The Brazilian Ministry of Labor has filed a lawsuit against Samsung this week, citing precarious working conditions imposed on its 6,000 employees at a manufacturing facility in Brazil.
Several irregularities were found at the factory in Manaus, including working shifts of up to 15 hours, lack of seats in the production line, lack of breaks and days off as well as harassment in the workplace. If found guilty, the South Korean firm will have to pay $250mi ($107mi) in damages to its employees.
According to the authorities, some 2,000 employees had to take sick leave of up to 2 weeks in 2012 alone, due to issues such as back problems and repetitive strain injury. This is hardly surprising given the requirements of the production line: a staff member has only 65 seconds to assemble a television, while a mobile phone is put together in under 33 seconds.
It is not the first time that Samsung has been in trouble in Brazil over poor working conditions. In September 2011, the company had to pay R$ 500,000 ($214,000) in damages to employees at a facility in Campinas, in the state of São Paulo.
The issues in Campinas were very similar to those seen in Manaus. At the time, employees described the working environment at Samsung as terrifying, with threats issued by managers when complaints were made. The company paid the fine and agreed to make the adjustments required by the government and Samsung should present evidence that the changes have been made to the Court this month.
Have we seen it all before?
A US-based NGO, China Labor Watch, has compared the working conditions at Samsung with the situation seen in China at Apple's manufacturer Foxconn. But this is different - Apple had a service contract with Foxconn, who treated its employees poorly despite telling their client that labor regulations would be respected. This is not to say that Apple wasn't also at fault, but the company treated the situation in a transparent manner and Tim Cook made sure that he was seen flying to China to demand changes. Requirements were raised so the bar was set higher across its entire supply chain and the Fair Labor Association got involved in the process.
With Samsung in Brazil, it is a different story. In this case there is no outsourced contractor to blame - we are talking about poor working conditions at their own factories. When questioned about the latest lawsuit, Samsung sent me a one-paragraph statement, which said that it is "committed to providing a workplace that adheres to the highest standards in the industry in relation to safety, health and wellbeing" and that it will fully cooperate with the Brazilian authorities when notified.
Well, if I were part of the Samsung management team in Brazil, I would be praying for a miracle. As the sheen has started fading from Apple, Samsung appears poised to become the most important phone manufacturer in the world, but consumers don’t like companies that use dangerous or abusive factories to churn out new products.
Brazil is one of the biggest markets in the world for Samsung. They need to manage their reaction to this situation carefully because Brazil also has the most switched-on and social consumers outside of the USA. If Samsung don’t deal with the accusations of slave labor in Brazil then these local consumers - who have recently managed to get laws changed through protests organized via social media – are likely to arrange a product boycott.
In short, Samsung may find that their problems in Brazil have only just begun if they can’t reassure the public quickly that this behavior was in error.