Apple's Next iPhone Outed In Labor Abuse Report - InformationWeek

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Apple's Next iPhone Outed In Labor Abuse Report

Coming soon: A less-expensive, plastic-backed iPhone, made by workers who earn $1.50 an hour.

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Apple has failed to live up to its commitment to hold its suppliers accountable for labor violations, China Labor Watch claims.

The New York-based labor rights organization issued a report on Monday that alleges ongoing legal and ethical violations at factories in China operated by Pegatron, a Taiwan-based supplier of Apple products.

In so doing, the labor group has also validated reports that Apple is working on a reduced-cost "plastic" version of its iPhone. The device is expected to be called the iPhone 5C, possibly in reference to the anticipated variety of back panel color choices.

"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," the labor group's report states. "Six days a week, the workers making these phones have to work almost 11-hour shifts, 20 minutes of which is unpaid, and the remainder of which is paid at a rate of $1.50 an hour ($268 per month) before overtime."

[ Want details on Google's latest seven-inch tablet and its new streaming TV device? Read Google Nexus 7, Chromecast: Visual Tour. ]

In a lengthy emailed statement, a spokeswoman said Apple is committed to providing safe and fair working conditions throughout its supply chain. The statement cites the company's work with the Fair Labor Association, a non-profit group that conducts labor audits, and over 15 audits of Pegatron facilities since 2007 as evidence of its commitment. In a survey conducted in June, the company found that Pegatron employees making Apple products worked an average of 46 hours per week.

China Labor Watch maintains that employees at the three factories it investigated worked 66 hours, 67 hours and 69 hours per week on average.

Apple's statement notes that the company has been in contact with China Labor Watch for several months and has moved to address previously shared findings such as the withholding of workers' ID cards by labor brokers.

"[China Labor Watch's] latest report contains claims that are new to us and we will investigate them immediately," Apple's statement says. "Our audit teams will return to Pegatron, RiTeng and AVY for special inspections this week. 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."

Pegatron CEO Jason Cheng said in a statement to the Associated Press that the company will correct any violations of Chinese labor law that it finds.

China Labor Watch says its investigations found at least 86 labor rights violations, including 36 violations of Chinese labor laws and 50 ethical violations. It cites the following issues: "dispatch labor abuse, hiring discrimination, women's rights violations, underage labor, contract violations, insufficient worker training, excessive working hours, insufficient wages, poor working conditions, poor living conditions, difficulty in taking leave, labor health and safety concerns, ineffective grievance channels, abuse by management and environmental pollution."

Following previous reports about labor practices at its suppliers, Apple in 2012 joined the Fair Labor Association and asked the FLA to audit suppliers such as Foxconn, where labor issues were previously reported. Funded in part by the companies it monitors, the FLA has been criticized for being insufficiently independent to issue unbiased reports.

Despite commitments from Apple and Foxconn to address issues identified in the FLA audit, the Economic Policy Institute (EPI), a Washington, D.C.-based think tank backed in part by labor groups, challenged the FLA's assessment that Apple and its suppliers have made meaningful progress. The EPI, in a November report, said "the FLA's rosy view of developments in Apple's supply chain is unfounded," and noted that the FLA gave Foxconn credit for reforms that "are either incomplete or purely symbolic."

China Labor Watch echoes that criticism. "Despite its professed high standards for the treatment of Apple workers, serious labor violations have persisted year after year," the group's report states.

Later this year, Apple is expected to launch a redesigned Mac Pro that will be manufactured in the United States. This small step away from overseas manufacturing might help restore Apple's image by creating U.S. jobs and distancing the company from criticism directed at its suppliers. It could also have tax and intellectual property protection benefits.

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Michael Endler
Michael Endler,
User Rank: Author
7/29/2013 | 9:24:41 PM
re: Apple's Next iPhone Outed In Labor Abuse Report
It will be interesting to see a) how low-cost this "lost-cost iPhone" really is; and b) whether it helps iOS overseas, where it gets absolutely killed by Android. Apple doesn't have to play in the lower-margin market as much as its competitors do, but its most recent attempt, the iPad Mini, has done very well.

Even the iPad Mini is feeling pressure from the Nexus 7, though, and rumors have begun to indicate that we'll soon see a split in the iPad Mini line: A Retina-equipped luxury model that sells at or a little above the current price, and something more like the current model but that sells at a lower price.

Will it work? I'm not sure. Even if the budget iPad Mini comes in at $249, the new Nexus would still undercut it by $50,and there will soon be a slew of 8-inch Windows tablets in this price range, all with next-gen Intel Atom chips that should provide excellent battery life and snappy performance. Samsung also seems determined to release 47 variants on its Galaxy Tab and Galaxy Note tablets, so things will be pretty crowded-- even with the budget iPad Mini potentially benefiting from an iOS 7 bump. Steve Jobs always talked about building the best possible device rather than focusing on market share-- it'll be interesting to see how the Cook era negotiates that ideal.

Also, Tom, kudos for leading with the labor abuse angle. Lots of others mentioned the iPhone 5C disclosure first, and given that many of us are reading this article on an iOS device, we should be aware of how those devices get made.
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