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Hardly one bad Apple spoiling the bunch

Hardly one bad Apple spoiling the bunch

A case study on the development of Chinese occupational health and safety law

Apple again hit the news in late February over poor working conditions in its supply chain. At least 137 workers in an assembly plant in Suzhou, China, which supplies Apple with touch screens, have nerve damage from exposure to n-hexane. And the reports can’t help but mention Apple’s last supply chain scandal, when a plague of suicides hit its supplier Foxconn’s factory in 2010. But from my perspective, working in a labour law legal aid and research centre in Beijing, this recent story isn’t bad news.

If anything, it’s a relief to hear of one international corporation bothering to audit safety conditions – goodness knows the government inspections do little to improve occupational health and safety here. And this recent Apple saga provides an example of an employer complying with legal obligations to purchase workplace injury insurance for workers. It may as well be the only complying employer, given the tide of uninsured, injured workers my colleagues have to battle for every day in court!

Sure, Apple is ultimately responsible, morally, for the harm to these 137 workers. But that doesn’t absolve the supplier corporation, who in this recent case is Wintek. Wintek shoulders its own moral obligations, and has failed to meet them. It also looks to have failed to meet its legal obligations to workers. And the media storm barely points the finger at the other internationally recognised brands using this same factory. They don’t seem to have responded to the lax safety in the way Apple has. (Even if it is 2 years late: the injuries first came to light in 2009 and workers conducted a strike earlier in 2010 but there was no response from Apple or Wintek, according to Hong Kong group Students and Scholars Against Corporate Misbehavior, as reported in the New York Times ). Cnet News quotes Apple, saying, “40 percent of the suppliers audited said Apple was the first company to ever have audited their facilities”, despite the fact that many large consumer electronic producers share these suppliers.

A legal aid lawyer talks to a client about a workplace injury (N.B. not sustained at Apple's supplier factory)

Nokia certainly hasn’t made itself accountable to consumers over supply chain incidents in the way the Apple has with its public, annual supplier responsibility reports. (The BBC names Nokia and HTC as fellow users of Wintek’s Suzhou factory.) This is despite Nokia claiming it, as a responsible a corporate player, sends assessors to most of its supplier factories.

Which brings us to the role of Chinese regulations. We shouldn’t assume supply chain safety will be regulated effectively by big-name, international chain heads alone. The workers in a supply chain are employed by any number of intermediate companies flying right under the radar, like Wintek. The Wintek’s of the world have no Western consumer-base breathing down their necks. And they are operating internationally, so they don’t have a home government scrutinizing their workplaces either. The country they operate in has a huge role to play in using its laws to ensure safe workplaces. I anticipate scoffing readers here: as if China has workplace safety legislation. But it does. The Law of the People’s Republic of China on Prevention and Control of Occupational Diseases (call it the ‘Law on Occupational Diseases’) has been in force since 2002. Let’s walk through Wintek’s possible contraventions.

Legal Breaches

Workers at Wintek’s factory say they had masks and protective glasses. This at least partially fulfills an obligation under the Law on Occupational Diseases to “take measures to ensure that the workers receive occupational health protection” (art. 4).  Wintek’s failing was poor ventilation: when it upgraded from alcohol to n-hexane for screen cleaning, it didn’t upgrade the ventilation. N-hexane is vastly more noxious than alcohol when inhaled. Given art. 5 of the same statute says the employer shall “bear responsibility for the occupational disease hazards produced in the unit”, Wintek is liable, regardless of the prudent provision of goggles and masks, because the hazard was still produced.

Or another company – unnamed, unknown – is liable.

The Law on Occupation Disease binds the employer only. Wintek may contract out to a local company to employ the Chinese workers. Yet another link in the supply chain. Wintek is certainly acting as though it accepts its position as employer, but details available publically don’t pinpoint the exact corporation employing the poisoned workers. In fact, most media reporting discusses Apple as if it were the employer, but it is certainly not.

Finding the correct employer, and proving an employment relationship, are particularly onerous tasks for Chinese workers, especially as liability doesn’t seem carry over with a change of business ownership. To get the official medical certification of a workplace injury (as required for compensation claims), the employee has to prove their employment. But keeping comprehensive business records simply isn’t common in China. Moreover, my colleagues tell me time and again of cases where the employer refuses to provide the documentation even when they do have it. They deny the employment relationship and effectively scuttle workers’ compensation claims. It’s a simple sidestep round legal liability in the march to mercantile success.

Strike two: Wintek didn’t tell workers the new cleaning solution was dangerous. In fact, really dangerous: Jia Jingchuan, one of the technicians, was hospitalised for 8 months with nerve damage caused by the n-hexane exposure. Workers’ n-hexane poisoning symptoms included extreme fatigue (imagine not being able to button up a jacket), intense headaches, dizziness, and numb limbs.

This lack of information is a distinct contravention of the law, even if Wintek itself didn’t realise the harm: “The employer shall know the occupational disease hazards produced by the … materials it employs; if it conceals the fact that … materials produce occupational disease hazards and employs them, it shall bear responsibility for the consequences of the hazards” (art. 29). In this provision, Chinese law-makers are putting an onus on employers to check for possible hazards before using a technology or material, and ensuring that keeping a hazard secret doesn’t assist an employer to escape liability. This is coupled with a worker’s right (under art. 36) to know of hazardous factors, their consequences and necessary precautions.

Whether Wintek (or Apple) think acquiring such knowledge is an unreasonable burden may be a matter for discussion with legislators, but so long as art. 29 stands, being ignorant of the danger of n-hexane is no excuse for Wintek. In any case, Wintek has never suggested that injuries caused by n-hexane were a complete surprise. Apple contends that 300,000 workers and another 6,000 supervisors have been trained in workplace safety in the last two years. Commendable, but it’s problematic if such large scale training still doesn’t create a culture where factory managers bother to check the danger a new chemical presents, or tell workers’ about it. And yet behaving responsibly towards workers’ is not a new idea for Wintek, whose Chairman says it “is committed to providing a safe and just work environment, upholding the rights of its personnel and fulfilling its social responsibilities as a corporate citizen.” Apple pledges to monitor the implementation of corrective actions at Wintek’s factory, but can it work out why a safety-conscious culture isn’t taking root?

Wintek says the workers’ medical costs and some compensation were paid out of work-related injury insurance. This is a pleasant surprise.  In China, the government is the insurer in such arrangements and the employer has a legal obligation to a buy an insurance policy in respect of its workers. A recent survey by Yilian, a Chinese legal aid centre, found 55.9% of surveyed injured workers did not receive their last medical insurance payment, and only 46.8% had work-related injury insurance, despite it being mandatory.  In this regard Wintek is a good example, and justified in touting the insurance pay outs in media stories about the n-hexane poisoning. 1 in 5 injured workers in China has industrial poisoning, according to the Yilian Centre’s Occupational Survey Report 2011 (19.1%, for exacting readers). Do you think 1 in 5 employers are providing adequate insurance for compensation post injury?

Yilian Center holds a press conference to launch the Occupation Survey Report February 2011

If it is Apple’s leverage that caused Wintek to comply with the work-related injury insurance obligations, then this also exemplifies how international brands can better achieve safe supply chain workplaces when armed with specific awareness of local legal obligations: their pressure on suppliers can be targeted, their expectations made clearer.

As for the technician, Mr Jia should have been paid his salary while in hospital, in monthly installments. Such payment is entirely absent from Apple and Wintek’s defence of how workers were treated. It’s fantastic that he received some compensation and medical costs, but his and his dependents’ everyday costs need to be funded too, and that’s what these regulations are for. The Yilian Centre’s Occupational Survey Report 2011 reveals that the typical injured worker is male, in his 30s, has migrated from elsewhere in China for mining or manufacturing  work, and was remitting wages to dependents in rural China.  Thus, the chances are Mr Jia’s salary supported a number of people and, after covering medical costs, the compensation payment won’t stretch far enough.

Art. 50 obliges Wintek to reassign these workers with occupational injuries, and to make proper arrangements for their work. Instead, reports say Wintek pressured the workers to resign and accept cash settlements. The terms of these cash settlements reputedly release Wintek from future liabilities. It is in this regard that Wintek’s response (and Apple’s) seemed particularly callow. Getting a liability release as part of a dispute settlement is hardly a new trick, but these workers are particularly vulnerable to being done over in the deal. Wintek denied these claims to the NY Times. The same paper also reported that signing a release is no longer being put to workers as an essential part of their resignation. Hopefully, this is true. Wintek would be sailing close to the wind in forcing workers to resign. Nevertheless, I doubt the workers would litigate under this provision to return to their jobs, given the costs, exhaustion and uncertainty.

And what of the ongoing health effects for Mr Jia and his coworkers? N-hexane poisoning doesn’t go away. The Telegraph quotes a worker, Guo Ruiqiang, saying  “We are unable to cope with the medical costs of treatment in the future” and notes his fresh symptoms. Chinese law specifically deals with such recrudescence: Reg. 38 states that “where a worker who suffered from a work-related injury but recrudesces from the past injury, and is confirmed to be in need of cure, he shall enjoy the treatment of work-related injuries provided for in Articles 30, 32 and 33” (those regulations entail payment from the work-related injury insurance fund and some salary continuance while off work).  So if Wintek and Apple continue their (relatively new) responsible response, future medical costs should not be a concern for the injured workers. But it might be helpful if they knew this! A reaction like Guo’s certainly suggests there is little faith down in Suzhou that Wintek and the government insurance fund will be supportive if workers return with fresh n-hexane poisoning symptoms.

Entirely new poisoning cases are unlikely as the use of n-hexane at Wintek’s factory ceased. In this regard, the law has been obeyed. If Wintek fails to make rectification after a government slap on the wrist, only then will it be fined – up to RMB200,000 (US$30,400), the retail cost of 133 basic i-Touches. As Apple is not the employer, it is unlikely to be fined at all.

Current Law Reform

The National People’s Congress has “Occupational Disease Prevention Law” slated for its law reform program for 2010-2012. In August 2010, China’s  State Council Legislative Affairs Office released to the public the draft amendments to this legislation. At the time of writing, the Chinese legislature has just met (the annual National People’s Congress, alongside the Chinese People’s Political Consultative Conference). This was evidenced, among other events, by a reinforcing of the Great Firewall and immense difficulties accessing email and social network accounts. The outcome is that further modifications to occupational disease prevention laws are scheduled for this year, but will there be progress or simply change? What this Apple case shows is that even a relatively well-scrutinised supplier and an international brand already under pressure over workplace conditions still achieve only partial compliance with workplace safety laws. Law enforcement needs to be bolstered.

The Yilian Center found increased safety precautions flowed from government safety inspections in only 40.9% of surveyed workers’ workplaces. This is despite health and safety failings, not because only 40.9% needed improved safety. The same survey found a mere 23.3% of respondents had some protective facilities in their workplace, despite the legal obligations on employers.

After decades of rapid development, the grave and large-scale toll on workers’ health is increasingly in the spotlight here in China. Workers and their families are increasingly taking action – legal class action, prohibited industrial action, blogosphere action – to secure compensation from the employers they claim so recklessly disregard their health. High profile government prosecution of employers for endangering workers is yet to come. Perhaps the Winteks of the world will start to feel the heat when Chinese safety law is refined in line with the National People’s Congress’s program, particularly if that reform includes improved enforcement or incentives for change in organisational culture.

Wintek isn’t a brand and so it is not vulnerable to a media maul, but its name is certainly known to its thousands of employees and an increasing Chinese readership. This case shows how the irresponsibility is very much Wintek’s, not just Apple’s. I hope in future we see suppliers held to popular and legal account, not merely the pillorying of Apple and its ilk. It is, as ever, clear that neither suppliers nor international supply chain leaders are willing to improve worker safety on moral grounds alone. China wastes a key way of influencing these companies if it lets safety laws languish unenforced, and shrugs off its responsibility to workers in the process.  Even the existing laws could have prevented this contamination of both workers and brands, if they were followed and upheld. That would keep the doctor away.

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Alex Grey

Alexandra Grey was a legal researcher and advocacy trainer at a Chinese not-for-profit in Beijing from 2010-2013, continuing there after a stint with AusAID's Australian Youth Ambassadors for Development program. Back home (Australia), she has lectured in law and policy since 2010 and was a practising commercial solicitor before she moved into the NGO and academic arenas. Alexandra has studied Chinese (Mandarin) and Linguistics at postgraduate levels and is now a PhD Candidate at Macquarie University.

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8 thoughts on “Hardly one bad Apple spoiling the bunch

  1. Alex Grey

    In reply to Terry: Thanks for the link to the PBS broadcast of June 2011, which compares Apple’s response to other IT brands’ responses: obviously not yet available at the time of writing the piece. You’ll note I quoted Apple saying, of itself, that it was leading the way. This is Apple’e self-perception, I didn’t say this was an objective fact, and I point out Apple’s late, incomplete and “callow” response to the problems. But I stand by my claim that the media does not focus on other IT companies’ supply chain safety/worker rights issues (and they have them, whether or not they are doing better at addressing them than Apple).

    The article doesn’t praise Apple. Rather, it makes the point that it’s not just up to Apple: the intermediary (Wintek) and the government regulator have obligations to protect workers from such harms and are not pulling their weight in this regard.

  2. hardmanb

    An excellent, balanced and informative explanation of some of the context surrounding a subject that the media normally oversimplifies. Nice job.

  3. Terry

    This particular article praises Apple for taking the lead in this case. That may not be true. Apple's announcement that the workers have been treated and returned to work is in conflict with reports from China that most of the workers left the company, and were given one-time-only payments by the supplier only if they signed an agreement that future health problems from the n-hexane could not be charged back to the supplier.… Further, in a PBS Newshour report in June, and leading China environmentalist singled out Apple as least responsive of the I.T. companies in dealing with issues like this.

  4. Alex Grey

    A friend recently alerted me to a Foxconn development on this subject: shifting the labour force from people to robots en masse. Less responsibility to workers, less risk.|w…

  5. Brendan Rigby

    Thanks for the legal analysis Alex – it is great to get a different and more nuanced perspective on the issue. You rightly argue that responsibility in the supply chain does not lay singularly at the feet of the supplier, but goes up. Similarly, we are starting to see more traction on sustainability and responsibility in the entire life-cycle of products in the context of climate change, pollution reduction. It is not a simple matter of addressing how a product is made. Consumers, government, regulators, suppliers, all need to be involved in brining sustainable change to how we produce and consume.

    The same can be applied to worker safety and labour reform, as your argue. All those involved in the life-cycle of the product, say an i-Touch, must be responsible, including Apple consumers, the relevant branches of Chinese government, Apple, etc.

    For more adventures in worker safety in China –

    Thanks again Alex

  6. wmyeoh

    This is an excellent piece that highlights the complexities involved with such tragic events. It's easy to point the finger at one company because their supplier is negligent – much more difficult to try and understand the situation as a whole. You've done a really good job in helping to get us there though – thanks Alex.

    As an aside, I read a piece a while back which talked about Foxconn (another of Apple's suppliers) dealing with the issue of workers committing suicide in their factory by installing safety nets, similar to those used by trapeze artists, around the factory floor, and then installing signs to tell people to please refrain from committing suicide, if it wasn't too much of a bother. After lots of media pressure, Foxconn relented and increased the workers pay.

  7. Marian

    Great report and analysis of the supplier issues and responsibilities

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