Our dedicated organizational unit consisting of RBA-certified auditors1) conducts on-site audits of our suppliers. We review their documents thoroughly, including wage information, contracts, and policies, and perform interviews of their employees (a minimum of square root of the total number of employees) engaging with both working level staff and managers during the audits. We manage all identified improvement points through G-SRM. We register risk grades and detailed audit findings on G-SRM once the participating employees of the respective supplier confirm the results. We require each supplier to submit its improvement plan and results, and our country/region-specific staff in charge reviews them along with the supplier’s employees or representatives.
We guide suppliers to take immediate remedial actions on site if possible and normally monitor whether they have taken remedial actions within three months from the registration of the improvement points. We monitor facility installation, certification, and other matters that require extended time and significant expenses over a longer term based on the respective supplier’s improvement plan. We demand suppliers found to have committed audit findings in our priority areas, including prohibition of child labor and forced labor, to take immediate remedial actions and impose penalties in the comprehensive evaluations.
We also operate a working-hours monitoring system to ensure that our suppliers comply with our work-hours requirements. Through this system, we review the average working hours and maximum working hours of our suppliers’ employees at different business sites on a monthly basis and rate them in accordance with the seriousness of non-compliance. In 2023, we performed on-site audits based on RBA’s criteria on all 395(367 in DX Division and 28 in DS Division) high-risk suppliers2) and implemented remedial actions. As a result, the average on-site audit compliance rate reached 95%.
1) Applicable to DX Division
2) High-risk suppliers refer to suppliers considered to have high labor and humanrelated risks or a significant impact on our business – in terms of transaction amount·volume, EHS issues raised by NGOs, among others. As of 2023, 18.9% of suppliers equipped with manufacturing facilities were assessed to be in the high-risk group.
※ At approximately 150 resident suppliers, we conducted a comprehensive evaluation or their work environment in line with the RBA standards, identified areas of improvement, and established a management system (from December 2022 to April 2023).
Samsung Electronics has a zero-tolerance policy towards child labor. To prevent suppliers from employing child labor, we have conducted special audits at recruitment sites annually since 2015, especially during middle school and high school vacations, when child labor recruitment is likely to occur. Since 2018, we expanded these audits to second-tier suppliers. We assess actual and potential risks by reviewing recruitment postings and policies, verifying identities, and conducting employee interviews.
Samsung Electronics audited 112 first-tier suppliers, 50 in DX Division and 62 in DS Division, and 32 second-tier suppliers in East Asia. None of these suppliers employed child. However, three suppliers had deficiencies in their recruitment processes, including a lack of facial recognition protocols for identification. These suppliers have since taken measures to improve upon these deficiencies.
At Samsung Electronics, we have audited 119 first-tier suppliers and 31 second-tier suppliers in East Asia. We strategically timed these audits during middle and high school vacations when child workers are more likely to enter the workforce. Our inspections found no instances of child labor recruitment among these suppliers. However, we implemented remedial measures for suppliers who lacked facial recognition for identification or did not explicitly include child labor prohibition in their contracts.
* Conducted twice a year in winter and summer, the number of suppliers may overlap between the time periods.
In 2023, we reported policy, process, due diligence activities and plans, and improvement cases to Samsung Compliance Committee to eradicate child labor in our company and suppliers.
The Samsung Electronics Supplier Code of Conduct prohibits suppliers1) from using forced labor and payment of recruitment fees by migrant workers. If a migrant worker pays such a fee, the supplier must compensate the worker within 90 days. We monitor fees and costs in all recruitment processes through dialogue with supplier management and employees. This covers the selection of new suppliers, regular audits through self-assessments, on-site audits, third-party audits, and special audits for forced labor.
Audit findings related to recruitment fees for migrant workers, child labor, and working hour violations are classified as serious forced labor violations. Suppliers risk a downgrade in their assessment rating of comprehensive evaluations or even transaction termination, in severe cases, if they fail to resolve these issues.
In 2023, we reimbursed USD 81,549 in recruitment fees to 247 migrant workers. From 2017 to 2023, we reimbursed USD 1,207,283 to 1,896 migrant workers from 11 countries, including Bangladesh, Nepal, and Vietnam. In 2022, we issued a large-scale refund of USD 735,813 to 430 workers of a supplier in East Asia, which was higher than in 2023.
COVID-19 significantly impacted reimbursement trends in Malaysia, one of the largest migrant worker host countries in Southeast Asia. In 2018, the reimbursement amount was USD 214,093. However, in 2019 due to COVID-19 disruptions, this figure began to decrease. Then, in 2020 and 2021, when the pandemic was in full swing, the inflow of migrant workers virtually stopped, and the reimbursement amount decreased significantly. However, since 2022, these amounts have been rising.
Responding to these changes, Samsung Electronics has resumed special audits for migrant worker forced labor in 2023, after a temporary suspension due to COVID-19. In 2023, we targeted 21 suppliers in Malaysia, Hungary, and Slovakia, which are known for their hiring of migrant workers. Using a checklist based on the RBA’s Specialty Validates Assessment Program (SVAP) on forced labor, we checked 22 items including on-site audit of recruitment agencies, possession of recruitment agency contracts by first-tier suppliers, recruitment fee reimbursement, local language contracts and pay stub provisions, pre-departure introductory training, and remediation procedures and record-keeping. Following the audit of the recruitment agency contracts, results revealed that suppliers used 32 agencies2) in 10 countries to recruit migrant workers for manufacturing jobs.
Initially, all 21 suppliers collectively had an average compliance rate of 94%, which was generally satisfactory. However, we discovered one supplier in Malaysia charging workers recruitment fees. In addition, we confirmed 30 audit findings related to a lack of due diligence toward recruitment agencies and insufficient evidence or documentation of recruitment agency contracts and pre-departure introductory training. We collaborated with local subsidiaries and consulted with workers through interviews to support monthly status improvements. This collaboration confirmed that all audit findings had been addressed and improved. In 2024, we aim to further improve the labor and human rights of migrant workers by expanding our target countries to five.
1) Based on the International Labour Organization’s (ILO) core conventions No. 29 (Forced Labour Convention) and No. 105 (Abolition of Forced Labour Convention), etc.
2) Sending countries: 18 agencies in seven countries (Nepal, Myanmar, Bangladesh, Serbia, Uzbekistan, Ukraine, Kazakhstan); Receiving countries: 14 agencies across three countries (Malaysia, Slovakia, Hungary)
| Item | Number of findings |
Key finding details |
|---|---|---|
| Recruitment agency audit |
5 | Audit not performed |
| Pre- employment training |
3 | No training process conducted |
| Recruitment agency contract |
3 | Nonpossession of contract |
| Provision of pay stubs |
3 | Local language pay stub not provided |
| Prohibition of payment of recruitment fees by workers |
2 | Recruitment fees paid by workers |
| Job posting | 2 | Insufficient information related to employment conditions |
| Provision of employment contract | 2 | Local language contract not provided |
| Training on contract details | 2 | No worker training records prior to employment |
| Provision of a safe storage location | 2 | Insufficient storage management process for personal items |
| Provision of transportation within countries/regions | 1 | Transportation expenses not provided |
| Provision of travel expenses | 1 | No record of return travel expenses paid |
| Prohibition of mandatory savings programs | 1 | No policies and procedures in place |
| Personal document renewal fee refund | 1 | Passport issuance fee not refunded |
| Prohibition of changes to terms of employment contract | 1 | Local language contract not provided |
| Personal document storage policy | 1 | Policy not in place |