Apple's Cheap iPhone Driving Worker Abuse Scandal: China Labor Watch

China Labor Watch reports Apple is building a low-cost iPhone at the cost of "cheapening the value of the workers in its supply chain."

Apple is again at the center of a workers' rights issue. China Labor Watch (CLW), however, in citing 86 labor rights violations it found in three factories run by Apple supplier Pegatron Group, also put front and center what has until now been a rumor: the low-cost iPhone Apple is said to be working on for emerging markets.

On July 29, CLW released the report, "Apple's Unkept Promises: Cheap iPhones Come at High Costs."

The report begins: "Apple is preparing to release a cheap iPhone. Just how does a prosperous company like Apple produce a discounted version of its phones? At this moment, in Shanghai, China, workers in Apple's supplier factory Pegatron are monotonously working long overtime hours to turn out a scaled-back, less expensive version of the iPhone."

Later in the report, a worker offering an account of his day reveals, "Today's work is to paste protective film on the iPhone's plastic back cover to prevent it from being scratched on assembly lines. This iPhone model with a plastic cover will soon be released on the market by Apple."

Putting the detail of Apple's cheap iPhone aside, CLW's charges against Apple are serious ones.

According to the report, workers in Apple's supplier factory are being made to work nearly 11-hour shifts, 20 minutes of which are unpaid, at a rate that's "half the average local monthly income of $764 and far below the basic living wage necessary to live in Shanghai, one of the costliest cities in China."

Workers are living in tiny dorm rooms with 12 workers to a room—a video made by CLW shows an appalling image, with buckets, hopefully for washing, standing beside each set of bunk beds—with hundreds of them sharing only two-dozen showers.

Interns—student workers between 16 and 20 years old—are being paid a lower rate for the same work, and pregnant women are being made to work the same hours, despite Chinese health laws mandating an eight-hour work day for pregnant women, says the report.

Following more than 200 interviews with workers outside factories and undercover investigations, CLW says it found 36 legal violations and 50 ethical violations, in areas including hiring discrimination, insufficient wages, health and safety concerns, abuse by management and environmental pollution.

"What is the competitive advantage that Pegatron has utilized to win Apple's order of the cheap iPhone?" asks the report. "Extensive labor violations and suppressed wages that cheat workers of a living wage, a healthy working environment and a voice. As Apple launches its cheaper iPhones, it continues to profit while cheapening the value of the workers in its supply chain."

In a response to the report, posted in full by The Register, Apple says it has "conducted 15 comprehensive audits at Pegatron facilities since 2007" and "tracked working hours at all of these facilities." A June survey found that employees worked an average of 46 hours per week, it added.

In its video, CLW says that Apple claims that in 2013, 99 percent of its suppliers complied with an Apple rule forbidding supplier's employees from working more than 60 hours per week—though Chinese laws put the max at 49 hours.

In the three factories focused on in the CLW report, the video adds, workers were found to be instead working between 66 and 69 hours per week.

"Apple believes in transparency and accountability, both for our suppliers and ourselves," Apple said, in part, in the conclusion of its lengthy statement. "... We are proud of the work we do with our suppliers to uncover problems and improve conditions for workers."

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