Sunday, September 8, 2013

Apple Supplier Pegatron Investigated for Abusive Labor Practices

Though Apple’s Supplier Responsibility Code of Conduct is one of the best in the technology industry, it still is having problems in arranging production of Apple products by companies   that do not benefit from the exploitation of workers by the violation of Chinese labor laws. This is evident in Apple’s recent decision to contract Pegatron, a rapidly growing Chinese company to produce iPhones, Apple computers and iPad parts. In response to these new production demands from Apple, Pegatron has grown from a workforce of approximately 50,000 in March to 70,000 workers today. (2,3).

The rapid growth at Pegatron has drawn the attention of China Labor Watch (CLW), a labor watchdog group whose dedication to Chinese worker’s rights and scrutiny of Chinese production methods has led to the identification of  many corporate violations of labor rights. Most recently, from March to July of 2013, CLW investigators went undercover inside Pegatron, and conducted approximately 200 interviews with workers outside of three Pegatron plants (1).

CLW reports finding 86 labor rights violations, including 36 legal violations and 50 ethical violations at these three Pegatron factories. Many of these violations are inconsistent with Apple’s Supplier Code of Conduct (7). These violations were occurring at the same time Apple claimed it’s suppliers have achieved 99 percent compliance with it’s 60-hour workweek rule (the legal workweek limit in China is 49 hours). However, CLW reports the average workweeks at the three factories investigated are approximately, 66, 67 and 69 hours (1,3). Their finding flatly contradicts Apple’s June 2013 Supplier Responsibility paper that indicates a 46-hour workweek average for Pegatron employees (2,3,4). CLW also found that Pegatron’s Shanghai workers were forced to sign forms falsifying the number of overtime hours worked.

Other violations noted by CLW in their report include several forms of dispatch labor abuse (see earlier blog here on dispatch labor). Recent examples at Pegatron include withholding worker IDs so that Pegatron employees are unable to work elsewhere because they lack proper identification and recruiting companies withholding pay or fining workers for not working enough as well as not providing recruits with mandatory health insurance. Also noted by CLW is hiring discrimination, women’s rights violations, underage labor, contract violations, insufficient worker training, insufficient wages, poor working conditions (e.g., employees being made to stand for 10-11 hours at a time, employees provided gloves that do not sufficiently protect them from the materials used to create metal backplates for the iPad), poor living conditions (e.g., 30-minute waits to enter their production facility, tight living quarters, packed cafeterias and cold showers), difficulty in taking leave, labor health and safety concerns, ineffective grievance channels, abuse by management, and environmental pollution (CLW found metal-cutting fluids were dumped directly into the local sewer systems) (1).

This May, 2013 Apple championed its “success” in achieving positive reforms at Foxconn (another important manufacturing subsidiary) including higher wages and shorter work-weeks (1,3,4). While there can be no doubt that there have been some important positive changes at Foxconn the CLW reports regarding Foxconn (6) have brought the claim of “success” by Apple under renewed scrutiny. Whatever positive changes there have been at Foxconn are clearly lacking at the  three Pegatron factories CLW now reports on.

CLW executive director Li Qiang reports that their, “investigations have shown that labor conditions at Pegatron factories are even worse than those at Foxconn factories” (1).  Apple responded to CLW’s newest report with a statement, saying it is “committed to providing safe and fair working conditions throughout our supply chain” and that it had conducted 15 comprehensive audits at Pegatron facilities since 2007, including surprise audits within the past 18 months. It also confirmed that some labor brokers were withholding worker ID cards and demanded Pegatron “put a stop” to it (2,3,4). In fact, labor conditions at the Pegatron AVY factory are so poor that within a period of two weeks more than 25% (30 out of 110) new recruits quit (3).

Apple also indicated it would investigate the claims outlined in the China Labor Watch report, and take corrective action where needed. We applaud this stand but wonder if these steps will be sufficient as we have already seen that Apple audits are unable to adequately identify the realities of its supplier factories. In allowing its suppliers to continue abusive labor practices, Apple is facilitating unhealthy working conditions. Apple is clearly not living up to its own standards.