Apple Inc’s decision to suspend new business with a key supplier highlights just how hard it is for the world’s biggest tech company to find partners that are both reliable and do the right thing by their workers. The problem may be of its own making.

Pegatron Corp won’t get any new contracts after the Taipei-based company was found to have committed labour violations related to its student workers’ programme at factories in China. According to Apple, some were misclassified and allowed to do night shifts and overtime, in contravention of the Cupertino-based company’s rules, Bloomberg News reported.

Its statement is telling:

“We have a rigorous review and approval process for any student worker programme, which ensures the intern’s work is related to their major and prohibits overtime or night shifts.”

The term student worker programme should ring immediate alarm bells for anyone who cares about labour rights. Getting college or vocational students to work factory production lines is an accepted practice in China that foreign clients have signed onto for years. Apple at least asks its manufacturing partners to ensure that the work relates to their studies. Under the pressure to churn out product, though, such programmes are vulnerable to abuse.

Pegatron said it fired the manager responsible, whom it said "went to extraordinary lengths to evade our oversight mechanisms.” Still, we need to question what conditions incentivised employees to work so hard to not only break Apple’s labour code, but also make such efforts to cover their tracks.

This isn’t the first time Pegatron has appeared in print alongside allegations of labour violations. As far back as 2014, China Labor Watch named the company, alongside Catcher Technology Co, Jabil Inc and Foxconn Technology Group, for failing to undertake corrective action related to labour and safety standards.

Apple attracts the most criticism in the technology industry over labour and environmental standards. This partly reflects ever stricter rules that the company has imposed on its supply-chain partners, the results of which Apple publicises in its annual Supplier Responsibility Progress Report.

Critics may argue that this is a marketing exercise designed to make consumers feel more comfortable about buying shiny gadgets produced by cheap labour - which helped to yield US$57bil of profit for Apple last year. Yet incidents like this show that for all its talent and money, the US company doesn’t control its suppliers as much as it might wish.

For example, it continues to find workers who were forced to pay recruitment fees to get a job - a contravention of its standards. Apple repaid US$1.3mil to 462 partner employees last year, according to its supplier report. In fact, the iPhone maker has booted 145 companies from its supply chain over the past decade for failing to meet its standards. In 2019 alone, Apple discovered 10 core violations related to working hours.

Even at Foxconn, one of its most important and longest-standing assemblers, allegations have surfaced of questionable practices.

Among them, according to a report last month by The Information, Foxconn overquoted the number of workers it needed to build its iPad Pro, part of an effort to pad the supplier’s profit margins. It also supposedly used Apple-owned equipment for work with other clients, a big no-no in the industry, and gave employees of Alphabet Inc’s Google a tour of a factory used to make MacBook parts - a contravention of Apple’s security protocols, The Information reported. Foxconn denied all the allegations.

Yet having enunciated its standards so clearly, Apple needs to ask why violations keep happening. The drumbeat of infractions is less a testament to the company’s determination to clean up its supply chain than a reflection of the conditions that continue to prevail. 

 - Bloomberg