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Bloomberg has a lengthy piece illustrating just how great a challenge it is for Apple and other multinational companies to ensure the fair treatment of workers in complex supply chains.

When one of Apple’s suppliers like Flextronics wins a new contract, it needs to take on additional workers – lots of them, and fast. Those workers are recruited through employment brokers, which are required to adhere to Apple’s rules. But many of them are brought in from other countries, like Malaysia and Nepal.

Alok Taparia, the managing director of Transworld Manpower, another of the four Nepalese brokers retained for that drive, says he was given clear instructions: Workers shouldn’t be charged; Flextronics would pay the brokers. But Taparia and the other Nepalese brokers say Flextronics demanded so many men so quickly that there was no way to do it without tapping the country’s network of subagents, stretching into Himalayan villages reachable only by foot. As Apple itself has described in reports on its supply chain, the subagents always charge…

Workers recruited from neighbouring countries can end up needing to pay several layers of agents and sub-agents for their jobs. Without the cash to do so, they take on loans – and are required to surrender their passports as security. The piece says that Apple’s attempts to deal with this are proving less successful over time.

Apple in 2009 tried barring suppliers from using workers who had been charged more than one month’s net factory wages. But by Apple’s own accounting, the problem got worse. Last year the company’s audits turned up $6.4 million in fees paid by workers beyond the company’s prescribed limit—compared with $6.7 million in the previous four years combined. And Apple audited fewer plants last year than it did in 2011. The company orders its suppliers to refund workers charged beyond its limit.

One worker’s plight is used to illustrate just how badly things can go wrong. 27-year-old Bibek Dhong started work for Flextronics, testing iPhone cameras, already $1000 in debt to agents. When the company hit quality control problems, and was forced to shutdown production, Dhong and his fellow workers were left redundant, in debt and – with their passports held by local agents – no way to get home.

Having wired home much of their money in anticipation of following close behind, many started running out of cash. Then they ran low on food. The first to go hungry were among a group of younger men who had relied on a local restaurant outside the hostel to give them a meal a day on credit. The owner cut them off when he found out they’d lost their jobs, Dhong says. Hunger soon spread to almost everyone.

Even when he was eventually allowed home, around a third of his income is used to pay interest on loans for payments on a job he no longer has.

Dhong and his wife see only one escape: borrow more money and pay for another job abroad. Many other former Flextronics recruits say they will do the same.

Apple says that it has led the industry in addressing such abuses, and has helped contract workers reclaim $16.4 million since 2008. Flextronics’s Bukit Raja facility is no longer in Apple’s supply chain.

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6 Responses to “Apple’s challenges in ensuring fair treatment of workers in complex supply chains”

  1. PMZanetti says:

    Oh that’s nice. While nearly 1/4 of Americans are unemployed, Chinese employment recruiters have to go down the dirt path and drag farmers into the work force due to demand. All for the continued proliferation of an American company. Something seriously wrong with this. Not blaming Apple, simply saying, something seriously wrong with this.

    • The core “problem” you are alluding to is simply that American workers are lazy and have a huge sense of entitlement. Americans wouldn’t take these jobs.

      • Gus Watkins says:

        You’re damn right I wouldn’t take that job. I am “entitled” to fair pay, safe working conditions, and the ability to get a job without paying up front or sacrificing my passport.

        Americans workers have protections in place, largely ensured for us by union laborers in the 19th century, who stood up to this kind of mistreatment, so businesses are unable to treat American workers so poorly. The reason manufacturing has moved to the Third World is to keep up with demand while keeping prices low.

        The REAL problem is income disparity, because Americans would gladly pay for these products at prices that reflected fair wages and ensured safety for workers if they had the money to do so, but the vast majority of the wealth in our society is owned by a handful of people. If Americans had access to the wealth of this nation, we’d still spend it on consumer products and entertainment. The difference is, people wouldn’t be dying in order to provide them.

        Yeah. I’m entitled to a better world than this. So are these workers. So are you.

      • Gus, thanks for your opinion. Its a good opinion and something we also enjoy here in northern europe. The sacrifice of union workers from many years ago, ensured our “welfare” to enjoy.
        But on the other hand, its hard for the average, unenlightened Chinese worker to “just say no”, when you have no cash, no food, starving with a family to care for too. Then you slack on a few moral guidelines to make ends meet and the vicious circle starts.
        What is needed is education, because with knowledge comes a sense of empowerment that enables the “average Joe” to just say no to horrid working conditions.
        Like you, I live in the better part of the world and can easily afford working “luxuries” that others cannot.

  2. Hopefully, the MacPro is just the beginning of a continuing trend…

    • Ben Lovejoy says:

      I think Apple has the luxury of making that in the USA as it’s a niche product at a high price. It could never made iOS devices in the US without pricing itself out of the market, I think.