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Apple and FoxConn Admit to Chinese Labor Law Violation

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Apple and its manufacturing partner FoxConn have admitted to breaking Chinese Labor Law rules pertaining to the world’s largest iPhone factory. Labor Day As reported by Bloomberg, Apple and FoxConn were using too many temporary staff at Foxconn’s Zhengzhou iPhone factory. The non-profit China Labor Watch investigated and found that temporary staff, known as dispatch workers, made up 50% of the August workforce, well above the 10% maximum stipulated by Chinese Labor Law. In addition, CLW’s report found that 55% of factory staff were dispatch workers in 2018, and about 50% were dispatch workers in August. This number included student interns, and now that they’ve gone back to school the number of dispatch workers dropped to 30%. Latest Dispatch Temporary workers at the factory don’t receive the benefits that full-time employees get, including paid sick leave, paid vacations and social insurance, which according to CLW, provides medical, unemployment and pension coverage. Additionally, CLW found that the student workers were working overtime during peak production hours, some dispatch workers did not receive their bonus, the factory didn’t provide adequate protective equipment for staff, and both physical injuries and verbal abuse were quite common, among other CLW violations. Mea Culpa Foxconn and Apple admitted to the violations. Apple said that after conducting an investigation, it found that the amount of dispatch workers “exceeded our standards” and is working with Foxconn to resolve the issue. Ongoing Apple has had problems with Chinese labor law violations for many years, and two years ago it was reported that high school students were illegally working overtime to assemble the iPhone X. Foxconn workers assembling iPhones have also committed suicide. But while Apple has pushed for their manufacturing partners to do better by their employees, the profit margins for the factories is razor thin, and violations continue to happen. The bad public image that comes from violating labor laws has been a concern for shareholders, especially as ESG investing has become more popular. The ESG investing adviser Trillium met with Apple to air its concerns in the wake of a 2010 rash of suicides at a Foxconn plant, and pushed the company to reach “full compliance” with Chinese labor laws. Apple is set to debut its new iPhone 11 models tomorrow during its September conference. -Michael Tedder Photo: Joyce Zhou / REUTERS