Some thoughts on Apple’s ‘Report on iPod Manufacturing (in China)’

A few moths ago, accusations appeared in the media of poor working conditions for the workers in China who build iPods for Apple.

Apple said that they would investigate the claims (which were against their Supplier Code of Conduct) and produce a report. 

Well, they have and it’s available on the Apple website – and I would recommend reading it.

This is something I’m particularly concerned about.  Like most people, I don’t want to buy goods from companies that allow or turn a blind eye to the miss-treatment of their workers and those of their suppliers.

However, I have to say I was particularly interested to find out about the specific conditions of those building iPods – having this romantic (and totally unlikely) hope that those building premium and highly profitable products like iPods would be given some degree better treatment and pay than merely what was ‘legal’.  After all like most Californian tech employers, Apple treat their own staff to ‘way above average for America’ working conditions (eg photos of the Apple Campus at 1 Infinite Loop) – I hoped that iPod assemblers had at least ‘above average for China’.

So I read the report, and I have to say Apple seem to have been fairly upfront about everything as far as I can see.  Sure, we don’t know whether they left bits out, and they’ve certainly been smart enough to highlight some issues that need addressing to ensure that it doesn’t look like a whitewash.

So let’s take it as gospel as I have no reason not to doubt them – and the fact that they even investigated and cared about these claims of bad treatment is to be commended.

There are, however a few issues that I would like to raise.  (I should also remind new readers that I thoroughly dislike the iPod product and am not a big fan of Apple software I don’t particularly have anything against Steve Jobs or the company itself)

To set the scene (according to the report), the iPod is made in a manufacturing facility that employs 200,000 people – although only 15% of the resource is used to produce Apple products.  This facility is really a large town near Longhua where people go to live to work in the factories owned by the manufacturing company.  That means housing, catering, recreational facilities and healthcare are all provided by the employer.

There’s nothing unusual or particularly wrong about that – it’s the same model that Britain used when it became the first industrialised nation (similar to the process China is going through now) – Bournville was a whole town made by Cadbury’s to house their workers.

Living conditions

However even by the Apple’s own descriptions of the living areas they consist of single sex dormitories.  I find this disappointing as it is widely known that this kind of living is chosen because it promotes the spending of over-time as there is little to ‘come home to’.  At least during the British industrial revolution employer’s like Cadbury built houses so that families could live together etc.

According to the report, employees are not forced to live in these dormitories (which are provided free) however considering what little they earn it’s unlikely they would want to spend any of their earnings on accommodation if at all possible.  The Mail on Sunday (which originally broke the story) printed this picture of the dorms:

Remuneration and overtime

According to the report all of the workers receive at least minimum wage (which according to the Mail on Sunday is approximately 800 yuan or $100 a month).  However only half receive anything more, which is disappointing considering the markup and profit from the players.

However it appears that pay irregularities have occurred, from the report:

We did find, however, that the pay structure was unnecessarily complex. An employee’s wage was comprised of several elements (base pay, skill bonus, attendance bonus, housing allowance, meal allowance, overtime)

I’m unsure as to why ‘housing allowance’ is in there when further up in the report it says that accommodation was free.  It’s also not clear whether the minimum wage was just the ‘basic pay’ element or a combination of the skill and attendance bonus too – potentially meaning that some working would be left with below-minimum pay.

The report also admits that:

We did, however, find that employees worked longer hours than permitted by our Code of Conduct, which limits normal workweeks to 60 hours and requires at least one day off each week. We reviewed seven months of records from multiple shifts of different productions lines and found that the weekly limit was exceeded 35% of the time and employees worked more than six consecutive days 25% of the time

It had been reported that many employees were doing over 80 hour weeks and that was to reach a minimum wage payout.  The report doesn’t address this issue but clearly any instance where overtime is being taken up regularly clearly suggests that workers are not being paid enough to make a decent wage, there are too few workers or that the living conditions make it a better bet to stay on the factory floor.

Welfare

Although this section of the report begins with the positive:

Employees work in factories that are generally bright, clean and modern with air-conditioned assembly line areas, and are provided with protective gear.

It has to be admitted that such ‘luxuries’ as a clean, air conditioned environment is probably for the quality of the product rather than the comfort of the workers.  You can’t build or construct PCBs and other components in anything but that.

The report claims that most workers are happy and that there is also a grievance procedure in place (a ‘mailbox’ to the CEO and company hotline). 

However workers in a factory which has advertising hoarding’s inviting people to join up for work today can’t feel very safe about their jobs – and surely that must be a good reason not to voice grievances to either Apple or the CEO?

Also, having spent some time in China myself I found that Chinese people were generally not willing to question authority – both out of honor and fear.  One doesn’t question the government and to some degree their supervisor or manager.

With that in mind, I am not happy that merely ‘interviewing a random selection of workers’ would produce unbiased results when it came to investigating whether workers were ill-treated.  Nor would a grievance process of telephoning the management (from your open dorm, don’t forget) work either, for the same reasons.

There were some issues however, including:

During our interviews with employees, we explicitly asked every line worker whether they had ever been subjected to or witnessed objectionable disciplinary punishment. Two employees reported that they had been disciplined by being made to stand at attention. While we did not find this practice to be widespread, Apple has a zero tolerance policy for any instance, isolated or not, of any treatment of workers that could be interpreted as harsh. The supplier has launched an aggressive manager and employee training program to ensure such behavior does not occur in the future.

(I find the wording of the last sentence to be very unfortunate btw)

It’s awful that this happened to two employees but based on my views above I’m not convinced that everyone would be so forthcoming about such treatment to a number of ‘inspectors’ ultimately working for the customer of their employer.

If two people say this kind of treatment is happening I would be prepared to say that it must be more prevalent and potentially worse than is being described in the report.

Monitoring

Apple end the report with:

Recognizing that some aspects of workplace auditing (such as health and safety) lie beyond our current expertise, we’ve engaged the services of Verité, an internationally recognized leader in workplace standards dedicated to ensuring that people around the world work under safe, fair and legal conditions. We are committed to ensuring compliance with our Code of Conduct and will complete audits of all final assembly suppliers of Mac and iPod products in 2006.

I have to commend Apple for trying to do their best, especially by contracting an independent workplace standards organisation to do the monitoring.

However I can’t help but feel that the original investigation which led to this report was flawed in places, susceptible to rigging by the employer and as such the results given (even though they are not as rosy as Apple would have liked) could be nothing compared to the true conditions in those factories.

Of course this is nothing specific to Apple, and Apple must be commended for even bothering to investigate this.  When we buy items made in China we need think about the person(s) who built this and the conditions that they have to work in.  <s>Chances are</s> They are not as nice as ours.

But what I would say to Apple is that the workers in their Chinese iPod factories deserve better than ‘minimum wage’ (or near ‘minimum wage’).  If Apple feels it important to value their own staff by paying them above average salaries, benefits packages, etc than I feel they have some responsibility to ensure that those making the very products of their enterprise are also receiving something ‘above average’.

There’s also a whole school of thought, of course, that this then encourages better products (it’s why Apple in America does it) – and Apple could lead the way by helping this concept flourish in China too.

So, in closing Apple get a 6/10 in my book for this report.  The issues raised need addressing, but I also have concerns about the way in which the investigation was conducted may not have encouraged workers to freely raise grievances.

UPDATE: My blog doesn’t get the kind of traction on Apple related posts that the Unofficial Apple Weblog does. Check out their interesting selection of comments on this subject.