China Labor Watch: Dear Tim Cook, a fraction of Icahn’s request could fix Apple suppliers’ labor rights violations

The Economic Policy Institute (EPI), an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States, has posted an open letter to Apple CEO Tim Cook.

Here it is, verbatim:

Dear Mr. Cook:

Another consideration should take precedence over Apple’s assessment of Carl Icahn’s suggestion that the company return $150 billion to its shareholders through a stock buyback, which would be on top of the $100 billion already pledged to Apple shareholders through the capital return program. This other consideration is much less expensive, yet far more justified.

It has now been more than six years since the harsh working and living conditions faced by the workers making Apple products were first exposed, and 19 months since new findings, including those highlighted by a series of New York Times stories, led Apple to pledge to make dramatic reforms. Some modest reforms have advanced since then, but the public record still suggests labor rights abuses in Apple’s supply chain remain distressingly common and significant.

We offer up for your, and for that matter Mr. Icahn’s, attention this recent summary of the public record, which examined three new investigations by China Labor Watch, and concluded that the new iPhone products are being produced under working conditions that “include widespread abuses of labor laws and common decency, as well as widespread violations of Apple promises and its supplier code of conduct.” It also summarizes findings concerning Apple’s reform promises of early 2012, stating that the available information indicates:

“Apple has not met commitments to ensure that workers in its supply chain receive retroactive compensation for working unpaid overtime, has not ensured promised wage increases, and has not, through the FLA [the Fair Labor Association], provided an assessment of the livable wage standard for its Chinese workers. Apple also has not met its commitment to reduce overtime work hours to the level allowed by Chinese law; it has not even met its less lenient standard of reducing work weeks to 60 hours. Further, Apple has not met its commitment to ensure workers in its Chinese supply chain have a true voice in the workplace. And the more intensive study of working conditions, as undertaken by the FLA, has involved less than one-fifth of the workers in Apple’s supply chain, a figure far short of what Apple had promised.”

In all likelihood Apple could make good on all these promises using only a fraction of the resources Carl Icahn is requesting should go to a buyback. To illustrate, say Apple were to dedicate $15 billion — or one-tenth of the Icahn request — to improve the conditions of the workers making its products. A few billion of that amount could certainly cover all retroactive pay commitments; the promised intensive studies across the supply chain; resources to advance the ability of workers to voice complaints about (perhaps equip them with iPhones and a special app) and negotiate remedies to abuses; and systematic, independent and transparent monitoring to ensure implementation. The remainder could cover much if not all of the promised wage increases for several years or more.

Given the inherent difficulty of obtaining information about the workers in Apple’s supply chain in China, and the ongoing lack of transparency from Apple about the labor rights initiatives it may be undertaking, if any, it is hard to be more precise about what the costs of a full remedy might be. Accordingly, as you have met with Mr. Icahn to discuss his proposal, you should have a public meeting with workers in the supply chain and independent labor rights monitors to discuss the nature and scale of an Apple commitment to remedy labor rights abuses.

As you well know, long-term stockholders in Apple have reaped enormous gains. This is not to judge whether more than the already-committed $100 billion in Apple’s capital reserve program — $36 billion of which has already been allocated in dividends and stock repurchases — should be provided to shareholders, but it is to underscore that the one million workers in your supply chain that are directly responsible for producing your products should be given priority consideration. At relatively modest cost, Apple could fulfill its promises to remedy the abusive living and working conditions many of these workers still face.

In a conference call just a few days ago on Apple’s fourth quarter earnings, you said Apple is “proud to be a force for good in the world beyond our products,” and after referencing areas such as working conditions, the environment, and human rights, said “Apple is making substantial contributions to society.” When it comes to the rights and working conditions of those individuals making your products, this claim is questionable at best. But with just a fraction of what has been or may be returned to shareholders out of Apple’s ample cash reserve, that admirable ambition can be achieved.

Sincerely,

Isaac Shapiro, Research Associate, Economic Policy Institute

Li Qiang, Director, China Labor Watch

34 Comments

  1. Isaac Shapiro is right, absolutely right. Apple is not in the jung business, Tim Cook said. So the people should be paid not like junk.

    I gladly pay a high price for Apple products, like today I ordered the new iPad Air with 128 GB. But I want that the people who makes my iPad, iMac, MacPro, MacBook Air, Retina MacBook Pro, iPhone and so on will be paid in a fair way so they can feed their families and grow their children.

    No matter where they live, whether in the US or in China or elsewhere in the world. Period.

    1. Sorry, but Apple already does more for labor in China than Dell, Gateway, Toshiba, etc.

      Where is the open letter to all the other electronic manufacturers?

      The Economic Policy Institute needs to show that they are not singling out Apple, all companies doing business in China needs to be looked at

      1. I think you’re right that Apple has done more so far, but there’s still a LOT of room for improvement, right? So, given that Apple has a LOT more power to force suppliers to treat their employees well, who do you think activists should pressure? Dell? The Chinese manufacturers would laugh if Dell tried to tell them to change their practices. Apple, though? If Apple threatens to shift even a portion of their business, you know the manufacturer will do whatever they say.

        So, if a group wants to make life better for workers in China, who should they push? Seems kinda obvious to me.

      2. Let me give you an analogy.

        What is the organization under whose umbrella the most charity work in the world is done? The Catholic Church. It sets the standard for charity in the world.

        It’s not a perfect organization, which the media never tire of calling to our attention; for example, even though on a per-capita basis the incidence of child abuse is the lowest of almost any organization in the world, the “pedophile priest” is a major black eye for that Church.

        And rightly so. When one takes a leadership position, one has an obligation to act in not only an average, nor even superior, but EXEMPLARY manner, or one rightly suffers the anger of those who have looked to one for leadership.

        The Catholic Church’s wheels grind slowly, but they’re stepping up to the plate and actually doing something about this problem. I think it’s time for Apple to step up, too.

    2. Other posters here that have lived in China, point out that many of the workers would be working in the rice fields if the factories were not there. That job pays way less and is much more physically demanding.

      1. iGads & Think are right on. The world laughs at the US when it (we) comes up with stuff like this.

        It is obvious that this is a self serving letter. They just want recognition at Apple’s expense. Otherwise, as already stated, why are they not writing and publishing letters to other US industry folks that pay far less to China factories for their goods!

    3. Apple has already double workers wages in the factories that produce its product. Where is MS, Samsung, Sony HTE Erricson, Nokia and dozens of other companies with there wage hikes? Apple mandated those wage increases.

    4. Not saying Apple is NOT doing the right thing and not saying that others ought not to be addressed by this EPI, but what ILA says makes perfect sense. I would not mind if Apple would make a public point of “better working conditions if you buy Apple products” and ask yet a little extra. Perhaps half a percent would be enough to significantly improve the wages and conditions. As a consumer you’d have an extra incentive.

  2. It’s all well an good to claim Apple hasn’t done any of these things. I don’t see any proof though. I am left to wonder if they’re taking isolated incidents and claiming they’re proof that Apple has failed at these goals. If Apple has succeeded in this goals on the grand scale but there are still isolated incidents of non compliance then it’s not a failure. Apple just needs to follow through on whatever punishment they have in place for these specific incidents.

  3. Shut the hell up and be glad they have a job. Btw, the United States is the only country in the world, where the poorest among us are the fattest. Seriously take that into consideration

          1. Carbs and sugar are the cheapest things you can eat. Fat people are sick people. Poor people are forced to slowly kill themselves because they can’t afford to eat healthy. Yes, if they can, then they have other problems. Americans are fat because they eat like stupid, rich pigs.

  4. All China needs is for Apple to price Union Workers out of their jobs. All first world countries have already been there, done that.

    Sure, every other gadget builder could move to India, Brazil or Bangladesh but there are only so many targets for educated workers.

    A living wage in third world countries is a hell of a lot lower than a living wage in America.

    Why can’t these do-gooders get that through their thick heads?

  5. A lot of allegations and little to back it up. They target Apple and not it’s competitors. They don’t compare average living/working standards in China to those of Apple’s supplier base.

    They’ve got an agenda that is still a bit of a mystery. But it has little to do with economics.

  6. I think it’s interesting to focus on Apple, when it’s Chinese factories that are employing Chinese people, paying them junk wages and treating them poorly. Why are the owners of the factories not going to jail?

    Apple is an American company which asks and pays for resources, controlled and supplied by China. China Labor Watch needs to yell and demand from the Chinese government. What? Oh then CLW will go to jail. I see how it all works.

  7. I once wrote to China Labor Watch to report a case of children working in Chinese factories (not for Apple), fully documented with address, names of people involved and photos.

    Mr Slaten’s (CLW Program Coordinator ) reply a week later was that they were too busy writing stories about Apple to do anything about it, but encouraged me to travel to China, go to the factory and check it out myself..

    Gee thanks a lot, but the name of your outfit is a little misleading if you’re so so focused on the actions of a single company…

    So, sorry I’m not biting their bullshit. They look more like a extortion/PR agency than someone who actually cares about workers. I don’t believe giving more money to such a broken system would solve anything.

  8. “Another consideration should take precedence over Apple’s assessment of Carl Icahn’s suggestion that the company return $150 billion to its shareholders through a stock buyback, which would be on top of the $100 billion already pledged to Apple shareholders through the capital return program.”

    FIRST AND FOREMOST:
    The $150 billion handout (or even the $100 billion original buyback) is **NOT** money being *returned* to stockholders. Those stockholders **NEVER** had that money — ever! Apple absolutely cannot return something that was never given to them and something that was never the shareholder’s in the first place.

    Call it what it is: A handout to Icahn and his ilk.

    Second,
    “It has now been more than six years since the harsh working and living conditions faced by the workers making Apple products were first exposed, and 19 months since new findings, including those highlighted by a series of New York Times stories, led Apple to pledge to make dramatic reforms. Some modest reforms have advanced since then, but the public record still suggests labor rights abuses in Apple’s supply chain remain distressingly common and significant.”

    Yes, it has been six years since the initial reports. Apple has *SIGNIFICANTLY* more than *any* other company to institute reforms. Apple has gone so far as to voluntarily and unilaterally raise the price it pays its subcontractors with the express direction that the additional moneys are to go to better conditions and support for factory workers.

    Additionally, the January 2012 reports in the New York Times have been refuted and even the author of those reports has admitted to completely fabricating a significant fraction of those claims. Anyone pointing to those reports as evidence that Apple’s suppliers are still not acting responsibly instantaneously loses all credibility.

    Further, why should Apple be the only one funding these advances? Many other companies, both US and non US, use these suppliers. Why shouldn’t Google, Motorola, HTC, Samsung, etc. pay billions to better the situation? Apple has already stepped up (voluntarily and unilaterally). Why come at Apple again unless you think Apple is an easy target and Samsung and the rest will completely ignore you — and press releases about them will not help your cause.

    And yet further, you claim
    “Apple has not met commitments to ensure that workers in its supply chain receive retroactive compensation for working unpaid overtime, has not ensured promised wage increases, and has not, through the FLA [the Fair Labor Association], provided an assessment of the livable wage standard for its Chinese workers. Apple also has not met its commitment to reduce overtime work hours to the level allowed by Chinese law; it has not even met its less lenient standard of reducing work weeks to 60 hours. Further, Apple has not met its commitment to ensure workers in its Chinese supply chain have a true voice in the workplace. And the more intensive study of working conditions, as undertaken by the FLA, has involved less than one-fifth of the workers in Apple’s supply chain, a figure far short of what Apple had promised.”, then follow up with
    “Given the inherent difficulty of obtaining information about the workers in Apple’s supply chain in China, and the ongoing lack of transparency from Apple about the labor rights initiatives it may be undertaking, if any…”
    If it’s so difficult to get accurate information, how can you, in any way, point to Apple as THE cause — and necessary remediator — of the supposed current conditions? Again, why do you claim that it is solely Apple’s responsibility to fix what may, or may not, be broken?

    Your whole letter stinks of grand standing for your organization with very, very little substance.

    1. Don’t ruin a perfectly good rant by starting it with total BS, Shadowself. You said that:

      Those stockholders **NEVER** had that money — ever! Apple absolutely cannot return something that was never given to them and something that was never the shareholder’s in the first place.

      The exact opposite is true. The shareholders own the corporation in its entirety – all of its assets and all of its liabilities. Every penny of profits belongs to the shareholders from the moment that it is acquired by Apple. It does not matter if it is returned quarterly as a dividend, or retained indefinitely by the company. The shareholders always had that money.

      1. You sir, are just another self-entitled iDiot just like Messr. iCahn. You do not “own” the company, you own your shares. You do not “earn” any money, Apple does. Capital nvestment in any company has two facets – the first is to raise capital for fledgling endeavours. Apple is no fledgling, so your money is not “ventured”, Apple owes you nothing, morally, ethically or financially. The second facet is simply gambling, where, if you win, you owe Apple nothing more than gratitude, and if you lose, Apple owes you nothing. Taken collectively – yes, you own “something”, but it in ingenuous at best to suggest that shareholders, like iCahn and yourself, add any value to a company. If you don’t like the game, walk away while you are ahead, the house owes you nothing. If you invest in a company, unless you own 51% you have nothing to say – nothing. So, as many of my fellow MDNers are fond of saying, put up or STFU.

        Capitalism is not a Casino for the indolent.

        dmz

  9. I believe that the labour problems in China reflect the Chinese government and a corrupt system rather than US company policies who do business there. It will take at least a generation to educate the Chinese population to treat each other with deep respect.

  10. Bravo, EPI!

    If Apple claims to be the premier quality manufacturer that doesn’t even have any interest in selling at low price points, then there is no reason whatsoever to sit on billions of dollars in cash while employing people to assemble your product in near-slave-labor conditions in the same facility as all the junk makers. If Apple wants to set itself apart, labor standards are one very worthwhile investment. … and there will be no better way to push sales of genuine Apple products in China than to foster huge goodwill amongst the superior workforce who will sing the praises of Apple when they enjoy better wages and better working conditions. Economic slavery is no way to bolster one’s reputation. Apple can, and should, be better than the rest of the industry. At this time, by using the same sub-suppliers as the rest of the industry, Apple cannot claim to be better in labor or manufacturing for the majority of its products. The only possible advantage Apple offers its sub-tier assembly workforce is that they may have a few less toxic materials to handle, and even that is marginal. One would have to be delusional to claim otherwise.

  11. Dear China, stop wasting money trying to look first world and try to focus on giving a good life to your people, Apple is already doing your part giving jobs to your people, now do your part and stop biting the hand that feeds you and don’t be such an ass with your own kind.

  12. My 20000 shares votes against Icahn and I also think that Apple could do this and show example for others. Don’t think that I try to raise the production costs for Microsoft and Google or others though 😛

  13. Unfortunately, any money Apple were to spend upon contractors, would ultimately end up in the hands of their bosses, and the supposed abuses would remain. These sorts of do-good ideas, totally ignore reality.

  14. I think it is time for Tim Cook to master the art of the open letter himself.

    When Apple was being unjustly criticized Steve Jobs would take pains to carefully and patiently explain Apple’s view on the matter.

    When Apple was being accused of using copy protection as an anticompetitive tool to screw consumers, Steve explained that they used their AAC because it was the best quality, and called on the Music industry to allow Apple and everyone to use unprotected files for the consumers benefit. At the time everyone was unjustly blaming Apple for DRM, when the truth was that it was the music industry’s fault. Result achieved.

    When All were screaming and criticizing Apple for refusing to use the then standard Flash, Steve carefully explained all the very good reasons for Apple’s choices, in a way that helped all parties see that this was the correct way for the industry to go. Result, largely achieved.

    When the hugely exaggerated antennagate happened the open letter was elevated to the open presentation to clearly demonstrate how unjust and exaggerated these claims were. Result, achieved.

    There continue to be unjust and exaggerated claims put forth to damage Apple’s reputation and criticize their products, and though sometimes quietly addressed, Apple has not as boldly and clearly defended itself as in the past.

    I would like to see Apple be more clear in it’s responses to the false memes that are allowed to grow unchecked. Open letters for big issues and less opaque advertising to respond to competitor’s often specious claims. The feel good ads are fine, but sometimes the Apple advantages need to be demonstrated to the public in a more clear and direct fashion. Perhaps Justin Long needs to have a few words with the green robot.

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