Amazon said it pushed Chinese factory for reforms before report published

Amazon said it pushed Chinese factory for reforms before report published

NEW YORK (CNNMoney) – Amazon said it has called on a supplier to clean up its act at a Chinese factory where a watchdog group says it observed harsh conditions and mistreatment of workers.

Amazon said it had discovered “two issues of concern” at the Foxconn factory in Hengyang earlier this year. The concerns involved treatment of dispatch workers and overtime pay, Amazon spokesman Ty Rogers said. He did not respond to a request for further details.

Amazon’s admission comes after an investigation by the US-based watchdog group China Labor Watch, and The Observer — The Guardian’s weekly newspaper — into worker conditions at the Hengyang factory, where Echo smart speakers and Kindle e-readers are made.

A report about the investigation, which was carried out between August 2017 and April 2018, published on China Labor Watch’s website Sunday.

It alleges multiple violations of Chinese labor law at the factory. It also describes an environment where 60-hour workweeks are common during peak season, and a significant portion of factory workers do not receive adequate overtime compensation.

“Amazon’s profits have come at the expense of workers who labor in appalling working conditions and have no choice but to work excessive overtime hours to sustain a livelihood,” the report states.

Amazon said that it found issues at the Foxconn factory during an audit in March, and the company “immediately requested a corrective action plan from Foxconn Hengyang detailing their plan to remediate the issues identified.”

The company did not detail those issues or directly address the China Labor Watch report.

Amazon said it’s also “conducting regular assessments to monitor for implementation and compliance with our Supplier Code of Conduct.”

Foxconn, a consumer electronics manufacturer, said it’s “aware” of the report and is conducting a “full investigation.”

“If found to be true, immediate actions will be taken to bring the operations into compliance with our Code of Conduct,” the company said.

The report said the factory relies heavily on “dispatch” workers, which are temporary workers who do not receive sick pay or holiday leave. Under Chinese laws, factories are supposed to limit the number of dispatch workers on staff to about 10% of workers to discourage exploitation. About 40% of the workers at the Foxconn Hengyang factory are dispatch workers, the report says.

Those who worked overtime hours were also not paid time-and-a-half, as required by law. Instead, workers were compensated at the normal hourly rate.

In its statement, Foxconn said salary reviews “are conducted regularly and we ensure that we offer all employees remuneration that exceeds statutory requirements and that is competitive with our industry peers.”

“Such remuneration includes basic wages, payments for any overtime work, housing and other allowances, and other financial incentives and bonuses,” the company said.

The China Labor Watch report also says that, while working conditions were different for regular and dispatch workers, “all workers are subject to long hours and low wages.”

According to the report, workers at FoxConn’s Hengyang factory earned an average monthly wage that was roughly half of what other workers in the city made in 2017.

“Other major issues at the factory include inadequate fire safety in the dormitory area, lack of sufficient protective equipment, absence of a functioning labor union at the factory, and strict management who subject workers to verbal abuse,” the report states.