Watchdog group finds Pegatron exploiting workers in lead up to 'iPhone 7' launch

Apple's repeated demands that suppliers cut costs have reportedly prompted "iPhone 7" manufacturing partner Pegatron to skirt the tech giant's audits with covert decreases in effective pay and increases in illegal overtime amid worsening working conditions, according to frequent critic China Labor Watch.

The most recent report by China Labor Watch utilizes copies of pay stubs collected in 2015 and 2016. The group claims that Apple's falling profits is putting pressure on manufacturing partners to lower costs, a situation that leads to mistreatment of Chinese workers.

Over two years of examination, the group collected over 2000 pay stubs. The base wage of most workers was equal to the legal minimum wage for the time period which varied between $304 and $350 per month. This is reportedly offset by deductions taken in accordance with China labor law from the paychecks for social insurance, and other fees assessed by the company for lodging and other expenses.

China Labor Watch claims that the average wage in Shanghai was $895 per month. By comparison, Pegatron workers who had accumulated up to 90 overtime hours received only $633 per month over the evaluation period, and in off-peak manufacturing times generally made between $301 and $452 per month.

Further, the group discovered excessive overtime in departments where more man hours are needed. An analysis of payroll records in March revealed one employee worked 109 hours, or three times the legal limit of 36 hours. Apple responded to the findings in July, saying that while the China Labor Watch statistics were higher than in-house audits, excessive overtime continues to be a problem in certain departments.

China Labor Watch claims that Pegatron's working condition is "Apple's responsibility" despite Apple not holding a financial stake in the ownership of the company. Additional complaints against Apple are levied for it seemingly wanting to "keep money in its hands and do nothing" about Pegatron's working conditions.

In Apple's supplier responsibility report for 2016, the company claimed that following 640 audits of the supply chain, compliance with its hourly standards exceeded 97 percent. China Labor Watch denies that audits are effective, as measures can be taken beforehand to game the system, with the company able to fake records that show compliance to the Apple-ordered requirements.

Activist groups and media reports have called attention to issues at both Pegatron and Foxconn that span pay issues, use of underage labor, terrible dorm conditions, and lax safety standards. While Apple claims that the situation has improved radically under supervision, reports continue to surface of continuing problems.

China Labor Watch August Pegatron report