country’s commitment to labor standards cannot be expected.

Instead, I believe the most likely manner for Apple to successfully advance reforms is for the company to establish a role for parties whose interest in improving labor standards is not nearly as complex as that of the company’s itself, nor as tenuous as that of even progressive governments. These parties should include the workers themselves as well as NGO representatives.

Especially in China, where freedom of expression is limited and real unions do not exist, involving such independent, strong voices is an enormous challenge. But Apple could take significant steps in this direction. Scott Nova and I have constructed a list of options, which include the following:

  • Apple could insist that its suppliers establish real bargaining rights for its workers, including democratic elections of worker representatives at the factory level. Apple could participate directly in the bargaining process, ensuring that workers’ perspectives are included.
  • Apple’s commitments to make reforms at its suppliers could take the form of a binding agreement between Apple and international worker representatives, with enforcement mechanisms.
  • Apple could engage with and pay heed to NGOS such as SACOM in Hong Kong and China Labor Watch; these NGOS are fully independent of Apple and for years have reported on working conditions at Apple suppliers and made recommendations for reform.

The only limited reforms to working conditions at Apple suppliers that have occurred in recent months provide further evidence that relying on private regulation alone is an unlikely path to comprehensive progress. Apple’s direct involvement in advancing improved working condition is essential, but absent the influential involvement of independent voices that represent the interests of the workers, improvements in labor conditions at Apple suppliers are more likely to remain modest and erratic.