This is an English translation of the article Fairphone: Zu viel versprochen. Eine Bilanz by Sebastian Jekutsch. (Please note that this article is outdated.)
For over three years, I have been concerning myself with fair electronics and especially IT. I first noticed the Fairphone project near the end of 2010: A feel-good video directly from the Southern D.R. Congo’s mining areas, where the team bought a few bits of (purported) cobalt ore directly from the workers, and advertised this as the first step towards a fair mobile phone. It seemed pretty naïve. I noticed that there was not a single technician on the team, so that the whole thing seemed to be more of a marketing experiment than a serious hardware development project. And besides, how should one go about producing a fair phone if even a computer mouse can only be made partially fair?
But it was built! The phones have actually been manufactured, and we can take stock: How fair is the Fairphone?
I will be concentrating on three aspects that are especially important and concern the fairness of the product: the sourcing of raw materials, the working conditions in manufacturing, and transparency in general. I test these according to Fairphone’s two promises: that the Fairphone is “ethically sourced,” and that it “inspires the industry.”
The name Fairphone has always been irritatingly pretentious, which unfortunately has been carried over into countless news reports without further reflection. These reports, along with surprising statements (which actually reflected hopes), as well as many of the questions I have received in the last few months all indicate that, by intention or not, wrong conceptions about Fairphone are widespread. In contrast, the only things that really were big about Fairphone were the promises made and hopes nurtured. Both the team and the budget for the Fairphone, on the other hand, were very small, which is important to keep in mind.
Fairphone has jumped onto a bandwagon that has been set into motion by companies such as Motorola, AVX, HP, Philips, and Intel. Its electrolytic capacitors (of which there is exactly one in each device) and soldering paste (and possibly soldering wire), which contain the metals tantalum and tin, respectively, are smeltered from ores stemming from conflict-free mines in the D.R. Congo. These resources probably account for about 1 gram of the device.
The fair aspect of this arrangement is that raw materials are still being sourced from this area stricken by civil war and extreme poverty, from which many other companies have retreated.
It is often overlooked that not all tin used in the Fairphone is confirmed to be conflict-free (or sourced from the D.R. Congo). Also, that there may be some amount of tantalum of unknown origin in the ICs. The origins of all other raw materials are also unknown.
Note that “conflict-free” is not the same thing as “fair”: Although the mines from which the tin and tantalum originate have been certified at some time (for instance, regarding child labour), the criteria are weak compared to other products such as fairly traded coffee. Also, the expected reliability of such certifications in the D.R. Congo is fairly low. Certifications of the mines and of the transport path are not unproblematic as they can hardly be gapless. Corruption and fraud are common and monopoly-like structures threaten the workers’ income.
This is a development that has just started, and Fairphone are doing their small share in advancing it.
Fairphone has contracted the manufacturer A’Hong in China, who was willing to produce the small charge of 25,000 devices (based on a design that was formerly produced there), and to enter a potentially longer-term business relationship including audits of the production process.
- The audits have been done and have led to many small but significant improvements.
- However, structural problems remain: Workers earn minimum wage plus overtime compensation. This does not warrant the label fair and is also less than what was promised in Fairphone’s cost breakdown in September: The living wage study envisioned there has not been carried out. A living wage is defined to be roughly the wage needed by a small, young family to eat and live. In China, the minimum wage is generally far below this level.
- The working hours have been reduced to 60 hours a week, which is still illegal but typical for the industry. Moreover, one day of rest per week has been established. These conditions are not met at A’Hong outside the Fairphone production. The shortening of the working hours might however not be appreciated by the workers themselves: Because of the low wages, many usually want to work longer rather than shorter hours.
- Apart from the low wages, Fairphone laudably avoided the second major reason for long overtime: Short-term production changes. Fairphone dealt with delivery difficulties (which were in part due to quality problems) which would never have been accepted by companies such as Apple, and which would have had to be compensated by forced overtime and short-term employment of even more severely underpaid temp workers.
- Fairphone and the audit report are entirely silent on the topic of worker representation in unions.
Unique about Fairphone is the fact that per device, almost 4 Euro are being paid into a worker welfare fund, one half being contributed by the buyer and the other half by A’Hong. Fairphone says that this amounts to about one additional monthly wage per worker – I haven’t checked the maths. However, the fund is not necessarily intended to be paid out as additional wages (which wouldn’t be sustainable), but the use of the money will be voted upon under participation of the workers. See also the interview “We are trying to find out what fair means.” However, this cannot be considered a replacement for representation through a real labour union with ongoing collective negotiations; it could even act as a hindrance to such a representation.
For now, we therefore do not observe any extraordinary amount of fairness in manufacturing. It remains to be seen what happens to the workers’ welfare fund. Fairphone themselves admit that what has been achieved is disappointing and insufficient in the long run, but point out that they need more time.
Due to the complexity of the supply chain, the origins of single components are important in judging the fairness of the whole phone. Fairphone has published a terse and somewhat arbitrary-seeming list of the producers of some components. This list does not state the production site, nor does it consider raw materials, so it is not possible to draw any definite conclusions. NagerIT, the partially fair mouse, has come a lot further on this way. As responsibility for manufacturing has completely been passed to A’Hong, Fairphone are also unable to offer a bill of materials. This leaves some interesting questions unanswerable, such as whether the proportion of labour costs in production are actually higher than the meagre and controversial 1.5% seen in the production of the iPhone.
Usually, a contractor’s margin is too small to noticeably improve the labourers’ conditions, even if it wanted to. While the margin earned by A’Hong is unknown, we do not expect Fairphone to retain a profit margin of their own, instead investing money into improving the situation in the future.
Hardly a viable role model for multinationals
Fairphone has proven that there is a demand, even if it is not huge. If Apple was offering a fair phone (compare the Yes Men’s iPhone 4cf hoax), it would be a matter of entirely different scale. One of Fairphone’s goals was to show that being fair is possible and that the big brand companies can follow their example. However, this premise is not always plausible.
Many IT devices now use conflict-free raw materials due to Dodd-Frank 1502. What is special about Fairphone is that they still source these from the D.R. Congo. Dodd-Frank has caused high unemployment in Congo, which Fairphone is helping to ameliorate. Although Apple says that they are using conflict-free tin, they are probably sourcing it from Indonesia, which also qualifies as conflict-free, but not as fair.
The problem is that the sourcing of conflict-free coltan (tantalum ore) and cassiterite (tin ore) from the D.R. Congo does not scale. The amounts that are on offer (including from neighbouring Ruanda) are much too small considering the huge amounts of devices that are being sold nowadays. The large makers simply have no way of following Fairphone’s example.
However, Fairphone is not the only company sourcing conflict-free raw materials from Congo. The other companies who do so do not state clearly which of their products are affected, probably in order to avoid drawing attention to their other products not being as fair.
- Many brand companies are able to demonstrate small improvements after audits are conducted at contractors’ factories. The only reason Fairphone’s achievements are remarkable in this respect is because of their small size.
- Fundamental changes regarding working hours or union representation are neither seen with multinationals nor with Fairphone.
- Building iPhones at Foxconn might actually earn workers a better wage than making a Fairphone at A’Hong, although the calculation is not quite straightforward due to locally differing minimum wages and scarce information. I am making this assumption because Foxconn, according to all critical reports that are known to me, consistently pays more than the local minimum wage. Foxconn is quite popular with workers for this reason, as well as for paying wages in a punctual manner (as does A’Hong). Again, Fairphone does not serve as a role model.
- In the electronics industry, workers rarely work less than 60 hours a week, but frequently more. Apple is attempting to enforce this limit, but has not been successful recently according to a graph on their web site.
- Apart from these facts, I cannot judge the general working conditions compared e.g. to Foxconn or Pegatron, as the audit reports are not easily comparable. This would be a job for someone with a lot of time on their hands.
- The concept of a workers’ welfare fund, the use of which is left for the workers to decide, does seem to be unique to Fairphone.
It seems almost humorous to mention that the working conditions – concretely, the reduction to 60 working hours a week – have been effective only for the duration of the production of the Fairphone, meaning that after this short period of a few days everything went back to the old state, including 70-hour-weeks without a day of rest. More than anything, this shows how small the impact of Fairphone as a role model is.
Due to their small production volume, Fairphone is not able to attach conditions to their order. Apple or Samsung would be. In this way, the small Fairphone project points its finger at the multinationals’ failure. This is a good and important thing to do, but it is all they manage.
Fairphone’s cost breakdown is much more transparent than anything published by the big companies. Bills of materials are not and will probably never be published by any maker. Others do, however. Some companies publish all suppliers] and their locations (HP even publishes the list of smelters). However, it remains unknown what each supplier does exactly, because no maker is willing to publish its trade secrets. Fairphone would if A’Hong was willing, but this doesn’t seem to be the case.
An option for the future
What the small Fairphone team has accomplished during the past three years, probably through self-exploitation, is incredible and deserves a lot of respect. However, the objective results are accordingly small. What remains is an unpleasant feeling of wrongly raised hopes.
Just like Nager-IT before them, Fairphone actually went out and did something, instead of simply lamenting about the state of affairs (as I am doing myself). This is one of the necessary and important steps towards a fairer IT. (If you are interested in learning more, you may order the new issue of the FIfF magazine (in German).) However, it is also clear that there will be no real progress without the big companies. The Fairphone project is too small to achieve anything more than to draw attention.
Of course, this is just the beginning. Those who bought a Fairphone 1 have made the next step possible. Thank you! Let’s hope that the team doesn’t run out of steam now that pressure is mounting due to delivery issues, software problems, a mediocre test result and maybe criticism such as this article. Please stay involved.