Corporate Accountability and WorkPlace
New research shows just how disturbing labor conditions at Foxconn, the "Chinese hell factory," really are.
October 14, 2014
Behind the sleek face of the iPad is an ugly backstory that reveals
once more the horrors of globalization. The buzz about Apple’s sordid
business practices comes 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 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 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.
Arun Gupta is a co-founder
of The Indypendent and the Occupied Wall Street Journal. He is writing a
book on the decline of America empire for Haymarket books.
