Another Southeast Asian iPhone Supplier Is Making Headlines for Labor Abuses

August 26, 2016, 9:16 PM UTC
Workers Inside The Pegatron Corp. Factory in Shanghai
Employees make their way towards the assembly line area at a Pegatron Corp. factory in Shanghai, China, on Friday, April 15, 2016. This is the realm in which the world's most profitable smartphones are made, part of Apple Inc.'s closely guarded supply chain.
Photograph by Qilai Shen—Bloomberg via Getty Images

A labor watchdog group in China is accusing one of Apple’s two major iPhone suppliers of intentionally over-working its employees, a new report reveals.

Members of the group China Labor Watch on Wednesday released a comprehensive report accusing Pegatron—the Taiwan-based manufacturing company with a major factory in Shanghai that’s been building Apple devices since 2011—of letting workers clock in more than 80 hours a week, a violation of Apple’s own policy of letting employees work no more than 60 hours weekly with at least one day off, according to Business Insider.

The report claims Pegatron’s workers are compelled to work overtime hours because of the low hourly wages they receive: wages CLW claims have been driven down by Pegatron and Apple CEO Tim Cook’s policies.

“Since Tim Cook became CEO of Apple, the company has required suppliers to not only increase their productivity, but to also decrease costs at a rate between 5% to 10% every year,” CLW claims in its report. “This has fostered competition between suppliers in decreasing costs.”


In its key findings, CLW notes that the average wage in mainland China has been increasing steadily, but says Pegatron, workers’ wages have dropped significantly in the past eight months.

In April, when Shanghai’s city government raised its minimum wage to about $2,200 yuan ($330), Pegatron adjusted by cutting its workers’ welfare and insurance benefits, according to CLW.

The company also has allowed student interns, who are not allowed to work overtime, to clock in up to 80 overtime hours per month on average, CLW claims.

“Pay stub records reveal that the highest amount of overtime hours put in by a worker was recorded in March,” the report claims. “The worker was found to have put in a total of 293 hours of work in March. 4.”

Pegatron is Apple’s second largest iPhone supplier behind China’s Foxconn, which has its own troubled history of worker abuses and more than a dozen worker suicides in 2010 alone.

The Wall Street Journal reports Apple shifted some of its iPhone supply chain from Foxconn to Pegatron in 2013 shortly after Chief Executive Tim Cook’s tenure began. Prior to Cook, Foxconn virtually monopolized iPhone production for Apple.

The tech titan’s Pegatron deal was a way to minimize risk after glitches showed up in iPhone 5s produced by Foxconn in 2012, according to the Journal.

Fortune contacted Apple and Pegatron for comment on this story and will update it if they respond.



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