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China enacted a new labor law in 2014 to protect workers’ rights, setting the maximum limit for temporary workers in factories at no more than 10%. According to The Information (via Verge), this law has directly affected Apple Inc (NASDAQ 🙂 because its suppliers’ factories in China did not respect the limit on temporary workers.
What happened: Temporary workers in China have lower wages and fewer benefits. It had become commonplace in China due to declining interest in factory jobs, according to The Information sources, as reported by Verge.
After the law went into effect, Apple surveyed 362 of its supplier factories in China and found that nearly half of them violated the limit on temporary workers. More than 50% of the staff in eighty factories were temporary workers, according to an Apple filing reviewed by The Information.
The iPhone maker asked its suppliers to take advantage of the temporary worker limit for March 2016, thus providing them with a grace period to respect this law.
Three former members of Apple’s “supplier responsibility team” allege that no changes were observed after the grace period expired and that Apple did not take any meaningful action against suppliers who violated the law “for fear of creating costs, consuming resources and delay product launches. “
Why It Matters: According to The Information, the problem continued in 2018 when a Quanta factory that made Apple watches hired 5,000 temporary workers, representing 27% of its workforce.
In 2019, Apple and its main vendor Foxconn (TW 🙂 Technology Co Ltd (OTC: FXCOF) admitted to having more temporary workers in China than allowed by law, Engadget reported.
Apple’s strategy of preventing leaks and keeping products secret is causing the temporary worker problem.
“We are making it difficult for our suppliers to comply with this law, because 10% is simply not enough to meet the spikes in labor demand that we require during our peak periods,” said Apple executives in the company’s presentation, The Information noted, according to information provided by Apple Insider.
Apple said it applies its supplier code of conduct policies equally across the supply chain.
Price Movement: On Wednesday, AAPL fell 2.09% to close at $ 121.78.
Image courtesy of: Wikimedia
Read the article also in Benzinga Spain
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