Samsung Supplier Owes Workers Overtime Pay, Labor Group Says

Photographer: SeongJoon Cho/Bloomberg

Samsung Electronics Co. reported in October that net income excluding minority interest rose 25 percent to 8.05 trillion won ($7.6 billion) in the third quarter. The company is benefiting from shipments of smartphones in China, helping it weather slowing growth in high-end handsets. Close

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Photographer: SeongJoon Cho/Bloomberg

Samsung Electronics Co. reported in October that net income excluding minority interest rose 25 percent to 8.05 trillion won ($7.6 billion) in the third quarter. The company is benefiting from shipments of smartphones in China, helping it weather slowing growth in high-end handsets.

A supplier for Samsung Electronics Co. (005930) isn’t paying some overtime to employees of its mobile-phone factory in southern China, according to a report from worker-rights group China Labor Watch.

Samkwang Science & Technology Co. in Dongguan also violated Chinese labor laws by discriminating against men, pregnant women, ethnic minorities and applicants older than 39, the New York-based group said in a report on its website yesterday. The allegations are based on an undercover investigation of the factory, according to the statement.

Samsung, Asia’s largest technology company and the world’s biggest maker of mobile phones, said it will send “a team of specialists to the supplier company to further investigate the allegations made in the report and to take necessary measures.” The Suwon, South Korea-based company, like other manufacturers such as Apple Inc., has come under scrutiny for the way its component suppliers treat workers.

“Earlier this year, Samsung, through a third party auditor, conducted an on-site audit of the labor conditions at the supplier company that is currently the subject of the recent report,” Samsung said in an e-mailed statement. “Based on the results of the audit, Samsung requested the supplier company’s plan for corrective measures and has been strictly monitoring the implementation of those improvements.”

Production Line

China Labor Watch sent an “investigator” to work on the Samkwang production line for two weeks assembling mobile-phone covers and screens in the plant, which employs more than 5,000 people, the group said. The factory doesn’t pay workers at least $84,000 in overtime pay each month, according to the group. That works out to more than $1 million a year, it said.

Samsung reported in October that net income excluding minority interest rose 25 percent to 8.05 trillion won ($7.6 billion) in the third quarter. The company is benefiting from shipments of smartphones in China, helping it weather slowing growth in high-end handsets.

Last year, the group said a Chinese supplier of mobile-phone covers to Samsung employed girls under the legal working age of 16 in China. The group also found instances of forced overtime at HTNS Shenzhen Co. and said tightly shut windows resulted in poor air quality and a lack of proper ventilation.

Apple Inspections

China Labor Watch has investigated working conditions at eight Samsung factories in China as well as Apple suppliers, according to the group’s website.

In response to earlier China Labor Watch reports, Samsung audited 105 Chinese suppliers and didn’t find any instance of underage workers, it said in a November 2012 statement.

Apple assembler Foxconn Technology Group, the world’s largest contract manufacturer of electronics, said in October it was investigating practices at its Yantai plant in China after interns worked overtime in breach of company policy.

Foxconn was criticized by activists for its work practices after worker suicides in 2010 led to factory inspections and the installation of safety nets. Foxconn had resolved 98 percent of 360 employee condition issues raised by the Washington-based Fair Labor Association during inspections, the group said in May.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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