Friday, August 26, 2016

Pegatron - the new Foxconn

Hundreds of thousands of young Chinese workers are laboring on iPhone 7 production lines. Foxconn is a familiar name as it became the focus of media attention after widespread labour violations. Pegatron, however, has received scant media attention, despite its growing role in Apple's supply chain over the last four years. Unfortunately, the terrible conditions in which 100,000 young Chinese workers labor and live at Pegatron's Shanghai factory are painfully familiar.

China Labor Watch (CLW), a nonprofit organization dedicated to exposing labor rights violations in the Chinese factories, say that the same legal and ethical violations that attracted media attention in 2012 continue unabated at Apple supplier factories today. In the case of Pegatron, CLW reports that conditions have actually worsened since 2015, despite years of audits commissioned by Apple, a membership in the Fair Labor Association, and promises from the company that it is committed to ensuring the safety and dignity of those who make its lucrative products.

A study of workers' pay slips and interviews with workers at Pegatron Shanghai found that workers continue to be forced to endure extreme overtime hours, working as many as 109 hours per month beyond their regularly scheduled workdays -- three times the legal limit in China. CLW found that the vast majority of workers within the maintenance department recorded more than 82 overtime hours in March 2016, while all 382 pay stubs examined from this department showed overtime hours in excess of the 36-hour-per-month legal limit for overtime. Included among these workers are student "interns" who are not legally allowed to work overtime, yet were found to log up to 80 hours of overtime per month.

Pegatron and Foxconn state that overtime within their facilities is optional. However, CLW's research shows that high production quotas imposed by Apple, low base wages imposed by the factory, and harsh management techniques and denial of requests for time off combine to remove workers' choice in the matter.

CLW's investigation revealed that the base wage offered to workers by Pegatron, after deductions, is equivalent to just $213 per month, which is $117 less than the legal minimum wage in Shanghai. Even with all of the overtime hours, workers still earn $300 below the average monthly wage for the region. These figures represent a decline in wages for Pegatron workers from 2015 to 2016, because the factory management made up for a government-mandated minimum wage increase by cutting welfare payments and forcing workers to contribute monthly earnings to the social insurance benefit that was previously paid by the company. So, though wages were legally raised from $1.85 per hour in 2015 to $2.00 per hour in 2016, workers' real hourly earnings after deductions were just $1.60 per hour.

Other labour violations documented by CLW include daily unpaid labour of more than one hour, cramped and unsanitary living conditions in factory dormitories, and the failure to provide necessary protective equipment, which puts the health and safety of workers at risk.

These contraventions of workers’ rights and dignity are happening a full decade after they were first brought to Apple's attention. In a report published in September 2005, SOMO, a Dutch nonprofit group that researches the practices of global corporations, documented trouble at Apple laptop suppliers Quanta Shanghai and Elite Computer Systems, located in Shenzhen.  On August 18, 2006, ‘The Mail on Sunday’ published a scathing report on conditions at Chinese factories where Apple's iPod line was then in production. Data show unequivocally that Apple is not effectively holding suppliers accountable for violations that breach Chinese law and the company's Supplier Code of Conduct. Today, the same violations can be found at Apple suppliers as were present 14 years ago, calling into question the efficacy of the industry-wide practice of auditing.

CLW's Li Qiang asserts that Apple is actively "obstructing" positive change in the industry by squeezing suppliers to miniscule profit margins while simultaneously imposing production quotas that require round-the-clock factory operation. Due to Apple's role as the smartphone sector's profit-leader, Qiang believes that little will change in the industry until Apple changes its practices.


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