Pegatron Corp (和碩) shares closed lower yesterday after a labor watchdog on Thursday said that workers continue to suffer poor conditions at the company’s factory in China.
An undercover report by China Labor Watch (CLW) on the Shanghai iPhone factory operated by Pegatron said workers were living in overcrowded dormitories lined with mold and crawling with bed bugs.
While the broader market rebounded in the wake of a strong showing on Wall Street overnight, Pegatron shares fell following the labor report and amid a cautious outlook on sales of the new iPhone models due to slowing global smartphone demand, dealers said.
Pegatron shares dropped 1.1 percent to close at NT$81.1 in Taipei trading, while the TAIEX was up 0.76 percent.
“Low pay, long hours, unpaid work, poor workplace safety and despicable living conditions persist,” New York-based CLW said in the report, alleging there were nearly two dozen “legal and ethical labor rights violations.”
While Apple Inc has pledged to improve conditions at contractors producing its gadgets, the report said its investigation showed ongoing problems since a 2013 report on three Chinese factories operated by Pegatron.
“Before overtime pay, workers making the iPhone earn only the local minimum wage of US$318 per month, or about US$1.85 per hour. This is not a living wage,” the report said. “After their long shifts, workers take a 30-minute shuttle bus back to their dorms, where up to 14 people are crammed into a room. Mold grows pervasively along the walls. Bed bugs have spread throughout the dorm and many workers are covered in red bug bites.”
The report said health and safety were major concerns because the facility uses a number of toxic substances, including mercury and arsenic, but that “no one tells workers anything about the location of these or other substances in the production process or how a person should protect herself from injury.”
The report cited a total of 23 violations, including lack of training and inadequate safety equipment.
“Unfortunately, the awful working and living conditions that Pegatron workers face in 2015 are generally no better than those witnessed in 2013,” the report said.
CLW cited “limited improvement” in some areas, saying the average working week has dropped from 63 hours to 60 hours, but it noted that half of the workers hired at Pegatron are temporary, even though Chinese law allows only 10 percent of a workforce to be temporary labor.
In response to the CLW report, Pegatron said it has launched an internal investigation to review the working conditions at its Chinese factories.
The company said that since CLW’s investigation of the working conditions at its Chinese factories two years ago, many improvements have been made.
Pegatron reported good sales for the third quarter due to the launch of the new iPhones, posting NT$308.67 billion (US$9.49 billion) in consolidated sales, up 41.6 percent from the previous quarter and 30.4 percent from the previous year.
However, foreign institutional investors have been on the sell side of the stock this week due to worries over iPhone sales, dealers said.
Additional reporting by CNA
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