Apple contractor Pegatron is the latest component supplier which is being accused of failing in labor standards for its Chinese workers.
According to the Wall Street Journal, a report set to be released on Monday by nonprofit China Labor Watch claims that Pegatron is guilty of both environmental and safety violations.
In addition to workplace worries, the report alleges that Pegatron has withheld worker pay, I.D. cards needed to apply for jobs elsewhere, and living conditions are considered poor at the supplier's factories and subsidiaries.
As Apple diversifies its supply chain, Pegatron has been producing the iPad Mini and some variations of the iPhone, while larger competitor Foxconn -- also known as Hon Hai Precision Industry -- manufactures larger mobile devices for the company. While Pegatron is a smaller manufacturer, it is considered a long-term risk to Foxconn due to its lower profit margins -- less expensive for Apple, and potentially offering better long-term prospects and eventually larger contracts for the supplier. However, as both companies expand, the potential for worker abuse increases.
If the allegations prove to be true, this violates not only Chinese law, but Apple policies. In light of Foxconn worker conditions, Apple conducts and releases Supplier Responsibility reports designed to shed light on and improve conditions for employees that assemble the company's range of gadgets.
The iPad and iPhone maker has also established a supplier code of conduct designed to protect workers.
"Apple considers the most serious breaches of compliance to be core violations. These include physical abuse; underage, debt-bonded or forced labour; falsification of information or obstruction of audit; coaching workers for audits or retaliating against them if they provide information; bribery; significant pollution and environmental impacts; and issues posing immediate threat to workers’ lives or safety," Apple says.
"All core violations must be stopped and corrected immediately. Our preference is to fix problems so they don’t happen again rather than just fire the supplier."
In response to the fresh claims against Pegatron, Apple has issued a new statement as posted by the Wall Street Journal. The Cupertino, Calif.-based company reiterates that "Apple is committed to providing safe and fair working conditions throughout our supply chain," and says that 15 comprehensive audits have taken place at Pegatron facilities since 2007, covering over 130,000 workers.
The company says that Pegatron employees work for an average of 46 hours per week.
Apple says that the company has been in close contact with the China Labor Watch for several months. As a result, one claim has proven true -- that the supplier has withheld worker I.D. cards. The iPad and iPhone maker stated that this was a "small number," and the cards were kept as Pegatron "helped set up bank accounts for those employees." However, once the tech giant discovered the system, Apple demanded that this practice was stopped, and within a week a new procedure was established.
In response to the other claims of labor and rights violations, Apple says:
"Their latest report contains claims that are new to us and we will investigate them immediately. Our audit teams will return to Pegatron, RiTeng and AVY for special inspections this week. If our audits find that workers have been underpaid or denied compensation for any time they’ve worked, we will require that Pegatron reimburse them in full."
Pegatron CEO Jason Cheng told the Journal that the allegations would be investigated in full and immediate action will be taken to correct violations if required.