updated 12:30 pm EST, Thu November 7, 2013
Apple pulled orders from Malaysian factory because of low yields
Singapore-based supplier Flextronics effectively hired slave labor to help build camera modules for the Apple iPhone 5, a new Businessweek report claims. The company is said to have relied on recruiters across southeast Asia, who charged migrant workers hundreds of dollars -- up to half or more of their annual salaries -- for the right to take a job. The recruiters then confiscated passports, ultimately leaving the new workers without any pay or food for months.
A given example is a Nepalese man who paid $1,000 to three different recruiters for a job as a camera module tester at a Malaysian Flextronics factory. The position offered only $180 per month; while paying recruiters is a common practice in the region, Apple's supplier standards officially limit that fee to one month's net salary, with any excess due to go back to the worker in question.
Apple ended up pulling orders from the Malaysian factory, but only because yield rates fell to as little as 30 percent. Flextronics in turn laid off the plant's 3,000+ workers, giving them due pay including severance, but without delivering on promised repatriation efforts. The company held onto the passports of over 1,300 workers, who were forced to stay in a Flextronics hostel for as long as two months after the factory was closed, with dwindling money and/or no food at hand.
The company didn't begin feeding or repatriating people until Malaysian police became involved. Even then the fallout continued, since workers back in their home countries still had to repay loans used to cover the recruitment fees. To this day, many are believed to be working off debts in new jobs; others have sold off land to cover expenses.
Flextronics tells Businessweek that it has started investigating allegations and will "immediately reimburse any employees that have been charged excessive fees by labor agencies." Apple has also issued a statement, promising to make sure "the right payments have been made," and noting that it has helped people recover over $16 million in recruiter fees since 2008. "We aggressively investigate any claims of bonded labor where Apple products are made," says a spokesman, Chris Gaither. Apple "is continuously auditing deeper into the supply chain," he adds, and takes such charges "extremely seriously."
Apple suppliers have been repeatedly accused of rights abuses during the last several years. While improvements have been made at companies like Foxconn and Pegatron, suppliers are still said to depend too much on underage labor, dangerous conditions, and excessive, sometimes unpaid overtime.