Foxconn's Other Dirty Secret: The World's Largest 'Internship' Program

Alex PasternackWednesday, Feb 15, 2012
http://motherboard.vice.com/2012/2/15/foxconn-s-other-dirty-secret-the-world-s-largest-internship-program

In June 2010, a university student named Liu Jiang arrived in the southern Chinese city of Foshan to begin his summer internship, at a factory that produces LCD screens for laptops and cell phones for the manufacturing giant Foxconn. As a student at the Dongfang Vocational School of Technology in the northern city of Shijiazhuang, Liu had traveled hundreds of miles for a chance to get hands-on experience working for China’s leading electronics maker.

But his internship was brief. Less than a month later, in the early morning of July 18, the eighteen-year-old would climb to the roof of his six-story dormitory and leap to his death.

Liu quickly became a statistic in Foxconn’s ugly worker history, a blip on the Internet radar: his was the seventeenth suicide attempt, and the thirteenth death, at a Foxconn factory that year alone. (The suicide rate at Foxconn is still lower than that of the general population in China, but striking for its concentration among a group of workers at a single company.) Apart from his school, few details emerged about Liu’s life or the conditions of his particular internship, a gig that landed him among other full-time workers his age and younger.

But in light of a series of reports that have emerged in the years since, Liu’s suicide points at one of the under-reported but more unsavory aspects of the much-criticized labor practices that produce gadgets for Apple and many other popular computer brands: with the help of schools and government officials, the company runs a massive internship program built not on voluntary education but on “compelled” factory work for teenage students. According to Ross Perlin, author of Intern Nation, Foxconn may be running “the world’s single largest internship program – and one of the most exploitative.”

By Foxconn’s standards, Liu’s internship — which he landed through a labor placement firm in the nearby city of Guangzhou — would have included housing, food, and a small stipend estimated to be about half the salary of a typical factory worker, all in the name of hands-on education. But according to independent studies, and by Foxconn’s own admission, interning in a gadget factory is often less about job training and more of a lesson in the crude economics of globalization.

Foxconn says it relies on as many as 180,000 interns during the summer months to fulfill the needs of the voracious beast of Western gadget demand — and the requirements of companies like Apple, Amazon, HP and nearly every other major electronics brand. The Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM), a longtime critic of Foxconn, estimates the number is much higher, and that interns have at times made up as much as a third of the company’s 1.3-million-strong workforce, or 430,000 interns. Either way, it’s an intern workforce more sizable than Disney, Congress and Hollywood combined.

But neither Apple nor recent widely-spread reports in the mainstream media make mention of interns. Sourced from schools and third-party recruitment firms, SACOM reports that interns tend to fall into a class of indirect workers, for whom Foxconn is not directly responsible. At the time of Liu’s death, Foxconn deflected responsibility for his case because he was hired by an outside recruitment company in Guangzhou.

“Because [indirect workers] are not directly hired by the factories, the factories will say, ‘we are not responsible for taking care of them,’” Fan Yuan, of the New York-based China Labor Watch, told me. “They usually work longer hours than regular workers. If there is an inspection or auditing from these companies, these workers will disperse.”

As a result, the use of interns can complicate attempts to surveil the supply chain for labor violations. “If we want to dig deeper, if we want to find the factories that are selling raw materials to Foxconn, in these factories the conditions may be even worse,” says Yuan. “But it’s really difficult for any organization to have specific data about them.”

This isn’t the venerated internship of the privileged college student, building valuable work and life skills with school credit and on-the-job training in place of pay – if such an internship even still exists. Historically, Foxconn’s low-wage internships involve essential factory labor by poor students, some of whose areas of study have nothing to do with electronics, and turn the “school credit” idea on its head. According to SACOM, vocational students, including those studying journalism, tourism and languages, have had practically no choice but to participate in such internships if they want to graduate from their schools. As temporary workers, they have little legal protection or recourse in the event of injury, over-work, or underpayment. And if they complain, they could jeopardize their diplomas.

“It is evident that this use of student workers is a form of involuntary labour, which is supposedly prohibited by Apple,” says a recent letter by SACOM to Apple’s CEO, Tim Cook. Apple, which is only one of dozens of Western brands that contract to Foxconn, has taken steps to address concerns at the manufacturer, including threats to workers’ health and safety, a heavy emphasis on overtime, and the use of underage workers. This week Apple announced, to some skepticism, that the independent auditor Fair Labor Watch was beginning to examine the company’s supply chain.

Apple’s most recent 27-page Supplier Responsibility Report, however, makes no mention of student internships. And while Foxconn’s internships have been reported in Chinese media, in Perlin’s book and in a recent Alternet story, student workers were not mentioned in recent reports by the Times, This American Life and others.

School work

Even if Foxconn is the largest employer of interns, the system is far larger than Foxconn, and depends upon the collusion of local governments and schools. Observers like the Hong Kong-based China Labor Bulletin and SACOM say the system is abetted by a network of government officials, who are paid fees for recruiting students, work with an unruly system of public and private vocational schools that funnel students into internships and reap fees and other benefits in the process. Such schools have proliferated across the country in recent years, often targeting rural and low-income high school graduates not privileged or accomplished enough to make it through the testing gauntlet and enter China’s middle- and top-tier universities.

On June 26, 2010, a week after Liu Wang began his internship in Foshan, the official China Daily newspaper described a striking approach to labor supply at Foxconn, which was then reeling from a string of suicides and rising labor demands. The Henan provincial government declared that 100,000 vocational and university students would be sent on three-month internships at Foxconn’s Shenzhen plants.

At one vocational school in Zhengzhou, wrote Hu Yinan, students were informed of the government’s requirement after the summer semester had begun, and that “all those who refuse would have to drop out.” That elicited ironic resignation from at least one student who spoke to the paper: “Everybody is going, ‘I can go find out why all those Foxconn employees killed themselves.’ It’s kind of fun.”

Meanwhile, a study that year by Beijing University and Tsinghua University found that local government agencies were given recruitment fees in exchange for filling worker quotas. One student interviewed for the study said she and 30 other students were dispatched from a vocational school in Guizhou Province to intern at an electronics factory in Changzhou, Jiangsu. There they were paid 500 yuan per month, half the pay of an average Foxconn worker, over the course of four months, with their internships tied to their eligibility for graduation.

In exchange for sending interns, schools are compensated, to the detriment of the interns: “it was not unusual for schools to deduct a ‘commission’ from the interns’ salary or get paid directly by factories for providing cheap labour,” according to the 2011 report by China Labor Watch.

The 2010 report concluded that Foxconn was “systematically” abusing internships offered by over 200 vocational schools in Southern China since 2009. Rather than performing “training”-related tasks, they were pressed into factory work, in some instances, forced to work 14-hour days in a standing position with low pay. Foxconn, it said, was as a “concentration camp of workers in the 21st century,” with students “kidnapped” to work overtime in the name of “just in time” production.

The “Internship”

The appeal of internships to employers at Chinese factories is not unlike that for many employers at white-collar offices in Los Angeles or London: free or low-cost labor by eager, energetic workers who earn few, if any, benefits, doing essential work. In China, where the “internship” has migrated from the West, Foxconn may be the tip of the iceberg. “What Foxconn and Apple’s other Chinese suppliers do—and Apple’s willingness to tolerate it—is completely par for the course for manufacturing in China,” says Perlin, who’s spent years working and studying in the country. “Forced labor is a major part of the Chinese economy, in many different respects, and our dependence on Chinese goods binds us to that every day. Forced internships like the ones at Foxconn appear to be somewhat common as well. What may be different here is the scale and the high-level government collusion.”

Since the 2010 suicides, Foxconn has pledged to improve its approach to interns, in addition to pay and worker safety. In an October 2010 statement, Foxconn responded to SACOM’s claim that a third of its workforce was interns, insisting that interns comprised 7.6% of its total employee population in China, “and at no time has this percentage ever exceeded 15% even during the summer peak seasons.”

“While we have found a small number of incidents where interns have voluntarily and legally worked overtime hours,” read the statement, “we are working hard to institute a ban on any overtime work by interns and we are in the process of ensuring that this important policy is enforced across all of our operations.” For its internships – “short-term, on-the-job” training managed by individual schools for students aged 16 and up – compensation levels are now “equivalent to that of the basic workers and higher than the government regulated levels and the average internship period is between two and six months.”

In the electronics industry, which has been called the most labor-abusive in the world, internships are not often addressed, even though guidelines by Apple and others forbid unpaid work and stipulate minimum pay. But those guidelines can mean little in practice when operations like Foxconn are squeezed at the margins to provide unpredictable, overnight deliveries of new products. The tide may be turning though, as a groundswell of labor unrest – and the uncensored reporting of labor abuses by the Chinese press – seem to illustrate.

Though Foxconn raised wages in 2010, they’re still reported to be 50-60 percent of the minimum living wage of the cities where factories are based, according to SACOM. That means overtime is necessary. One student worker in Chengdu explained, “If there is no overtime at all, I will only receive the basic salary. Hence, I have no choice.”

To young workers from the countryside, the ability to work long hours, even in violation of local labor laws, can be seen as a benefit. But the costs are high. Following the string of suicides, an undercover report published by China’s leading investigative newspaper, Nanfang Zhoumo (Southern Weekend), laid bare the grim circumstances: 300,000 employees working and living on a 2 square kilometer patch of land – three times the population density of Manila, the densest city in the world – with ten workers to a dorm room, and little to no time for relationships (cheap prostitutes tend to set up shop just outside the factories). The coverage was excellent (part one, two and three), perhaps because its reporter, Liu Zhiyi, was able to fit in so well with the young workers: he too was a 23 year old intern for the newspaper.

“I know of two groups of young people,” was how he started his first article. “One group consists of university students like myself, who live in ivory towers and are kept company by libraries and lake views.”

The other group are treated more like robots. “They often dream, but also repeatedly tear apart their dreams, like a miserable painter who keeps tearing up his or her drafts,” he wrote. "They manufacture the world’s top electronic products, yet they gather their own fortune at the slowest possible pace. The office’s guest network account has a password that ends with “888” — like many businessmen, they love this number, and they worship its homonym [“rich,” “lucky”]. Little do they know that it’s their own hands protecting the country’s “8,” as their overtime hours, lottery tickets, and even horse racing bets struggle to find the “8” that belongs to themselves."

Few protections

In China, where inflation is colliding with higher wages, and placing a stronger reliance on white-collar internships, few protections for interns exist. Because interns are classified as students rather than workers, they are not protected by the country’s Labor Contract Law or other labor laws. Guidelines issued by the Ministry of Education and other government departments that do govern internships “do not necessarily carry the weight of law,” according to a report by the China Labor Bulletin.

A report published in 2011 by the Chinese Ministry of Education emphasized that the nation’s goal was to improve the supply of skilled workers to a distressed labor market – not necessarily to protect the rights of student interns and workers. “China has entered a critical moment of economic and social development,” it read. “However, secondary vocational education, which is supposed to shoulder the responsibility of cultivating China’s skilled workers, is still weak. Its quality, structure, scale and efficiency have yet to catch up with social and economic development.”

The lack of protections for interns is widespread. Because interns are not permanent workers, a range of employers, from Foxconn to Fox Searchlight – which has recently been named in a class-action lawsuit over “The Black Swan” – can ultimately deflect responsibility.

In October, a spokesman for Fox pointed the finger at director Darren Aronofsky: “These interns were not even retained by Fox Searchlight … which has a proud history of supporting and fostering productive internships.” After Liu’s suicide in July 2010, a spokesman for Foxconn said that because the victim was not an official employee of Chimei Innolux, but a temporary worker employed by a labor dispatching firm, it would not be “handling” the case.

In that same statement, Foxconn revealed that Liu’s internship had been terminated about a week after it began, on July 7, because he failed to show up for work for several days, and that the company had been trying to arrange to have him sent back to his hometown. It’s not clear why he stopped working, what kept Foxconn from buying him a ticket home, or what led him to suicide.

But Liu’s death might be read as the stark sign of an abusive practice that stretches far beyond China’s factories. And it’s another reminder, if we needed one, that calculating the cost of a new gadget is much harder than the price tag suggests.

Editor’s note: Liu Jiang is an alias. Liu is the surname of the intern who died in 2010, but his given name could not be confirmed.