Apple Supplier ‘Pegatron’ accused for deplorable working conditions

Pegatron Corp. is one of the fastest growing global industries and has a big client like Apple and produces what are arguably the world’s most popular gadgets – “iPhone” and “iPad,” but despite the modern image the industry has, the working conditions are often appalling.

pegatron-factryAccording to a report from the China Labor Watch, which is titled as – “Apple’s Unkept Promises: Cheap iPhones come at high costs to Chinese workers”, workers at Pegatron are overworked (not in the position to refuse overtime), underpaid, forced to live in unhygienic conditions and have to stand for long hours during their shift. The labor brokers even withhold worker pay or the identification cards that is required to work elsewhere reports The Wall Street Journal.

The report reveals that conditions at Pegatron’s manufacturing facility do not meet the standards of the Apple Supplier Code of Conduct, which states that working conditions in Apple’s supply chain must be safe, can work no more than is legal, and that workers should be treated with respect and dignity. While this code was made to protect worker abuse, it is not being followed ‘entirely’ by Apple or some of Apple’s suppliers.

New York-based nonprofit China Labor Watch, alleges safety and environmental violations; the withholding of worker pay or the identification cards they need to work elsewhere; and poor living conditions at China-based factories owned by Taiwan’s Pegatron Corp. and two subsidiaries.

In a statement, Apple said that it has conducted fifteen audits at Pegatron manufacturing plants in last six years, which includes several surprise on-site inspections within the past eighteen months. The results of the inspection, along with documents provided by Pegatron Corp, did not reveal the allegations mentioned in the China Labor Watch report.

The U.S. Company said it is “committed to providing safe and fair working conditions throughout our supply chain.” When asked about withholding worker’s salary and the identity cards, the company said it will investigate claims and take appropriate action where needed.

When reached to Pegatron, Chief Executive Jason Cheng said, “We will investigate [the allegations] fully and take immediate actions to correct any violations of Chinese labor laws and our own code of conduct.”

Workers at Pegatron’s plant are being abused in several ways. A worker ‘Zhu’ who works on an iPhone assembly line and hails from Henan province said she was hired via an intermediary recruiting agency and has now found that she has to work for 3 months to avoid excessive wage deductions from the recruiter in the form of punitive fines for mistakes made. Ms. Zhu said she plans to leave the Pegatron factory after serving three months.

Pegatron said it is “wrong for recruiting agencies to take part of workers’ salaries even if they quit early, and we are investigating.” The company added, “We pay the recruiting agencies for the workers’ social insurance, so it is illegal and a breach of our contract with them if they do not provide insurance for the workers. We conduct periodic audits of agencies to see if they are providing insurance and those not complying will be penalized.”

This, of course, is not the first time Apple suppliers have been blamed for poor working conditions in factories. Apple’s history with Chinese suppliers such as Foxconn and Wintek is no secret, with both have been blamed multiple times for horrible working conditions and breaching Apple’s code of conduct.

WSJ added that against environmental regulations, Pegatron-owned subsidiaries (AVY and Rating) located in the eastern city of Suzhou and in Shanghai, dumps metal-cutting fluids directly into the sewer systems. In February-2013, the Shanghai government did fine Pegatron unit for polluting the local river with a metal cutting fluid and motor oil but it is observed (during March and April) that instead of complying with local environmental regulations, the company is still dumping the hazardous chemicals into the drain.

Amid the alleged safety issues, the Apple inspectors could immediately conduct a comprehensive inquiry, whose findings will determine the necessary action to take in correcting any labor issues that may be breaching its supplier code of conduct.

For more information, read in detail the China Labour Watch report here. The investigation report speaks itself.

Primary legal and ethical violations at Pegatron Shanghai

  • The majority of the workforce is composed of dispatch workers.
  • The majority of workers hired by dispatch labor companies do not have five types of insurance and a housing fund, as required by law.
  • If dispatch workers do not complete three months of work at Pegatron, the dispatch company will deduct a 600 RMB ($97) fee.
  • Discriminatory hiring practices that restrict the hiring of certain ethnic groups (Hui, Tibetans, Uighurs); people under 1.5 meters (4 feet 11 inches) tall; people over the age of 35; pregnant women.
  • Discrimination toward women who are pregnant out of wedlock, do not have a birth permission document from the government, or who do not abide by China’s family planning policies. Women who fall under these categories cannot enjoy maternity leave at Pegatron.
  • Matching the workload of most other workers, pregnant women are made to work 286 hours of overtime per month; by law, pregnant women should not be made to work more than 44 hours per week.
  • During busy seasons, worker training does usually not meet the statutory minimum of 24 hours.
  • During worker training, the trainer simply lets trainees copy the answers to the training test.
  • There is insufficient time during training for workers to understand how to utilize grievance channels within the company.
  • Underage workers (under 18) do not receive any special protection, working the same long hours under the same conditions as adults.
  • The factory uses many student workers, some of whom are required to pay fees or wages to their schools.
  • Most workers normally work 63 hours per week during the low season and 66 hours per week during the busy season, both of which greatly exceed the legal limit of 49 hours per week. Workers perform about 110 hours of overtime per month.
  • Workers are made to sign falsified overtime record sheets.
  • Workers’ 9.31 RMB ($1.50) minimum wage is insufficient to meet the basic needs of life in Shanghai, making workers dependent on overtime work to make a living wage.
  • Unpaid overtime. Workers are required to join a 20-minute meeting every morning without pay, adding up to a day of unpaid overtime over the course of a month.
  • Workers restroom breaks are limited. If a worker wants to go to the restroom for the second time in a single day, his team leader will scold him.
  • 12 workers live in a single crowded dorm room.
  • Due to hundreds of workers having to share two dozen showers, some workers are unable to shower until midnight.
  • Even if a worker lives 20-minutes off campus, he or she must travel all the way back to the factory to personally submit a sick leave application.
  • Pegatron does not usually allow workers to take leave.
  • Forced labor. Overtime is mandatory for most workers.
  • Chemicals are used during the production process, but must workers lack knowledge of the risk of these chemicals to their health.
  • Insufficient fire escape routes.
  • Lack of fire prevention training.
  • Very few worker have the opportunity to participate in fire drills.

[Update 1]: Apple says – Our audit teams will return to Pegatron, RiTeng, and AVY for special inspections this week. The company added –

If our audits find that workers have been underpaid or denied compensation for any time they’ve worked, we will require that Pegatron reimburse them in full.

[Update 2]: Here’s what Apple replied to the allegations.

Apple is committed to providing safe and fair working conditions throughout our supply chain. We lead the industry with far-reaching and specialized audits, the most transparent reporting and educational programs that enrich the lives of workers who make our products. Apple is the first and only technology company to be admitted to the Fair Labor Association, and we are dedicated to protecting every worker in our supply chain.

As a part of our extensive Supplier Responsibility program, Apple has conducted 15 comprehensive audits at Pegatron facilities since 2007, covering more than 130,000 workers making Apple products including annual audits of Pegatron’s final assembly locations and surprise audits at both RiTeng and AVY within the past 18 months.

Additionally, we have closely tracked working hours at all of these facilities. Our most recent survey in June found that Pegatron employees making Apple products worked 46 hours per week on average. Excessive overtime is not in anyone’s best interest, and we work closely with our suppliers to prevent it. Apple surveys working hours for more than 1 million employees across our supply chain each month and we report the findings on our website.

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