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.

When will workers share in Apple's wealth?

Scott Nova, Special to CNNFri February 17, 2012
http://www.cnn.com/2012/02/17/opinion/nova-apple-foxconn


STORY HIGHLIGHTS
Scott Nova: Labor rights problems at Apple's supplier factories an issue for years
Apple joined an organization called the Fair Labor Association to audit its supply chain
Nova: If Apple wants to improve labor practices, it should reach out to independent groups
Nova: If Apple genuinely "cared about every worker," it would pay every worker a living wage

Editor's note: Scott Nova is executive director of the Worker Rights Consortium, an independent, nonprofit labor rights-monitoring organization that investigates working conditions in factories around the world.

(CNN) -- Apple's CEO Tim Cook says the company "cares about every worker" in its factories and that "no one in (the) industry is doing more to improve working conditions than Apple."

Of course, when it comes to issues of corporate responsibility, talk is cheap. What matters is not what Apple says, but what it does.

And what Apple does in its vast global supply chain has been well-documented, which is why the company is in public relations overdrive, frantic to protect its once pristine corporate image.

Consider the fate that befell workers at a factory in Chengdu, China, that makes products for Apple. In May, independent investigators issued a report documenting grave dangers to workers at the facility. They warned the factory was failing to control the profusion of dust produced by the manufacture of aluminum cases for the Ipad 2. When a factory is suffused with aluminum dust, there is a high risk of explosion. Apple ignored the report and refused to meet with the authors, the investigators said. It did nothing to address the danger.

Two weeks later, the factory exploded, killing four workers and injuring 18. In the wake of the explosion, Apple said its suppliers took measures to control aluminum dust. But despite this, in December 2011, another explosion, at an Apple supplier factory in Shanghai, injured 61 workers.

Grievous labor rights problems at Apple's supplier factories have been known for years, including the spate of worker suicides in 2010 at the giant plant in Shenzhen, China, known as "Ipod City." At this factory -- owned, like the Chengdu plant, by Apple's biggest supplier, Foxconn -- more than a dozen workers took their own lives by throwing themselves from the roof of the factory's overcrowded dormitories, in apparent protest of the brutal treatment facing workers at the facility. (Foxconn reportedly responded by putting up nets outside the dorms and making workers sign pledges not to kill themselves.)

In recent weeks, public awareness of these issues has increased exponentially, thanks to a huge jump in media interest, raising Apple's public relations problems from a low simmer to a rolling boil.

When a company comes under this kind of pressure, sometimes genuine change in policy can occur. The more typical response is a mere change in rhetoric. This is the route Apple is choosing.

Apple's major move has been to announce that it has joined an organization called the Fair Labor Association, which will "audit" Apple's factories. According to Apple, the Fair Labor Association is an independent watchdog that will work tenaciously to hold Apple and its suppliers accountable.

Unfortunately, while there are some fine people at the association, the organization is not the independent watchdog Apple claims it to be. Indeed, most of its money -- millions of dollars per year -- comes from the very companies whose labor practices it is supposed to scrutinize. Although Apple has not disclosed its financial relationship with the Fair Labor Association, it is likely now the organization's largest funder. Moreover, on the association's board of directors sit executives of major corporations such as Nike, Adidas and agribusiness giant Syngenta. The job of these executives is to represent the interests of other member companies, such as Apple. Under the Fair Labor Association's rules, the company representatives on the board exercise veto power over major decisions.

Independence, as most people understand the term, means an organization is not funded and governed by the companies it is charged with investigating. Despite the financial relationship, Apple argues that the Fair Labor Association will act independently and that the association's review of Apple's factories will probably be "the most detailed factory audit in the history of mass manufacturing."

Early indications are not encouraging. Just one day after launching what was supposed to be a long and uncompromising investigation of Foxconn's Ipad plant in Shenzhen, the association was already issuing public praise of Foxconn and Apple.

On Wednesday, CNNMoney/Fortune ran an article with the headline, "Apple iPad plant is 'way, way above average,' says inspector." Fair Labor Association President Auret van Heerden said this about Foxconn to Reuters: "The facilities are first-class. ... I was very surprised when I walked in the door how tranquil it is. ..." The CNNMoney/Fortune article notes that "whether intended or not, van Heerden's remarks served to support (Apple CEO) Cook's contention that no one has done more than Apple to address the working conditions at factories."

Van Heerden reached these conclusions after a guided tour of the factory provided by Foxconn's owner, Terry Gou. The views of Gou, one of the wealthiest men in Asia, are well-known to Foxconn workers because, as punishment for displeasing their managers, workers are sometimes forced to spend hours writing out copies of his personal sayings. Clearly, Apple's partnership with the Fair Labor Association is not, in and of itself, going to usher in radical change.

So what steps would Apple take if it were genuinely committed to improving its labor practices? For starters, it would open its factories for inspection and worker trainings to genuinely independent groups such as Hong Kong-based SACOM, the organization whose report on the Chengdu factory could have saved the lives of the workers killed there in May, had Apple paid it heed.

And if Apple genuinely "cared about every worker," it would pay every worker a living wage -- enough for workers to achieve a minimally decent standard of living, support their families and even save a bit toward a better future. Today, barely 1% of the retail price of an Ipad goes to the workers who make it; 33% goes to Apple's profits. Apple's profits are so high, and its global labor costs so low, that it could triple the wages of its 700,000 manufacturing workers and help them achieve a living wage (just a few dollars an hour in China), and still make $40 billion a year. A wage increase of 16% to 25% at Foxconn, announced today as Apple's public relations blitz reaches a crescendo, doesn't come close.

Next time you are at the Apple Store, consider bellying up to the Genius Bar and asking why the most profitable company in the history of technology can't pay its workers a living wage and why, if Apple is really ready to open itself to independent scrutiny, it doesn't allow inspections by organizations in which it is not a dues-paying member.

Apple Partner Foxconn Has ‘Tons of Issues,’ Labor Group Says

Peter BurrowsFeb 17, 2012
http://www.bloomberg.com/news/2012-02-17/foxconn-auditor-finds-tons-of-issues-.html

The Fair Labor Association, a watchdog monitoring working conditions at makers of Apple Inc. products, has uncovered “tons of issues” that need to be addressed at a Foxconn Technology Group plant in Shenzhen, China, FLA Chief Executive Officer Auret van Heerden said.

Van Heerden made the comments in a telephone interview after a multiday inspection of the factory. Apple, the first technology company to join the FLA, said on Feb. 13 that it asked the Washington-based nonprofit organization to inspect plants owned by three of its largest manufacturing partners.

“We’re finding tons of issues,” van Heerden said en route to a meeting where FLA inspectors were scheduled to present preliminary findings to Foxconn management. “I believe we’re going to see some very significant announcements in the near future.”

He declined to elaborate on the findings. The FLA plans to release more information about its inspection in the coming weeks. By then, the company will have had a chance to contest or agree to steps to prevent further violations.

“Foxconn is cooperating fully with this audit and we will review and act on all findings and recommendations,” Foxconn said in an e-mailed statement today. “This is a very professional and thorough review and any deficiencies the FLA might find in the implementation of customer or Foxconn policies will be addressed.”

Steve Dowling, a spokesman for Cupertino, California-based Apple, referred to the company’s Feb. 13 statement about the audits.

Hard-to-Find Violations

Van Heerden said in an interview with Reuters published Feb. 15 that Foxconn’s plants were “first class.” He said he was surprised “how tranquil it is compared with a garment factory.”

Heather White, the founder of Verite, another monitoring group, said that many alleged violations -- say, forced overtime or use of certain toxic chemicals -- can be hard to detect.

“Those are not things one would see on a hosted tour that was planned in advance,” she said.

Van Heerden said the comments reflected his previous interactions with Foxconn.

Apple had commissioned the FLA to carry out smaller projects in the past two years, in order to try out some of the inspection techniques used by the group to more effectively root out workplace problems.

Responses to Hazards

Van Heerden said he had been impressed with Apple and Foxconn’s responses to hazards related to the polishing of aluminum, which led to explosions at Foxconn and another Apple supplier, Pegatron Corp. (4938), that killed at least three workers and injured more than 70 people last year. Van Heerden said that Apple researched the problem and hired a respected consultant.

Apple shares were little changed at $502.12 yesterday. The stock has risen 24 percent this year, extending Apple’s lead as the world’s most valuable company.

In response to the consultant’s recommendations, Foxconn bought state-of-the-art extraction and ventilation equipment to prevent dust buildup, and developed an automated approach so that no humans are involved in the polishing work.

“I’ve seen the improvements that have been made, and they’re dramatic,” he said. “The room is full of robots. It’s totally automated. But people need to see the proof.”

Random Interviews

Van Heerden said that FLA’s 30-person inspection team will interview 35,000 Foxconn employees, via meetings with small groups of randomly picked workers, chosen to reflect the demographics of the campus in terms of age, gender and skill levels. As part of the process, workers log answers to questions on tablets connected to FLA servers so they can be tabulated.

White, who is now a fellow at Harvard University’s Edmond J. Safra Center for Ethics, says group meetings on Foxconn’s premises may not yield honest responses. She says she found it more productive to talk to workers in their homes or other off- site locations.

“It’s very hard to get people to speak openly about very serious issues,” she said.

To contact the reporter on this story: Peter Burrows in San Francisco at pburrows@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Foxconn Plans to Lift Pay Sharply at Factories in China

DAVID BARBOZAFebruary 18, 2012
http://www.nytimes.com/2012/02/19/technology/foxconn-to-raise-salaries-for-workers-by-up-to-25.html

BEIJING — Foxconn Technology, one of the biggest manufacturers of products for Apple, Dell, Hewlett-Packard and other electronics companies, said Saturday that it would sharply raise worker salaries at its Chinese factories.

Foxconn said that salaries for many workers would immediately jump by 16 to 25 percent, to about $400 a month, before overtime.

The company also said it would reduce overtime hours at its factories.

Labor rights groups say that over the years, many Foxconn plants have violated Chinese labor laws by pushing workers to endure excessive amounts of overtime.

Criticism has grown over working conditions at several Apple suppliers in China, including Foxconn, which employs more than one million workers to assemble some of the world’s most popular devices.

Apple announced last Monday that the Fair Labor Association, a nonprofit group, would provide independent audits of its supplier factories in China and elsewhere. Apple said the group’s findings would be made public. The association began inspecting Foxconn operations in China this week.

Apple and Foxconn, which is based in Taiwan, have strongly denied allegations that the workers are treated poorly. But Apple has acknowledged in its own audits that some of its suppliers in China violate Apple’s own code of conduct, with instances of child labor, forced overtime and unsafe working conditions and evidence that employees are sometimes exposed to hazardous and toxic chemicals.

In recent years, Foxconn facilities in China have experienced a series of worker suicides, and labor rights groups have documented varied abuses.

Last year, four workers were killed and about 20 were injured because of a dust explosion at a Chinese factory that was producing the Apple iPad.

According to Bloomberg News, the auditor at the Fair Labor Association said recently that he had already found “tons of issues” at Foxconn plants. He did not detail the problems.

A Foxconn spokesman could not be reached late Saturday.

A version of this article appeared in print on February 19, 2012, on page A14 of the New York edition with the headline: Foxconn Plans To Sharply Lift Workers’ Pay.