It's time to put ethics into IT

A report published this week finds sweatshop working conditions at the contractors who make the components for Dell, HP, IBM and other brand manufacturers. It should be taken as a wake-up call for the industry

If we can lay one criticism at the report published this week by CAFOD into working conditions for the people who make the PCs that we have sitting on our desks right now, it is that it is way too late.

During the 90s, when the sweatshops that produced Nike's trainers had everyone hopping mad, in the world of technology all anybody cared about was rising stock prices and the fact that everything just kept getting smaller, faster, cheaper and just plain cooler. There was more than enough fascination at the bright young things of Silicon Valley to keep us transfixed and the only downside of technology was those unvested stock options.

For sure, IT has tremendous potential to change the world for the better. The Internet can help improve literacy in places where books, even many centuries after the invention of the printing press, still barely reach. Software development provides skilled and relatively well-paid jobs in one of the few industries not at the mercy of the G8 nations, allowing many developing countries to compete for the first time with the West on a playing field that is not only level but perhaps even tipped slightly in their favour.

But hardware manufacturing is a different story, as the CAFOD report makes clear. Here, the same practice of outsourcing that makes software development so beneficial is having an altogether different effect.

CAFOD tells of employees humiliated during interviews -- sometimes stripped naked and given pregnancy tests -- and then forced to work long hours in sometimes health-endangering conditions, with no right of association and no employment rights. At one plant, which makes monitors, managers have the right to fire workers who step on the grass in the factory complex.

CAFOD singled out three companies for scrutiny in the report: Dell, HP and IBM, which between them produce roughly a third of all PCs that shipped in 2003, according to analyst firm IDC. The working conditions that CAFOD exposed were not necessarily found within these companies, but at the companies further down the supply chain. Contract manufacturers such as Solectron, Flextronics, Celestia and Samina-SCI are all but invisible to consumers of technology, but they have largely supplanted the big brand names in the manufacturing process. These four companies each had revenues over $10bn in 2002.

Cutting costs in this supply chain is hugely important to the big brand 'manufacturers'. Dell, HP and IBM all report massive savings -- billions of dollars -- in their supply chain over the past few years. It is the squeezing of this supply chain, where big contracts can be lost over a few percentage points on a price, that is largely responsible for the appalling working conditions that CAFOD found.

So what to do?

Closing factories is not the answer. If the people working in the factories visited by CAFOD and its partners had a viable alternative they would surely take it. The fact that they endure such conditions indicates that there is no bearable alternative. And you don't offer choice or empowerment by removing a family's source of income.

Even governments in the developing world have little real power to change conditions. One of CAFOD's criticisms of the PC manufacturers is that while they adhere to local laws, they do not necessarily conform to international norms. In many countries, national laws are simply not enough.

Of the three big brands, HP faired best in its code of conduct for supply-chain labour standards. First, said CAFOD, HP's code is specifically aimed at suppliers, while Dell and IBM build provisions on suppliers into the company's general business code, making it more difficult to discern their commitment to improving labour standards in the supply chain. Second, HP's code is clearly based on standards laid out by the UN body, the International Labour Organisation. Of the three, IBM faired worst, with no specific provisions on freedom of association or child labour, living wages or excessive working hours.

All three companies appear to be making some effort to improve the situation, but it is clearly not enough. HP has demonstrated a real commitment to labour standards in the supply chain, while Dell and IBM have demonstrated an "increased commitment" as CAFOD puts it, but none of them are willing to work transparently with other stakeholders such as stakeholders, NGOs or workers groups to ensure sustainable improvement of workers' rights.

And, getting to the heart of the matter, there is no commitment to incorporate labour standards into core business practices; for example, paying suppliers a price that will allow them to implement codes of conduct. And really, who can blame them?

If a major PC vendor adopts international labour norms and pays a living wage, etc., then they will inevitably have to raise their prices. Margins on PCs are slim enough already without extra costs being added in. And what will happen when they do that? All of us, the buyers of IT equipment, who read such stories and get so angry at the failure of the vendors to ensure the well-being of the people who manufacture their components, will simply go elsewhere -- to a manufacturer who can offer lower prices because they pay even less heed to labour issues.

At the front of the report, CAFOD makes four demands: that manufacturers adopt and implement codes of conduct based on International Labour Organisation standards; that they conduct business in a way that enables suppliers to implement labour standards; that the UK government (and other governments by extension) consider companies' policies and practices in relation to supply-chain labour rights when awarding procurement contracts; and that the UK government support the UN norms on business responsibility.

At the end, CAFOD lays out an agenda for change, and right at the end of that, is a lone action point that reads: "Institutional and individual consumers should hold the manufacturers to account for their management of supply-chain labour standards."

And that is the rub. If we really want change then it is us, the consumers, who will effect the change. Read the CAFOD report, here, and the next time you meet your supplier, take them to task on the points raised. But go a little further. Tell them you'd rather spend your money with a supplier that cares about working standards in the supply chain, even if it does cost a little more. There are a lot of people out there who will thank you.