Apple profits at the expense of its Chinese workers

A new report titled “Apple making big profits but Chinese workers’ wage on the slide” by the China Labour Watch group states that Apple’s policies have led to Chinese workers being short-changed.

Paraphrased, it states that since Tim Cook became Apple’s chief executive the company has required all suppliers to increase productivity and decrease costs at a rate of between 5% and 10% annually. This has led to intense price competition between suppliers. As Apple already buys more than 80% of its components directly, the remaining labour costs are squeezed.

The report states that Pegatron is one of Apple’s major suppliers, employing almost 100,000 workers in mainland China. Working conditions are terrible, and workers are subject to terrible treatment. Currently, Apple’s profits are declining, and the effects of this decline have been passed on to suppliers. To mitigate the impact, Pegatron has taken some covert measures to exploit workers.

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The report found (verbatim).

• Through careful examination of all pay stubs and the observations of CLW’s investigator, we found several critical issues:

• The average wage in China has been increasing steadily. However, at Pegatron, workers’ wages dropped significantly in the past eight months.

• The Shanghai municipal government raised the minimum wage from US$304 to US$330 in April and Pegatron workers indeed received a raise in wages. However, Pegatron managed to control labour costs by cutting welfare and sharing insurance payments with workers. As a result, workers’ total income decreased after the raise. Pegatron’s attitude toward workers is evident here. In 2015, workers’ hourly wage was US$1.85. In 2016, workers’ hourly wage increased to US$2, and after deductions, this amounts to only US$1.60.

• Excessive and illegal overtime work is still prevalent in Pegatron. Pegatron claimed that their ID check system could effectively control workers’ overtime hours, but this system did not have any effect in the departments where more overtime was needed. It is merely a tool for public relations. Pay stub records reveal that the highest amount of overtime hours put in by a worker was in March, which was a worker with 109 overtime hours. The worker was found to have put in a total of 293 hours in March.

• Pegatron has recruited many student interns, who had overtime work amounting to 80 hours per month on average. This is roughly the same amount as full-time employees. However, the Chinese law forbids companies from asking interns to work overtime.

• The base wage is still too low in Pegatron, and workers have to rely on overtime pay to support themselves and their families. Workers who do not work overtime only earn around US$213 after expenses are deducted. Apple’s profits decline, Pegatron’s working conditions deteriorate.

• In most production lines, workers have to arrive at work 10 minutes earlier than the regular schedule, but the 10 minutes are not paid.

• Workers spend about 60 minutes each day passing through the security procedures and ID checks before entering the workshop. The ID check system did not control excessive overtime. However it encroached on workers’ rest time.

• The factory forces workers to work and those who ask for leave would usually not be approved.

• Workers are exposed to potential occupational injuries without proper protection. For example, in departments that have noise and the use of lasers, the factory does not provide them with protection equipment.

The 19-page report makes interesting reading and is not backwards about blaming Apple and Tim Cook’s policies.

It concludes:

Since 2013, China Labor Watch has published reports every year to reveal Pegatron’s terrible working conditions. Media including the Wall Street Journal, BBC, and Reuters also reported on relevant issues. However, many problems have never really been resolved. Pegatron’s case demonstrates that Apple has never seriously fulfilled their commitments to the public and workers.

Apple’s senior operating vice-president Jeff Williams said, “We know of no other company doing as much as Apple does to ensure fair and safe working conditions, to discover and investigate problems, to fix and follow through when issues arise, and to provide transparency into the operations of our suppliers.”

Cook, also said: “We care about every worker in our worldwide supply chain.”

China Labour Watch ends with a statement from its executive director Li Qiang urging Apple to make investments to improve labour conditions in China.

“Currently, Apple is hindering the improvement of labour conditions within the whole smartphone industry. Apple alone claimed more than 90% of the smartphone industry’s aggregate profits, while a majority of other firms were operating at a loss. If Apple does not take on responsibility commensurate with its status, other companies will not have the ability to make improvements either.”