Problems in Apple’s Supply Chain

Since 2011, China Labor Watch (CLW) has been following the working conditions in Apple’s supply chain. In 2016, CLW conducted undercover investigations and interviews in four of Apple’s largest suppliers (Foxconn, Pegatron, Compel, and Green Point). CLW’s investigators entered Foxconn, Pegatron, and Compel as regular employees, collecting over 2000 paystubs in these plants. In addition, hundreds of students who worked at Green Point factory had reached out to CLW when they felt they were being taken advantage of. CLW uncovered a variety of labor rights violations at Green Point, such as poor living conditions, working conditions, wage deduction, and withholding of government issued I.D., amongst other abuses.

Through 12 investigations over 6 years, CLW discovered plenty of issues remain in regard to labor right violations in Apple’s supplier factories even in 2016 and a significant deterioration of living and working conditions. This report summarizes major labor right violations in Apple’s supply chain based on CLW’s investigations during the past few years. This report includes the following 7 parts: working hours, wage allocation, social insurance, deposits, a case study of Green Point, causes, and conclusion.

Based on the results of CLW’s investigations, the major issues in Apple’s supplier factories are summarized as follows:

1. In all of the four factories, weekly working hours surpassed 60 hours and monthly overtime hours surpassed 90 hours, with most overtime amounting to of 136 hours over a month.

2. Compared to base income in 2015 (including bonuses but not overtime pay) worker's base income at Pegatron decreased in 2016, which is rare in the industry.

3. Workers were required to sign an agreement to voluntarily do overtime, opt out of paying for social insurance and opt out of housing funds. These acts are blatant attempts to evade responsibilities and are clear violations of China’s Labor Law.

4: Workers at Pegatron and Green Point were continuously working overtime without compensation.

CLW strongly urges Apple and its suppliers to take our suggestions seriously. They must improve working conditions including working hours, wages, and social insurance. Apple must fulfill the promise that “Apple cares about every worker in its supply chain.”

Apple’s 2016 financial report indicated a drop in sales, reducing Apple’s profit margins. Thus, Apple lowered its order price with suppliers to maintain profitability. With the reduced production budget and the difficulty optimizing production lines within a short time frame, suppliers chose to mitigate the loss by exploiting their workers through longer working hours and less pay. Workers with little experience and channels of collective bargaining ultimately bore the cost of reduced corporate profits. Compared with the working conditions in 2016 workers in Apple’s supply chain received less compensation yet more overtime. These violations of worker’s rights raise questions as to the capability of Apple to uphold the promise of corporate social responsibility [within the supply chain].