Minimum Wage? In China?

Apple got busted. Not because Apple itself was doing anything illegal, as the evidence finally bore out—although their subcontractor may have been a little iffy on a few minor issue. Nor were Apple or their subcontractor doing anything that most other factories in China aren’t also doing. They got busted because they have a big name—and a lot of Americans are going to feel guilty that some poor Chinese peasants are being “forced” to make iPods. That was the point of the “exposure.”China does have a set standard for hours, wages, working conditions, age of laborers ,etc. For example, in Shenzhen the minimum wage is just over 800RMB a month (about $100). There is a set maximum of 60 hours a week per work week too. Apple and their sub-contractor confirmed that they were following these restrictions for the most part and promised to take better care of workers in the future.So what’s the reality of workers in China? We work with over 50 different factories on a consistent basis and many more on an infrequent basis. This is what I’ve seenLine workers. They are typically in over supply (except for recently in Guangdong Province there’s been a shortage) which means that it’s not necessary for factory wages to be competitive, or even at the national minimum since there are literally lines of people waiting at the factory gates. Line workers are supposed to get paid 800RMB (about $100)but there are very few factories that really pay that much cash out. Almost without exception the costs of housing, utilities, food, uniforms, being late, production mistakes, training and broken equipment are all taken directly out of the wages before they are paid. Monthly cash payments are usually much closer to 500RMB ($63) per month than the 800RMB national minimum wage.We’ve had factory owners tell us directly they can give us good prices because they pay off the Labor Bureau so they don’t have to pay taxes or insurance for workers making the national minimum wage. Not everyone does this, but it’s certainly more common than not. Some factories are more fair than others, but as I’ve said before, “In China, everyone’s at least a little bit ‘iffy.’”Line workers can work voluntary overtime, and it’s almost always available. And despite the multinational’s protestations to the contrary there is often overtime that is “less than voluntary.” For example, I just got back from a factory that is working on a large project for export to a very large multinational beverage company. I was in the factory all day on Sunday, from 8 until 8, and so were all of the 300 line workers, all the sales people, accountants and other administrators. None of them were officially clocked in and none of the professional staff were doing their normal jobs. The entire factory staff was building product and no one, I was told, was excused from the days work.Admin and other support/service workers. While they receive a much higher salary per hour, there is no way that sales people, drivers and other service workers are only working 60 hours a week—or working all their hours voluntarily. Granted this group may not in the US either. A couple of examples. We have a factory that almost always supplies us with the same driver as we go from location to location within the factory’s network. This driver is on call 24/7 for 29 days a month. He gets 2 days off each month and he makes 2500RMB (or $315) a month but doesn’t get housing or food. That’s an average of more than 23 hours a day for a 31 day period for about $0.42 an hour.Example number 2. Sales people from most of the major factories are “strongly encouraged” to spend time with clients on a regular basis. This not only includes office visits and taking time with clients at the factory but also taking them out to dinner, out for drinks, dancing or massages and Karaoke. Since we don’t drink, sing or fraternize with ladies at night we’re a pretty easy client in terms of time spent per order. But sales people love to tell stories of dinners and Karaoke that last until 3 or 4 in the morning. Sales people are not only scared to lose their job if they don’t provide clients with entertainment they are convinced that hours per night and entire weekends are just “what’s expected” from management. Other administrative staff routinely clock out, eat dinner and then go back into the office without clocking back in. In many places it’s an unspoken rule—in just as many places it’s clearly defined as part of the job description.With Apple the social compliance folks got the press they wanted. But my experience is that international social compliance investigators in China are often just as carefree with the law as are Chinese factories. One experience is typical. We did a project for a large entertainment company last year and their office in Shanghai called us and told us straight out to select the best of the factories that we were using to make the products and make sure that they prepared before the inspectors showed up. The “inspection” lasted less than 30 minutes and covered 2 floors of a 6 story, 3 building factory complex.Certainly working in a hot and dangerous factory for 12 hours a day is different than driving a car or taking clients out for drinks. But hours at work are hours at work. China is not the US; wages, expectations, overt pressures to work long hours, the ease of firing and hiring, and work environments differ markedly. Apple didn’t so much break Chinese law as they got big and were an easy target for publicity.Unfortunately, tech plants like Apple’s are typically cleaner, better run, hire better educated employees and have to pay and treat employees better than factories that can use lower skilled laborers. There are many more factories in China that truly do need some bad publicity to motivate them to clean up. But this row with Apple was a just a routine story and is already dead in the Western press. I remember Nike was called on the carpet for the same things a few years ago in Vietnam—as are most multinational companies. They all weather the storm of bad press and continue—usually paying better than other local factories and providing benefits and environments at least as good if not better than local standards and regulations require.