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China Labour Bulletin is quoted in the following articles. Copyright remains with the original publisher.

World University News: Vocational students face exploitation in sweatshops
Mother Board: Foxconn's Other Dirty Secret: The World's Largest 'Internship' Program
iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think
Apple iPad 3 Release Date is Early March: Ethically Produced by Chinese Factory Workers?

Vocational students face exploitation in sweatshops

Yojana Sharma19 February 2012 Issue No:209


Overseas non-governmental organisations have been raising the alarm over worker exploitation in factories in China that produce the Apple iPad and other consumer electronic products. A new report by a Hong Kong-based labour organisation has found that many of the exploited are students working as interns as a compulsory part of vocational courses.

Rapid growth in vocational education in China has led to a huge army of underpaid and routinely exploited interns for factories and businesses, according a report published last month by China Labour Bulletin (CLB) titled The Mass Production of Labour: The exploitation of students in China’s vocational school system.

More than nine million students graduated from China’s vocational schools and colleges in 2010, according to the latest official figures. A similar number of vocational students were employed that year as interns in factories and other workplaces as part of their education, CLB said.

“In many ways, vocational schools are seen as only serving the interests of businesses looking for cheap and disposable labour,” it claimed.

In one case reported by Shanghai Daily last August, Ganxi College in Jiangxi province took some 140 students to Shanghai to work as summer interns on an assembly line in a computer manufacturing company. Most worked night shifts, usually six days a week, unpaid. The case came to light when they demanded payment.

CLB looked in detail at media reports of forced internships from 2008 to 2011 involving 62 schools and factories. “The reports came from just about every central and coastal province,” it said.

More than half the cases involved tertiary-level vocational schools rather than secondary vocational schools, with internships lasting from 40 days to one year.

Better employment prospects

The government’s 10-year State Education Reform and Development Blueprint states that the development of vocational education is now a “national necessity”, and the sector has been heralded as a success by government officials as unemployment levels are lower for vocational school graduates compared to university graduates.

In 2010, the official employment rate of vocational school graduates was 96.6%, up 1% from the previous year and higher than the 91% employment rate of higher education graduates during the same period. The trend in 2011 was similar.

But reports of abuses have become so widespread that increasingly families shun vocational schools and colleges in favour of academic degrees. Many parents see vocational education as “nothing more than a conveyor belt supplying factories with cheap labour,” the report said. As a result, a number of vocational schools have had recruitment difficulties in recent years.

Foxconn’s use of interns

The perception of widespread exploitation is borne out by research conducted by labour groups like CLB and the Hong Kong-based non-profit Students and Scholars Against Corporate Misbehaviour (SACOM).

It has investigated the use of cheap labour, including student interns, by factories in China, particularly at Foxconn, a Taiwan-owned electronics giant that produces the Apple iPad, the Amazon Kindle reader and products by Nokia and other well-known Western brands.

Foxconn exploys almost a million workers in different parts of China and SACOM estimated that up to a third of the workforce at some Foxconn facilities were student interns. The company has disputed this figure, saying the proportion of interns has never exceeded 15% of workers.

According to SACOM, Foxconn uses student interns possibly to keep down costs as its profit margins have been falling over the years, and to maintain competiveness in the industry.

The issue of exploitation of workers at Foxconn has been raised internationally by labour organisations in recent weeks, “but numerous other cases [involving other companies] have been reported over the past few years, and it would be safe to assume that there is some degree of force or compulsion in internships at many vocational schools across China,” CLB said.

“Employers want vocational schools to provide both a steady stream of well-trained graduates to meet their long-term development plans, and a regular supply of interns to meet their short-term demands for cheap, flexible labour as and when required,” the report said.

Forced internships

In addition, CLB found that the incidence of ‘forced internships’ has been rising.

“The declining numbers of young workers entering the workforce, high economic growth and increased employment opportunities across China over the last few years have combined with low wages to create severe labour shortages in several regions and industries,” according to the CLB report.

“The shortages have in turn placed additional pressure on vocational schools to meet businesses’ demand for labour. This pressure has been one of the key reasons why incidences of forced internships have increased.”

A common complaint is that vocational institutions force students to intern at designated factories.

“It is alleged that if students refuse to accept the placement, schools threaten to withhold their diploma. Some schools have reportedly charged students with absenteeism, made the designated placement a necessary course credit, or even held exams inside the factory in a bid to ensure students participate in the internship,” CLB said.

And some local governments may have been have been complicit in urging vocational schools to provide local businesses with a steady stream of interns to make up for employee shortfalls.

The official China Daily newspaper reported in 2010 that the provincial government of Henan played a key role in sourcing up to 100,000 interns for Foxconn, and that some 119 vocational schools in Chongqing had also pledged a steady supply of interns to the company.

Common complaints

By far the most common complaints of exploitation of students were excessive working hours and poor pay.

But another well-documented complaint, clearly stated by students from 16 of the schools examined by CLB and SACOM, was that their internships bore no relationship to their field of study.

In one example, students studying road and bridge construction and maintenance were told to help with security checks in Shenzhen subway stations during the University Games in August 2011.

A group of pharmacy students from Liaoning were told to package lighters in Jiangsu, while a recent SACOM report showed that interns working on the factory floor at Foxconn had been studying several different majors, many unrelated to their work.

CLB talked directly to 22 institutions and found that nearly half had a well-established partnership with local businesses or factories in other provinces.

In these cases it was not unusual for schools to deduct a ‘commission’ from the interns’ salaries or get paid directly by factories for providing cheap labour, even though this is in direct violation of laws governing internships by vocational students, CLB said.

The law also states that interns should be paid a reasonable salary but few students considered their remuneration to be ‘reasonable’. Other students also complained of having to pay tuition fees while working on the factory floor.

Foxconn has said in a statement that “compensation levels for interns are equivalent to that of basic workers and higher than the government-regulated levels and the average internship period is between two and six months.”

Apple’s CEO Tim Cook said last week that the company “takes working conditions very seriously”. It agreed last month to allow inspections by the Fair Labour Association, which has offices in Washington, Geneva and Shanghai, following reports that employees were overworked and underpaid in Foxconn factories in China.

Foxconn's Other Dirty Secret: The World's Largest 'Internship' Program

Posted by Alex_Pasternack on Wednesday, Feb 15, 2012

In June 2010, a university student named Liu Jiang arrived in the southern Chinese city of Foshan to begin his summer internship, at a factory that produces LCD screens for laptops and cell phones for the manufacturing giant Foxconn. As a student at the Dongfang Vocational School of Technology in the northern city of Shijiazhuang, Liu had traveled hundreds of miles for a chance to get hands-on experience working for China’s leading electronics maker.

But his internship was brief. Less than a month later, in the early morning of July 18, the eighteen-year-old would climb to the roof of his six-story dormitory and leap to his death.

Liu quickly became a statistic in Foxconn’s ugly worker history, a blip on the Internet radar: his was the seventeenth suicide attempt, and the thirteenth death, at a Foxconn factory that year alone. Apart from his school, few details emerged about his life or the conditions of his particular internship, a gig that landed him among other full-time workers his age and younger.

But in light of a series of reports that have emerged in the years since, Liu’s suicide points at one of the under-reported but more unsavory aspects of the much-criticized labor practices that produce gadgets for Apple and many other popular computer brands: with the help of schools and government officials, the company runs a massive internship program built not on voluntary education but on “compelled” factory work for teenage students. According to Ross Perlin, author of Intern Nation, Foxconn may be running “the world’s single largest internship program – and one of the most exploitative.”

By Foxconn’s standards, Liu’s internship — which he landed through a labor placement firm in the nearby city of Guangzhou — would have included housing, food, and a small stipend estimated to be about half the salary of a typical factory worker, all in the name of hands-on education. But according to independent studies, and by Foxconn’s own admission, interning in a gadget factory is often less about job training and more of a lesson in the crude economics of globalization.

Foxconn says it relies on as many as 180,000 interns during the summer months to fulfill the needs of the voracious beast of Western gadget demand — and the requirements of companies like Apple, Amazon, HP and nearly every other major electronics brand. The Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM), a longtime critic of Foxconn, estimates the number is much higher, and that interns have at times made up as much as a third of the company’s 1.3-million-strong workforce, or 430,000 interns. Either way, it’s an intern workforce more sizable than Disney, Congress or Hollywood combined.

But neither Apple nor recent widely-spread reports in the mainstream media make mention of interns. Sourced from schools and third-party recruitment firms, SACOM reports that interns tend to fall into a class of indirect workers, for whom Foxconn is not directly responsible. At the time of Liu’s death, Foxconn deflected responsibility for his case because he was hired by an outside recruitment company in Guangzhou.

“Because [indirect workers] are not directly hired by the factories, the factories will say, ‘we are not responsible for taking care of them,’” Fan Yuan, of the New York-based China Labor Watch, told me. “They usually work longer hours than regular workers. If there is an inspection or auditing from these companies, these workers will disperse.”

As a result, the use of interns can complicate attempts to surveil the supply chain for labor violations. “If we want to dig deeper, if we want to find the factories that are selling raw materials to Foxconn, in these factories the conditions may be even worse,” says Yuan. “But it’s really difficult for any organization to have specific data about them.”

This isn’t the venerated internship of the privileged college student, building valuable work and life skills with school credit and on-the-job training in place of pay – if such an internship even still exists. Historically, Foxconn’s low-wage internships involve essential factory labor by poor students, some of whose areas of study have nothing to do with electronics, and turn the “school credit” idea on its head. According to SACOM, vocational students, including those studying journalism, tourism and languages, have had practically no choice but to participate in such internships if they want to graduate from their schools. As temporary workers, they have little legal protection or recourse in the event of injury, over-work, or underpayment. And if they complain, they could jeopardize their diplomas.

“It is evident that this use of student workers is a form of involuntary labour, which is supposedly prohibited by Apple,” says a recent letter by SACOM to Apple’s CEO, Tim Cook. Apple, which is only one of dozens of Western brands that contract to Foxconn, has taken steps to address concerns at the manufacturer, including threats to workers’ health and safety, a heavy emphasis on overtime, and the use of underage workers. This week Apple announced, to some skepticism, that the independent auditor Fair Labor Watch was beginning to examine the company’s supply chain.

Apple’s most recent 27-page Supplier Responsibility Report, however, makes no mention of student internships. And while Foxconn’s internships have been reported in Chinese media, in Perlin’s book and in a recent Alternet story, student workers were not mentioned in recent reports by the Times, This American Life and others.

SCHOOL WORK

Even if Foxconn is the largest employer of interns, the system is far larger than Foxconn, and depends upon the collusion of local governments and schools. Observers like the Hong Kong-based China Labor Bulletin and SACOM say the system is abetted by a network of government officials, who are paid fees for recruiting students, work with an unruly system of public and private vocational schools that funnel students into internships and reap fees and other benefits in the process. Such schools have proliferated across the country in recent years, often targeting rural and low-income high school graduates not privileged or accomplished enough to make it through the testing gauntlet and enter China’s middle- and top-tier universities.

On June 26, 2010, a week after Liu Wang began his internship in Foshan, the official China Daily newspaper described a striking approach to labor supply at Foxconn, which was then reeling from a string of suicides and rising labor demands. The Henan provincial government declared that 100,000 vocational and university students would be sent on three-month internships at Foxconn’s Shenzhen plants.

At one vocational school in Zhengzhou, wrote Hu Yinan, students were informed of the government’s requirement after the summer semester had begun, and that “all those who refuse would have to drop out.” That elicited ironic resignation from at least one student who spoke to the paper: “Everybody is going, ‘I can go find out why all those Foxconn employees killed themselves.’ It’s kind of fun.”

Meanwhile, a study that year by Beijing University and Tsinghua University found that local government agencies were given recruitment fees in exchange for filling worker quotas. One student interviewed for the study said she and 30 other students were dispatched from from a vocational school in Guizhou Province to intern at an electronics factory in Changzhou, Jiangsu. There they were paid 500 yuan per month, half the pay of an average Foxconn worker, over the course of four months, with their internships tied to their eligibility for graduation.

In exchange for sending interns, schools are compensated, to the detriment of the interns: “it was not unusual for schools to deduct a ‘commission’ from the interns’ salary or get paid directly by factories for providing cheap labour,” according to the 2011 report by China Labor Watch.

The 2010 report concluded that Foxconn was “systematically” abusing internships offered by over 200 vocational schools in Southern China since 2009. Rather than performing “training”-related tasks, they were pressed into factory work, in some instances, forced to work 14-hour days in a standing position with low pay. Foxconn, it said, was as a “concentration camp of workers in the 21st century,” with students “kidnapped” to work overtime in the name of “just in time” production.

THE “INTERNSHIP”

The appeal of internships to employers at Chinese factories is not unlike that for many employers at white-collar offices in Los Angeles or London: free or low-cost labor by eager, energetic workers who earn few, if any, benefits, doing essential work. In China, where the “internship” has migrated from the West, Foxconn may be the tip of the iceberg. “What Foxconn and Apple’s other Chinese suppliers do—and Apple’s willingness to tolerate it—is completely par for the course for manufacturing in China,” says Perlin, who’s spent years working and studying in the country. “Forced labor is a major part of the Chinese economy, in many different respects, and our dependence on Chinese goods binds us to that every day. Forced internships like the ones at Foxconn appear to be somewhat common as well. What may be different here is the scale and the high-level government collusion.”

Since the 2010 suicides, Foxconn has pledged to improve its approach to interns, in addition to pay and worker safety. In an October 2010 statement, Foxconn responded to SACOM’s claim that a third of its workforce was interns, insisting that interns comprised 7.6% of its total employee population in China, “and at no time has this percentage ever exceeded 15% even during the summer peak seasons.”

“While we have found a small number of incidents where interns have voluntarily and legally worked overtime hours,” read the statement, “we are working hard to institute a ban on any overtime work by interns and we are in the process of ensuring that this important policy is enforced across all of our operations.” For its internships – “short-term, on-the-job” training managed by individual schools for students aged 16 and up – compensation levels are now “equivalent to that of the basic workers and higher than the government regulated levels and the average internship period is between two and six months.”

In the electronics industry, which has been called the most labor-abusive in the world, internships are not often addressed, even though guidelines by Apple and others forbid unpaid work and stipulate minimum pay. But those guidelines can mean little in practice when operations like Foxconn are squeezed at the margins to provide unpredictable, overnight deliveries of new products. The tide may be turning though, as a groundswell of labor unrest – and the uncensored reporting of labor abuses by the Chinese press – seem to illustrate.

Though Foxconn raised wages in 2010, they’re still reported to be 50-60 percent of the minimum living wage of the cities where factories are based, according to SACOM. That means overtime is necessary. One student worker in Chengdu explained, “If there is no overtime at all, I will only receive the basic salary. Hence, I have no choice.”

To young workers from the countryside, the ability to work long hours, even in violation of local labor laws, can be seen as a benefit. But the costs are high. Following the string of suicides, an undercover report published by China’s leading investigative newspaper, Nanfang Zhoumo (Southern Weekend), laid bare the grim circumstances: 300,000 employees working and living on a 2 square kilometer patch of land – three times the population density of Manila, the densest city in the world – with ten workers to a dorm room, and little to no time for relationships (cheap prostitutes tend to set up shop just outside the factories). The coverage was excellent (part one, two and three), perhaps because its reporter, Liu Zhiyi, was able to fit in so well with the young workers: he too was a 23 year old intern for the newspaper.

“I know of two groups of young people,” was how he started his first article. “One group consists of university students like myself, who live in ivory towers and are kept company by libraries and lake views.”

The other group are treated more like robots. “They often dream, but also repeatedly tear apart their dreams, like a miserable painter who keeps tearing up his or her drafts,” he wrote. "They manufacture the world’s top electronic products, yet they gather their own fortune at the slowest possible pace. The office’s guest network account has a password that ends with “888” — like many businessmen, they love this number, and they worship its homonym [“rich,” “lucky”]. Little do they know that it’s their own hands protecting the country’s “8,” as their overtime hours, lottery tickets, and even horse racing bets struggle to find the “8” that belongs to themselves."

FEW PROTECTIONS

In China, where inflation is colliding with higher wages, and placing a stronger reliance on white-collar internships, few protections for interns exist. Because interns are classified as students rather than workers, they are not protected by the country’s Labor Contract Law or other labor laws. Guidelines issued by the Ministry of Education and other government departments that do govern internships “do not necessarily carry the weight of law,” according to a report by the China Labour Bulletin.

A report published in 2011 by the Chinese Ministry of Education emphasized that the nation’s goal was to improve the supply of skilled workers to a distressed labor market – not necessarily to protect the rights of student interns and workers. “China has entered a critical moment of economic and social development,” it read. “However, secondary vocational education, which is supposed to shoulder the responsibility of cultivating China’s skilled workers, is still weak. Its quality, structure, scale and efficiency have yet to catch up with social and economic development.”

The lack of protections for interns is widespread. Because interns are not permanent workers, a range of employers, from Foxconn to Fox Searchlight – which has recently been named in a class-action lawsuit over “The Black Swan” – can ultimately deflect responsibility.

In October, a spokesman for Fox pointed the finger at director Darren Aronofsky: “These interns were not even retained by Fox Searchlight … which has a proud history of supporting and fostering productive internships.” After Liu’s suicide in July 2010, a spokesman for Foxconn said that because the victim was not an official employee of Chimei Innolux, but a temporary worker employed by a labor dispatching firm, it would not be “handling” the case.

In that same statement, Foxconn revealed that Liu’s internship had been terminated about a week after it began, on July 7, because he failed to show up for work for several days, and that the company had been trying to arrange to have him sent back to his hometown. It’s not clear why he stopped working, what kept Foxconn from buying him a ticket home, or what led him to suicide.

But Liu’s death is the stark sign of an abusive practice that stretches far beyond China’s factories. And it’s another reminder, if we needed one, that calculating the cost of a new gadget is much harder than the price tag suggests.

Updated 1 PM with comment from China Labor Watch.

Editor’s note: Liu Jiang is an alias. Liu is the surname of the intern who died in 2010, but his given name could not be confirmed.

Apple's Sordid Business Practices Are Even Worse Than You Think

Thursday 9 February 2012
by: Arun Gupta, AlterNet | Report


New research goes beyond the New York Times to show just how disturbing labor conditions at Foxconn, the "Chinese hell factory," really are.

Behind the sleek face of the iPad is an ugly backstory that has revealed once more the horrors of globalization. The buzz about Apple’s sordid business practices is courtesy of the New York Times series on the “iEconomy. In some ways it’s well reported but adds little new to what critics of the Taiwan-based Foxconn, the world’s largest electronics manufacturer, have been saying for years. The series' biggest impact may be discomfiting Apple fanatics who as they read the articles realize that the iPad they are holding is assembled from child labor, toxic shop floors, involuntary overtime, suicidal working conditions, and preventable accidents that kill and maim workers.

It turns out the story is much worse. Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months'-long “internships” in Foxconn’s mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, “the Chinese hell factory,” treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.

To supply enough employees for Foxconn, the 60th largest corporation globally, government officials are serving as lead recruiters at the cost of pushing teenage students into harsh work environments. The scale is astonishing with the Henan provincial government having announced in both 2010 and 2011 that it would send 100,000 vocational and university students to work at Foxconn, according to SACOM.

Ross Perlin, author of Intern Nation, told AlterNet that “Foxconn is conspiring with government officials and universities in China to run what may be the world's single largest internship program – and one of the most exploitative. Students at vocational schools – including those whose studies have nothing to do with consumer electronics – are literally forced to move far from home to work for Foxconn, threatened that otherwise they won't be allowed to graduate. Assembling our iPhones and Kindles for meager wages, they work under the same conditions, or worse, as other workers in the Foxconn sweatshops.”

The state involvement shows Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.

The real story of the Apple-Foxconn behemoth, then, is far from being John Galt incarnate. Their global dominance is forged in the crucible of China’s state-managed authoritarian capitalism. Since the 1980s China has starved rural areas to accelerate the industrialization of coastal cities like Shenzhen, where Foxconn first set up shop in 1988. Scholars who study China’s economy and labor market link rural underdevelopment to the creation of a massive migrant work force that serves as the foundation of the country’s industrialization. Deprived of many rights, migrants are recruited to work in Foxconn's city-sized complexes by government employees with false promises of good-paying jobs that will help them escape rural poverty. A large percentage of migrant workers are student interns as they are recruited from poor rural regions like Henan and sent to work in coastal metropolises like Shenzhen.

Apple’s formula for mammoth profits, which topped $13 billion last quarter, starts with a highly flexible workforce. Foxconn wields military-style discipline to turn workers into flesh-and-blood robots who can fulfill exacting specifications and orders for new and constantly updated product lines, such as five generations of iPhones in four years. Workers are driven to crank out more computers in less time at lower costs because they are disposable. Of 420,000 employees at “Foxconn City” in Shenzhen, which abuts Hong Kong, half had less than six months service. The inevitable and systematic abuses crush the dreams of young rural migrants, argue scholars, making the suicides a logical outgrowth of the iEconomy as much as the iPad. Simply put, nothing will change unless Apple and Foxconn are forced to because their empires are built on these practices. (Foxconn denies everything.)

iSlaves

Speaking by Skype from SACOM’s office in Hong Kong, Debby Chan Sze-wan says that in Henan province alone more than 100 vocational schools and 14 universities supply students to Foxconn. “Vocational students are required to do internships. Many student workers are as young as 16. They have to work the same positions as other workers, including working on the night shift.” (One worker spoke to SACOM about irregular shifts, lamenting, “day and night shifts are sometimes changed two to three times a month. The change of shift is unbearable. It is difficult to adjust our body clock.”) In June 2010, Foxconn signed an agreement with an additional 119 vocational schools in the southwest municipality of Chongqing to supply student workers.

SACOM and others report that schools teaching journalism, hotel management and nursing threatened students with failure if they did not take a factory position. The Chinese government-owned Global Times noted that “automotive majors at a vocational school in Zhengzhou, capital of Henan, were also forced to serve as interns for Foxconn before they were given their diplomas.”

One study found in some Foxconn factories, which employ 1.3 million people in China, up to 50 percent of the workforce were students. Foxconn probably prefers it that way because it does not have to sign contracts with the students. Chan says this frees the company from having to pay into social welfare insurance that covers unemployment, healthcare, pensions, disability and maternity leave. In 2010, noted SACOM, “Foxconn ceased to recruit new workers in Shenzhen. Instead, a high number of vacancies were filled by tens of thousands of student interns.”

Not just students are shipped off to Foxconn, says Chan, “teachers have to come to manage them in the factories.” SACOM found that near one facility nearly all the rooms in a seven-story hotel had been rented by vocational teachers accompanying students. Government authorities apparently charge teachers with recruiting students and tech colleges have quotas for interns to be sent to Foxconn, according to a student paper from China Europe International Business School.

SACOM notes, “It is believed that Foxconn alone cannot mobilize such a high number of students.” Another account states, “Many high schools in Zhengzhou are required by local authorities to make arrangements for their students to intern at Foxconn factories in Shenzhen.”

There appears to be a simple reason why many vocational schools eagerly force their students to take hazardous industrial jobs: greed. Evidence comes from another Apple supplier in China, Wintek, where students seem to have it worse than Foxconn. Wintek gained notoriety for making workers use n-hexane, a toxic compound, to clean iPhone touchscreens because it evaporated much faster than rubbing alcohol, enabling workers to increase their output. In 2010 interns told SACOM there were 500 students at the plant who worked 11 hours a day, seven days a week with a maximum salary of 500 yuan, less than $80 a month. According to the report, “Wintek pays the students’ salaries in accordance with law, but the lion’s share goes to the schools directly.” Over the course of a year, 500 students could net a school more than a million U.S. dollars in income.

The China Labor Bulletin found schools stealing wages to be common: “The key issue in forced internships appears to be the entrenched relationship between schools and businesses, a relationship actively encouraged by the Chinese government.” They added that “it was not unusual for schools to deduct a ‘commission’ from the interns’ salary or get paid directly by factories for providing cheap labor,” despite the illegality of the practice. As for redress for abuses, “students have little or no legal recourse when they are cheated out of their pay or forced to work long hours in hazardous conditions.”

In other cases, the state education bureau will withhold funds reserved for vocational schools if they fail to meet quotas for interns.

Corporate Socialism

The use of hundreds of thousands of students is one way in which China’s state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime. Finally, the state rigorously enforces the registration system, often packing migrants back to the countryside if they lack the proper documents. It’s the very picture of the Foxconn workforce.

But that is just the beginning of state subsidies. China’s growth model over the last 30 years is based on “heavily intervening” in the process of economic development while retreating from “the social and civic sphere by providing social and labor protections,” according to scholars Ngai Pun and Jenny Chan. Foxconn is taking advantage of the latest phase, known as the “Go West” strategy, which is enabled by the government’s “massive investment in interior infrastructure including airports, highways, power grids and high-speed rail.”

Outright plunder is sometimes the tactic, and government officials are notorious for grabbing collectively held lands in China to benefit themselves and well-connected corporations. Debby Chan claims some of Foxconn’s new facilities have been a result of such land confiscations. (As elsewhere, privatizing the commons in China also serves the goal of turning rural peasants into industrial laborers.)

A SACOM video features Foxconn boasting that the building of its Chengdu Technology Park in Sichuan Province “had strong government support at the state, provincial, city and local levels.” For the facility, which will be able to spit out 40 million iPads annually on 50 production lines, the local government “increased cargo flights to Hong Kong and set aside the biggest block of land in its tariff-free zone for the company to help cut costs.” SACOM’s video also showed packed public buses being used as Foxconn’s transport fleet, and workers’ housing that was supposed to be “resettlement housing for rural farmers.”

In Foxconn’s Zhengzhou complex that manufactures iPhones, the government “fast-tracked approval for the factory in 16 days, including clearances for fiscal subsidies and preferential corporate income tax rates.” The government provided the land to Foxconn as well as renting it a renovated factory and rooms for 100,000 workers. The city is also talking of spending more than $4 billion to expand the airport so it can accommodate more cargo flights.

In Chongqing “employment promotion officials granted Foxconn a discounted corporate income tax rate of 15 percent” and lengthened an airport runway by 400 meters “to meet increasing transportation and logistical needs.” For Taiwan’s computer industry, Chongqing offers “direct charter flights, entry permits for Taiwanese citizens upon arrival, cross-border Chinese Yuan’s trade settlement services, 10-year subsidies on income taxes, export tax rebates and export custom declaration services.”

The New York Times feature on China’s role in Apple’s empire touched upon this, explaining how government subsidies enabled a glass-cutting factory to have engineers, workers, glass samples and a whole manufacturing wing on standby to service Apple’s possible needs.

Wages of Misery

The justification for soup-to-nuts state funding of corporations is they provide jobs and a rising standard of living. That’s not the case with Foxconn. The high turnover – less than 5 percent of Shenzhen’s workforce has five years or more seniority – and consistent worker accounts of being misled about wages as recruits and shorted on earned overtime pay once in the factory point to how Foxconn squeezes workers for profit. That, in turn, is the result of Apple’s strategy of squeezing suppliers. One executive who’s worked with Apple told the New York Times, “The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper. … And then they’ll come back the next year, and force a 10 percent price cut.” While Apple’s profit margin tops a rarified 30 percent, Foxconn ekes out a puny 1.5 percent. (Though don’t cry for owner Terry Gou, who has to make do with $5.7 billion.) In the case of an iPad, labor costs in China amount to 2 percent of the final retail cost.

Despite headlining one article, “In China, Human Costs Are Built Into an iPad,” the Times highlighted environmental hazards and overtime, glossing over wages, working conditions and abusive supervision. (Even then the Times barely scratched the surface of how Foxconn and other Apple subcontractors have trashed the environment and poisoned workers as documented in these studies.)

SACOM found that after the spate of suicides in 2010 compelled Foxconn to raise wages (which weren’t really raises because housing and food subsidies were cut), the pay of frontline workers ranged from 50 to 61 percent of the minimum living wage depending on the city. To make a sufficient wage, workers must take on overtime shifts. But if they decline even one overtime shift they get iced out for the entire month. One student worker in Chengdu summed up the dilemma, “If there is no overtime at all, I will only receive the basic salary. Hence, I have no choice.”

This is backed up by an eye-opening paper published in 2010 by Pun and Chang, titled, “Suicide as Protest for the New Generation of Chinese Migrant Workers: Foxconn, Global Capital, and the State.” The two academics found that for migrant workers in Shenzhen their average pay, even with overtime, was 47 percent of what city residents earned, and amounted to only two-thirds of the living wage calculated by SACOM.

Military-Style Management

To meet production goals Foxconn relies on “military-style management … on the shop floor.” Workers say “military training” starts during the recruitment phase, such as being forced to stand in the sun for hours with no water. In Chengdu, some workers claimed that for up to one month before work began they had to line up in formation and “stand still as a soldier for hours.” Even the China Daily reported that the state-controlled Shenzhen Federation of Trade Unions said Foxconn has a “quasi-military management system.” According to scholars as well as business publications, Taiwanese managers in China refer to their management style as militaristic.

The workers believe the goal is “to indoctrinate the idea of absolute obedience.” This reflects Foxconn founder Terry Gou’s principles that a leader must be “a dictator for the common good,” and “a harsh environment is a good thing.” One SACOM report stated, “New workers are always reminded by the management that they should obey all the instructions of the superiors without question.” Another apparent goal is to train the workers to stand all day. One female worker in Shenzhen said, “We have to stand all day long. Even worse, we have to stand like a soldier. I am totally exhausted after non-stop work.”

The absolute power inevitably leads to abuses. In another paper Pun and Chang cite a study by the independent Foxconn Research Group in 2010, involving interviews of 1,736 employees in 12 separate factory areas and 14 investigators who took one-month positions in the company. It found that 38 percent of employees had their privacy violated and 16.4 percent – one in six workers – were “subjected to corporal punishment by management and security personnel,” according to Ross Perlin (who is fluent in Chinese and translated parts of the study at my request). Twenty-eight percent of workers said they were abused or insulted. “Public humiliation and confession … is a frequently used management method,” write Pun and Chang. “Line leaders, who are also under pressure, tend to treat workers in a harsh way to reach the productivity targets.”

Pun and Chang conclude, “Foxconn employees experience long hours of repetitive work for very low income. They submit to management scrutiny on the job, and their low income and limited free time restricts their options outside of work. Many young men and women workers rarely stop working except to eat and sleep, simply to make ends meet. The result is a community of people under intense stress with few resources, a situation conducive to depression.”

In May 2010, the same month six Foxconn workers died after hurling themselves out of buildings, a letter issued by Pun and eight other mainland Chinese and Hong Kong academics connected the dots between state policies, global capitalsim and the effects on the workforce. The writers maintained that because young migrant workers never think of “going back to farming like their parents … they see no other option when they enter the city to work. The moment they see there is little possibility of building a home in the city through hard work, the very meaning of their work collapses. The path ahead is blocked, and the road to retreat is closed. Trapped in this situation, the new generation of migrant workers faces a serious identity crisis and, in effect, this magnifies psychological and emotional problems.”

For some, the way out is suicide, writes UCLA professor Russell Leong: “It’s my belief that workers internalized their oppressive conditions because they could not find ways to resolve the oppressive ‘relations of production’ – treated as part of the machinery of the production assembly line they became demoralized, dehumanized, and finally, desperate. So their only option was a very human one: to throw away or destroy their own bodies as a gesture of frustration – and of defiance.”

As much as Foxconn and Apple laud their audits, their devotion to the law and their ethics (Steve Jobs emailed an Apple user critical of the suicides, “We do more than any other company on the planet”), the companies ascended to the top on a heap of bodies. They are hardly unique, and that’s the problem.

As far as labor practices goes, Foxconn is no different than its rivals, and it’s impossible to escape. It assembles electronics for everyone including the iPad’s rival, the Kindle, and the Acer computer I’m writing this on. All that matters is that Wall Street is happy because Apple has more cash on hand than the U.S. Treasury.

Apple and consumers alike could easily pay more as labor accounts for only 7 percent of costs. Tripling wages and benefits might add $100 to an iPad. But that would set a bad example. Apple’s profits might decline a notch and Wall Street would dump its stock. Consumers would still have their toys but might buy fewer smart phones, tablets, iPods, Xboxes, laptops, desktops and other digital sundries.

Giving Foxconn workers a job with a living wage instead of one that cripples them by their mid-20s would pressure other Chinese companies to do the same. And then more demands would be made: Why can’t the factories stop poisoning waters, lands and workers, fouling the air and frying the planet?

It’s not that we can’t have advanced technology, a healthy society and a green economy. We just can’t have it with the Foxconns and Apples of the world, where dictatorial billionaires make closed-door calculations based on market share, revenue and profit at the expense of everyone, and everything else.

So don’t expect anything to change in Apple and Foxconn’s hell factories, unless workers in China (and wherever else Foxconn goes next) rise up and make it change. In the meantime, enjoy your iWorld.

Apple May Announce iPad 3 in First Week of March

By ANTHONY MYERS:
February 9, 2012

Now that the all new Apple iPad 3 has a set release date of early March, the question now is will it be ethically produced by Chinese factory workers at places like Foxconn. Reports of poor working conditions in Chinese factories that make the $500 or more iPad, have forced Apple to confront the possibility it may have to intervene or at least make an effort to investigate the charges.

Pro labor organizations like China Labour Bulletin and Students and Scholars Against Corporate Misbehavior have alleged Foxconn is running its factories with military precision, including surveillance of workers, demanding obedience and making it clear challenging authority is out of the question. Workers are forced to do as they are told or shown the door, CNN reported.

Even worse, several suicides in 2010 at Foxconn's Shenzhen plant forced the company to install safety nets to keep people from jumping off buildings to their death. Workers there report a militant culture among management, and many live, eat and sleep at the factories to maintain the nearly constant flow of parts for people's seemingly insatiable appetite for the iPhone and iPad. Put all that together with the fact Apple is now the biggest company in the world, even bigger than Exxon Mobile, and it adds up to potential backlash against Apple for not doing more to protect the people that make their game-changing tech gadgets.

"We care about every worker in our worldwide supply chain," Apple has previously said in a statement.

"We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made. Our suppliers must live up to these requirements if they want to keep doing business with Apple."

With Apple selling more gadgets than ever before over the holiday season, and with the new iPad to be released in only a few weeks, perhaps nothing can stop their momentum. But as more reports come out about terrible working conditions at Foxconn, it's only a matter of time before consumers start to change their behavior in response.

In fact, a group of hackers has reportedly struck the Foxconn plant Feb. 9, and hijacked employee login and password info, CBS News reported. Their reason for doing so? A group of hackers calling themselves Swagg Security claimed to have done it in retaliation for treating their workers so poorly. They've published the stolen info on Pastbin. Tell us in the comments if you think hacking Foxconn was a good idea or it there is any way to get Apple to do more to protect Chinese factory workers.
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