Amazon has admitted that thousands of agency workers who make its Echo smart speakers and Kindles in China were hired and paid illegally following an investigation by the Observer and the US-based China Labor Watch into the “unethical and illegal” working conditions at its supplier factory in Hengyang.
It had hired an illegally high number of agency workers and was not paying them properly for working overtime. Agency staff – known as dispatch workers in China – do not get sick pay or holiday pay and can be laid off without wages during lulls in production. China changed its labour laws in 2014 to limit their use to 10% of any workforce in an attempt to stop companies exploiting them to cut costs.
The China Labor Watch investigation found that more than 40% of the staff in the Foxconn factory were agency workers. Those working overtime were being paid at the normal hourly rate instead of the time-and-a-half required by Chinese law and by Amazon’s own supplier code of conduct.
The investigation also reveals that the Hengyang workers are paid far less than Foxconn workers in other Chinese cities. They earn a basic monthly wage of 1,750 yuan (£204), while workers at Foxconn’s factory manufacturing for Apple in Shenzhen start on a basic 2,400 yuan (£280).
The investigation produced payslip evidence to show that workers can work up to 80 hours of overtime in a month, rather than the 36 hours normally permitted by law. However, companies can and do secure exemptions. Workers at the factory also have to ask for permission from supervisors to go to the toilet. China Labor Watch’s investigator – who spent a month at the factory, posing as a dispatch worker – reported workers slumped, exhausted, over their work benches trying to catch a few minutes’ sleep during breaks.
The investigation found that many workers earn about £233 a month, less than half the national living wage of £530, calculated for China by the Asia Floor Wage Alliance. The standard hourly rate of 14.5 yuan (£1.69) is £1 less than the £2.69-an-hour national average for a factory worker in China.
The use of agency staff was designed to save money. “The factory employs dispatch workers as a means to cut manufacturing costs,” he said. “Amazon is only concerned about whether or not its supplier factories are completing orders in time and is generally apathetic towards the working conditions.” The result was that workers were left struggling to make a living. “The wages at Hengyang Foxconn are not enough to sustain a livelihood and workers must put in overtime hours so that they earn a sufficient amount to have a decent standard of living. The factory even cuts the overtime hours of workers as a form of punishment.”
Jeff Bezos of Amazon is worth an estimated £83bn and the Foxconn chief executive, Terry Gou, has a fortune estimated at £6.1bn. Foxconn is China’s largest single private employer, and in March it reported a 4.2% increase in profits, with net income rising to £1.84bn in the last three quarters of 2017. Profits for the first quarter of this year were £605m.