Ahead Of iPhone 7 Launch, Report Claims Labor Conditions Are Getting Worse At Key Apple Supplier In China

Ever since Tim Cook became Apple's CEO five years, he's made improving labor conditions among suppliers a very public goal. But a new report underscores that Cook's goal remains elusive. According to China Labor Watch, a non-profit group, conditions at one of Apple's biggest Chinese manufacturers are getting worse, not better.

A new report from China Labor Watch claimed that working conditions at Pegatron , a large Taiwanese headquartered contract manufacturer with operations in mainland China, have deteriorated over the past year.

Based on interviews with workers and review of worker paystubs, the nonprofit found that "excessive and illegal" overtime work is widespread at the Apple supplier. The highest amount of overtime put in by a worker was 109 hours in March, according to the report. Also, Pegatron's student interns worked 80 hours per month of overtime on average, despite Chinese laws forbidding intern overtime, read the report.

Workers have to put in overtime to make enough money to support themselves and family. Without overtime, Pegatron workers only make about $213 once expenses are deducted, said the report. In April, the Shanghai Municipal Government bumped up the minimum wage from $304 to $330 a month. Pegatron workers received a raise, but their real wages actually decreased in that period, according to paystubs the nonprofit reviewed. Pegatron kept labor costs low following the raise by changing the compensation and bonus structures as well as decreasing social insurance support, said the report.

"Working conditions are terrible, and workers are subject to terrible treatment," read the report. "Currently, Apple’s profits are declining, and the effects of this decline have been passed on to suppliers. To mitigate the impact, Pegatron has taken some covert measures to exploit workers."

Apple got a chance to respond to China Labor Watch's data before publication and "admitted that in some production departments of Pegatron, excessive overtime did exist, but the percentage of overtime violation was lower than our statistics," said the report. Apple didn't break out how it determined overtime pay for Pegatron workers.

I've reached out to Apple for comment and will update this post if I hear back.

The report claimed that Tim Cook has required suppliers to increase productivity while decreasing cost 5% to 10% every year since he became CEO. And now with Apple's profits in decline, China Labor Watch alleged that the squeezed margins are being pushed onto its suppliers.

Apple has pushed back against past reports of poor labor conditions. Following a 2012 report in the New York Times about Chinese labor conditions in factories, Cook sent out an email to employees retrieved by the Times that said: "We care about every worker in our worldwide supply chain." And then in 2014, the BBC produced a show that looked into the mistreatment of Pegatron workers. Following the program, Apple’s then senior vice president of operations, Jeff Williams (now COO), sent out an email saying he and Cook were “deeply offended by the suggestion that Apple would break a promise to the workers in our supply chain or mislead our customers in any way,” according to an email obtained by the Telegraph.