By  on August 16, 2007

WASHINGTON — Wal-Mart Stores Inc. said it found fewer instances of "high-risk violations" of its labor policies, such as a failure to properly pay for overtime work, in its factories last year, though "medium-risk violations," such as not keeping pay slips, were on the rise.

The world's largest retailer found high-risk violations last year in 40.3 percent of the factories it uses, down from 52.3 percent in 2005. The portion of factories with medium-risk violations, however, rose to 51.6 percent from 37 percent.

Wal-Mart conducted 16,700 audits in 8,773 factories last year, either through in-house specialists or third-party firms, according to its annual report on ethical sourcing released Wednesday. Globally, Wal-Mart said its top challenges are in the areas of overtime hours, and payment of wages and benefits.

"When we buy merchandise, we realize that our orders touch factory workers and their communities around the world," Wal-Mart president and chief executive officer H. Lee Scott said in the report's introduction. "We are working in collaboration with governments, industry peers, academics and nongovernmental organizations to address the underlying conditions that impact factory workers and the environment."

As part of its more holistic approach to the issue, Wal-Mart said in the report it is "looking to transform its sourcing process, and create a more proactive structure for tracking and giving incentives to suppliers" that follow its policies.

Due in part to its dominant position in the market and its ceaseless drive to lower prices, Wal-Mart has become a lightning rod for labor advocates at home and abroad. In recent years, the Bentonville, Ark.-based company has gone on a multipronged offensive aimed at explaining its practices to the public and bolstering its corporate image.

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