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Silicon Sweatshops

Taiwan correspondent Jonathan Adams talks about GlobalPost's exposé on labor abuses at factories that manufacture popular consumer gadgets

(Photo by Reuters / Illustration by Street Attack)

 

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Below is the transcript of the Correspondent Call with Jonathan Adams. 

 

Passport: Good morning and welcome. It’s Thursday, November 19. I’m David Case, Editor of GlobalPost Passport in our Boston newsroom. Americans will buy millions of electronic gadgets this holiday season, but under what conditions are these products being manufactured? This week, GlobalPost is publishing a five-part series entitled “Silicon Sweatshops,” documenting exploitation and poor working conditions at Asian factories that manufacture for Apple, Dell, Nokia and others. Despite strict codes of conduct, labor rights violations are the norm at factories making the world’s favorite high-tech devices. Although, on a positive note, we also found that some factories are bucking the trend. To talk about the series, GlobalPost’s Jonathan Adams joins us from Taipei, Taiwan. Good morning, Jonathan.

 

Jonathan Adams: Good morning. Or good evening, from here.            

 

Passport: Good evening Jonathan. Before we begin, just a few announcements. First, remember that the call is being recorded and will be posted on Passport’s website. As usual, I’m going to lead a Q and A that will last about 20 or so, but if you’d like to ask a question, please feel free to jump in. Currently your lines are muted. To un-mute yourself, you need to press *6. We ask that you identify yourself, make questions relevant to the topic we’re discussing, and be mindful of the time. We’ll have five or 10 minutes at the end of the call for un-related questions. Finally, as we occasionally do, we’ve opened this call up to non-Passport members whom I’d like to welcome. If you’re unfamiliar with Passport’s service, Passport is GlobalPost’s premium content section, which allows our members to have a closer relationship with GlobalPost’s 70-plus correspondents around the world. We hold these calls each week on topics of interest to our globally engaged membership, often from the front lines of whatever news is breaking around the world. I would encourage you to visit gloablpost.com/passport for more information about what makes Passport worth joining.

 

Ok, let’s jump in. Jonathan, very nice series, I enjoyed reading it. What labor rights abuses did you uncover in your reporting? And which, in your opinion, were the worst?

 

Adams: Ok, thanks, thanks for the question. First of all, I just want to mention briefly that in terms of the scope of the problems in the industry, the types of violations that we’re talking about, we are really piggybacking on numerous reports that the labor rights groups have done themselves over the past few years, and also several reports that the industry itself has done, based on the audits it’s conducted. So that was the real evidence of how widespread some of these violations are. Now, in terms of our own reporting, we spoke to about 12 current and former workers at Taiwan’s contract electronics supplier. It’s believed to supply Apple; we know it supplies Nokia and also other companies. We talked to Filipino migrant workers at this firm’s factory in Taiwan. We spoke to Taiwanese workers, both current and former at the supplier’s factories in Taiwan. And then we also spoke to Chinese workers at the supplier’s subsidiary in Southern China. And we found allegation after allegation of violations of the industry Codes of Conduct. And in some cases, allegations of violations of labor rights regulations, here in Taiwan, for example. So, just to name a few, from the Taiwanese workers, we heard from them allegations of routine violations of Apple’s and the industry’s Codes of Conduct on work hours, days off, overtime, the right to a worker complaint mechanism, such as a hotline, and the right to organize. And for the Chinese workers, we heard allegations of the industry group’s Code of Conduct on overtime hours, in particular, work hours and days off. We also heard some allegations of some under aged labor. And then finally, and this I would highlight as a most interesting point, because to me, these were the most severe, extreme violations and allegations we found, were involving the Filipino migrant workers working here in Taiwan. They allege that they have paid placement fees that are far in excess of Taiwan’s own labor regulations, sometimes equivalent to a full year’s salary. And these kinds of recruitment practices also happen to be a core violation of Apple’s own Code of Conduct. Apple actually added this concern about placement fees recently to its Code of Conduct. So that’s what we uncovered.

 

Passport: Ok, a couple of details I want to pick up on, Jonathan. First of all, you say violations in terms of vacation time. How many vacation days a month do these workers get?

 

Adams: Well, in some cases, in terms of the workers at the China factories, some of them even had trouble remembering their last day off. The allegations we heard at the China factory were that they were working 70-hour weeks, that’s 10 hours a day, seven days a week. Now the Code of Conduct, of course, limits this to about 60 hours a week, except in extreme circumstances, and does mandate days off. And we heard similar allegations from former Taiwanese workers at this Taiwan supplier. They said they were clocking, routinely clocking, 65 to 70-hour weeks, I believe is the number we have. They said that this overtime was mandatory. That if they did not work that overtime that their salaries would be docked, and that they weren’t actually paid for the overtime, but they were given vacation time, which they could only take when the company said they could.

 

Passport: Incredible. In these days of high unemployment, it seems unimaginable that the companies wouldn’t look for some other workers instead of working somebody to the bone who’s been working all week long.

 

Adams: Yeah, that’s right.

 

Passport: Let me ask you, you also mentioned the Filipino migrant workers. You said that they were actually paying placement fees. First of all, can you explain what that is? And if these workers are paying these fees voluntarily, why is their situation so bad?

 

Adams: Sure, sure. It’s a little bit of a complicated set-up to explain, so bear with me. But basically, these Filipino migrant workers have to go through a series of labor brokers in order to work in Taiwan. So they’re going to be paying placement agencies both in the Philippines and in Taiwan for the chance to work at one of these factories in Taiwan. They work on three-year contracts; it’s actually a two-year contract with a possible extension for a third year. And again, what we’ve found, and I’ve done the reporting in the last few years on this, talked to many, many of these migrant workers, and very, very often, what you’ll find is that these placement fees add up against anywhere from ten months to sixteen months of a worker’s salary. And in addition to that, these workers will also pay about 10 percent to the Taiwan labor broker here, that’s a monthly salary deduction, in addition to that, they also have another 10-15 percent of their salary deducted and put into a savings account which they can’t access until their entire contract is up and they’re back in the Philippines.

           

Passport: And these placement fees… if its 10 to 16 months, they actually lose that money?

 

Adams: Yeah. They’re not breaking even until they’ve been in Taiwan working for 10 to 16 months. And you asked, it’s a good question, why would accept what appears to be such a raw deal? And I think the sad truth is, having talked to a lot of these workers, is that if they work the entire three years, they can actually make more in Taiwan than they could back at home in the Philippines. So many of these migrant workers I’ve talked to, have been very frank, they’re happy to be in Taiwan. The worker I talked to, the main one in this series, said she’s proud to be a breadwinner, as she called it. They’re able to make money to send back to their families. But here’s the catch. And here’s the interesting thing that I’d like to highlight. The deal only works for them if they’re able to work that entire three-year period. If there’s any problem, if anything comes up before they’ve basically earned back the money they paid to get to Taiwan, then they’re stuck in a hole of debt. And that’s exactly what happened to another Filipino migrant worker who we talked to, who’s also featured in the series, who’s back in the Philippines. Due to the economic downturn, she was laid off, she went back to the Philippines and I don’t remember the exact number in the piece, but I think its something like $1,600 of debt. And that may not seem like a lot to an American, but to these workers, that adds up to several months’ wages. I would just like to point out briefly that after all these deductions, monthly deductions, what they actually take home is far under Taiwan’s own minimum wage.

 

Passport: I think I see in the piece that it’s $1050 for the placement fee. Anyway, that sounds rough. And then they take out debt. The actually borrow money to pay these fees.

 

Adams: Right. And I think the phrase we use in the piece, “modern-day indentured servants” I think that captures it pretty well. I think its important to point out the series is not talking about slave labor, its not about forced labor, a lot of these deals, it should be pointed out, are voluntary, they just happen to be tremendously exploitative.

 

Passport: They’re desperate people who are being taken advantage of.

 

Adams: Yeah, they’re people who are accepting these deals because they’re hoping to make as much money as they can in the shortest amount of time as possible.

 

Passport: These problems have been around for many years, though, Jonathan. What have brands like Apple done to address them so far and what have they done right?

 

Adams: Thanks for pointing that out. I think the brands have tried to address these problems. And the main way they’ve done that, as we point out in the piece, is through these Codes of Conduct. They’ve been faced with numerous allegations of violations in their supply chain. So what they’ve done is very publicly adopt these very detailed Codes of Conduct that say exactly what their suppliers can and can’t do. And this is something that’s happened within the last four or five years, you’ve seen these Codes of Conduct. There’s an industry-wide Code of Conduct that took effect, I think, four or five years ago. Now, they are trying to address the problem. The way they’re enforcing these Codes of Conduct, is usually through these audits, spot audits. They will show up at the supplier’s factory to inspect it, sometimes surprise visits, to make sure their supplier is complying with their Code of Conduct. But the point that I would emphasis here that I think is most interesting, is that the labor rights groups we’ve talked to say, great, this is a good first step. These Codes of Conduct and audits are part of a possible solution to the problem. The thing is, they just don’t go far enough, that’s what the groups are saying. That if you rely only on these Codes and audits, that you’re basically relying on the industry to police itself and that’s simply naïve. What the groups are saying is that you really need to bring in the outside monitors, like NGOs, to help fix the problem.

 

Passport: So the Codes of Conduct and the audits are like the headmaster coming around and all the kids in the class sit up straight.

 

Adams: That’s right, that’s exactly right. I think you can call this the dog and pony show. What happens here and what we’ve heard from the current and former workers is they’ll post a notice, look, we have a big brand coming by, we’ve got some inspectors coming by, so everybody be on your good behavior, don’t say anything bad about the company, so what the auditors are going to see is not going to reflect the day-to-day conditions at the factory. And they’re not going to necessarily have the trust of the workers to really hear honest complaints. And then when the auditors leave, these factories just go back to doing business as usual.

 

Passport: What was the most challenging or frustrating thing for you in the reporting process?

 

Adams: At least for me, the most challenging thing was really trying to pin down the specific relationship between the Taiwan supplier that we looked at and the big brands, particularly Apple. Both this company and Apple, to be specific, are not willing to publicly release any details about who their suppliers are. And this is a complaint that the labor rights groups have also found very frustrating. What I first heard from some of the labor rights groups is, how can you really talk seriously about corporate responsibility to your customers if your customers don’t even know who exactly is making the product and under what conditions. So that’s why this one of the labor rights group’s key suggestions here. The first step is more transparency so that consumers are able to have more information about exactly which firm is making the products that they’re buying.

 

Passport: So that sort of undercuts the leverage that the activists might have, essentially by disassociating the popular brand with the workers in the factory in question. I can see, though, on the other hand, a company like Apple, everyone wants to know what their next product is going to be and they try to keep that pretty seriously under wraps, so there’s kind of a catch-22 there, isn’t there?

 

Adams: The way I would describe it, and this is my own personal view, but I think what’s needed here is trying to find a balance and I’m not saying its an easy balance to strike, but I think that these businesses, in some situations, do have a legitimate right to confidentiality. But I also think that the consumers have a legitimate right to know who is making the products that they buy. So I think it’s about trying to find the right balance between those two things.

 

Passport: In the piece we published today, there’s actually kind of a solution proposed. It was a pilot project by Hewlett-Packard. And can you tell us about this? Tell us what was different in Hewlett-Packard’s approach versus the other companies?

 

Adams: First of all I would just say that this product we’re looking at, no one’s suggesting that it’s a magic bullet, an approach that’s going to fix all the problems. But we do think that, labor rights groups think, that this is a possible way forward. That its part of the solution. So this project that we looked at involved the brand Hewlett-Packard, and they had been talking to a Hong Kong-based NGO. So as far as we know, this is the first time in the industry that one of the big brands had worked directly with an outside NGO. So what they did, is there were several NGOs involved. And what they did is get the NGO directly on the factory floor. This is a long-term program, the whole thing lasted a full two years, they had the NGO talking with the supplier, managers, training the workers about their labor rights, they set up a hotline after gaining the workers’ trust so workers felt they could have a channel for their grievances. So the whole idea was to improve the workers’ own awareness of their rights and further communication with the management. And our reporter, Kathleen, in China, actually went to the factory and was pretty impressed by the results that she saw.

 

Passport: The NGO is Students and Scholars Against Corporate Misbehavior?

 

Adams: Yeah, that was the coordinating NGO for the project. There were also two other, I believe they were Hong Kong-based NGOs who actually went into these supplier factories and collaborated with the managers at the supplier.

 

Passport: And Chicony?

 

Adams: That’s the Taiwan-owned supplier to Hewlett-Packard and some of the other big brands, yes.

 

Passport: And interesting detail: they set up a telephone hotline to enable employees to make anonymous complaints and every Friday the managers would post a list of the complaints they’d received and how they were being resolved. It kind of seems like a no-brainer, but reading the other reports, it kind of seems like communication that was missing in other factories. That management just preferred to ignore workers’ gripes or suggestions.

 

Adams: That’s right. Or they simply didn’t have the capacity to do so, or didn’t know how to.

 

Passport: At this point, we’ve gone through the problems and the possible solution, let me open the floor up to questions. If you do have a question, remember to press *6 before you talk and go ahead we can just take the first person who opens up their line. (Pause) If there are no questions, I can keep going.

 

Ok, I’ll ask another one then. Essentially, if I want to find out who made my iPhone or my other digital gadgets, I can’t do that, can I? Based on what you said earlier.

 

Adams: Actually it can be difficult. I looked into this in particular for the iPhone as part of the reporting and research for this to try to pin down who the better suppliers were. Again, it’s difficult because in the case of the iPhone, Apple does not acknowledge who its suppliers are. However, one interesting thing that I did find, and you can find by doing a basic search on the Internet, there are several firms that are called teardown firms. They do teardowns, and that’s industry jargon, but what it means is that they literally take apart the product. And they identify every component in the product and as best they can, figure out who made it. So several firms have done this. The consulting firm iSupply has done this, also Display Search, there’s a website that’s called www.teardown.com. Another one called ifixit.com. For example, iSupply has done this with the iPhone, its pretty interesting. However, I will say, for the Taiwan supplier that we looked for the series, its believe by industry analysts, and of course, the workers, to be making panels, touch panels for some of these Apple, Nokia and other products. But this is one of the murkiest parts of the supply chain for the products. Even the teardown specialists, who have taken the whole thing apart, can’t figure out who’s made the touch panel in particular. So they’ve, in many cases, just left that blank. Its one of the most expensive components, for example, on the iPhone, but also, again, one of the murkiest, in terms of the supply chain.

 

Passport: Its also one of the most attractive. Which is why Apple wants to keep that under wraps, isn’t it?

 

Adams: Right. And the other thing to know is there’s a lot of competition between the Taiwan suppliers here for that business, for Apple’s business.

 

Passport: And just to clarify, these gadgets are made entirely by contractors, right? Apple doesn’t have its own factories.

 

Adams: Well, as far as my knowledge of the supply chain is, again, most of the supply chain is contracted out to companies. Some of the components come from Japanese companies; a lot of the components come from Taiwan firms. And some of the labor-intensive parts of the supply chain, including final assembly, will be done over in China.

 

Passport: Any questions at this point? (Pause) Ok, let me ask you one final question, Jonathan. What can American consumers do to help fix the problem that we’re facing?

 

Adams: I’ve been thinking about this question and the first thing that might spring to mind is some sort of boycott. The problem with that is, as we say in the piece, this is really an industry-wide problem. I personally feel that any sort of boycott of any particular product would be impractical. Impractical and ineffective. I think the fact is, that most of the products, or many of the products or electronic gadgets out there, if you dug deep enough into their supply chains in Asia, you’re going to find problems, labor rights violations, similar to those we found. So I think this is a very complex, industry-wide problem that involved supply chains that are stretching across borders and the suppliers are switching orders from factory to factory, from country to country. It’s very hard to figure out who exactly is making the product. But I think there are some things that can be done. I think the shareholders, of some of these big brands in particular, have a role to play. I think shareholder pressure for more attention to some of these problems might be effective. Beyond that, I think normal consumers can do a lot about it by simply educating themselves about who’s making their product, the products that they’re buying. We have several reports as part of the piece that are a great further reference of research, educate yourself about it. And then the only other thing I would add, is as we say in the story, the best solution or fix to some of these problems would come from Asia itself. And that means more or better laws and better enforcement by the Asian governments involved. The governments of the Philippines, Taiwan and China. And that’s, quite frankly, not something American consumers have a lot of leverage over. However, I think it is something that the US government, some of the European governments, possibly, might have some leverage over. I think, for example, Taiwan is a country that is extremely sensitive to foreign criticism. Particularly public foreign criticism. And I think if there was pressure from, again, American or European or other governments to take some of these problems more seriously and address them, that this could possibly help fix some of these problems.

 

Passport: Great. Well, thank you very much Jonathan.

 

Adams: Thank you.

 

Passport: Thanks everyone for joining the call today, let me remind the non-Passport members on the call that if you’re interested in hearing more of these calls and participating in them, you can go to our website, globalpost.com/passport. There are discounts for academics and students and other groups and we’d love to have you as members. So thanks for joining us today and we’ll talk to you next week. Bye bye.

 

 

 

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