Blood, Sweat and Tears At Microsoft Subcontractor Factory

(Associated Press)  China factories break labor rules.  By William Foreman.  April 19, 2010.

Two factories that make Microsoft Corp. products in southern China violated overtime regulations and failed to properly register the use of workers aged 16 to 18, officials said Monday.

The problems at the plants in the city of Dongguan were initially raised last week by the National Labor Committee, a New York-based nonprofit that monitors the treatment of foreign workers by U.S. companies. The group alleged that the teen laborers worked long shifts and were not allowed to use bathrooms during working hours at the plants, owned by Taiwan-based KYE Systems Corp. The factories make Webcams, computer mice and Xbox controllers for Microsoft, the world's biggest software company.

Investigators with Dongguan's human resources bureau said in a report that factories are allowed to hire workers between the ages of 16 and 18 as long as the laborers are registered with the authorities. The KYE factories had 385 such workers — most supplied by vocational schools — and 326 weren't properly registered, the report said.

Employees were also forced to work an excessive amount of overtime in March, clocking about 280 hours, the report said. Copies of the labor contract also weren't given to employees, the document said. But officials said that based on interviews with workers, there were no restrictions against using the restroom during shifts. The report said the company's policy was to give workers 10-minute breaks for every two hours worked.

KYE Systems Corp. spokesman Lai Jin-hui told The Associated Press, "Assembly line workers are allowed to go to bathroom only if they report the need." Lai insisted that factories did nothing wrong regarding overtime and had followed regulations that limit the workweek to 60 hours. But Lai acknowledged that the factories failed to properly register workers and would now fix the problem.

The human resources bureau report said the factories have been ordered to comply with the law and would be monitored closely.

Last week, Microsoft said it does quarterly onsite assessments and gets weekly reports from KYE about certain labor and safety criteria. The software maker said a team of independent auditors would visit the factories and monitor the situation pending results of its inspection.

(Southern Weekend)  Blood, sweat and tears at Microsoft subcontractor factory.  By Ding Tingting.  April 21, 2010.

A report (China's Youth Meet Microsoft) from the National Labor Committee (USA) has suddenly caught the number two keyboard/mouse producer KYE in a scandal known as "Child Labor Gate."  At the same time, the KYE workers are also under the spotlight.

The report was published at the official National Labor Committee's website on April 13, 2010.  After an investigation that lasted three years, the NCL found that KYE which is a subcontractor for Microsoft, HP, Samsung, Acer and Asus was using child laborers and juvenile trainees who worked excessive hours under restricted personal freedom.

The reporter used sharp descriptions such as "hundreds of students between the ages of 16 and 17 were forced to work 15-hour shifts on a daily basis" and "the workers faced abuse, punishment and sexual harassment."

NCL claims to be a non-government organization which "investigates and exposes the crimes of American companies which have their products made in developing countries" and the purpose of the NLC is "to protect the rights of workers in a global economy."  The report characterized KYE as a model example of a "sweat factory" and asked for a "broad global campaign against sweat factories."

According to information, the report addressed two of the four KYE factories in Dongguan -- the Dongguan KYE Computer Products Limited Company (main factory) and the Dongguan Xieying Electronics Limited Company.

"We don't know how they (NLC) got inside our factory.  Dongguan KYE headquarters factory human resources manager Ms. Nie told us.  "From the photos, the uniforms and caps are dated 2005 and 2006.  They are talking about that period of time."

This report was quickly quoted in several hundred Chinese websites and created problems for KYE (especially the Dongguan KYE headquarter factory): On April 15, the Dongguan Human Resources Bureah sent a team of inspectors to conduct a surprise inspection.

According to an inspector named Ye from the Dongguan Human Resources Bureau, they learned about the news on April 15 and sent more than ten people to inspect the labor conditions at the Dongguan KYE headquarters factory.  According to the chief inspector named Deng, "We reviewed the personnel records at the KYE office."  These personnel records included: entrance registration, personal identity information, labor contracts, pay slips, etc.

The Dongguan Human Resources Bureau found: Of the 2,883 workers in the factory, there were 385 workers between the ages of 16 and 17, but no child laborers age 15 or younger.

When questioned how the team can be sure that the factory did not conceal or under-report information, inspector Deng said: "We did some random inspections.  We went on the factory floor and we questioned those who seemed to be too young."  When asked how they can be sure that people were not using false identification, inspector Deng replied: "That's impossible, because all the wages are forwarded to the bank accounts of the workers.  If a worker uses someone else's identity card, he won't be able to get paid?"

However, our reporter found that "many of the juveniles (persons age 16 or 17) did not have a salary card.  "The factory gives our salaries to our teachers who pay us in cash.  We have never seen a salary card."  The juvenile worker named Wang Ping said, and she comes via the Guizhou Provincial Shenqing Professional Technical Academy.

Although the Dongguan Human Resources Bureau did not discover any child laborers, it was able to disclose several other KYE problems: excessive overtime hours; 326 of the juveniles were not registered with the Human Resources Bureau; copies of the labor contracts were not provided to the workers.

In relation to these three problems, the Human Resources Bureau issued an order to make corrections on April 15.  KYE was given seven days to fix these problems and guarantee the rights of the workers.

After receiving the order, KYE took a series of corrective actions on April 16.  But the labor inspectors was unable to provide a clear picture of the true conditions of the workers.

Were there child laborers at KYE as asserted by the NLC?  KYE general manager Li Jiongjing said that "this report was a smear."  The Human Resources Bureau also discounted the assertion as a result of their investigation.  Nevertheless, the bureau found several hundred juveniles at the factory.

Li Li is one such case.  Dressed in a factory uniform, she described herself to us.  She is from Guangdong province and was recommended to work here by her cousin who is a team leader.  She has been working there for less than one month.  She said that she is actually 15 years old, but she owns a 1992 identity card which established her as 18 years old and therefore not a child laborer.  Li Li admitted frankly, "My family got the card for me so that I can get into the factory."

According to Li Li's cousin: "There are definitely some very young persons who borrow the identity cards of acquaintances or who are brought in by their teachers as trainees."  She said that during the busy hiring season, the factory needs to hire a couple of hundred persons every day.  "Who is going to seriously care about your age?"

Meanwhile Li Zhongyuan faces the opposite situation: she is actually old enough but her identity card says that she is 16 years old.  But since she is a student at the Guizhou Provincial Shenqing Professional Technical Academy, the school brought her and more than twenty other students to "get practical training" at the factory.

15-year-old Li Guixin is also "learning" at KYE.  He was recommended by an acquaintance.  His job is to prepare the materials so that the assembly line workers are not short of materials.  Although he is "learning," he receives normal and overtime wages just like the other workers.

It is hard to say whether these are "child laborers."  But our investigation showed that are indeed a group of children under the age of 16 working at the Dongguan KYE factory.  Furthermore, their workload is the same as other workers.

What kind of environment do the several thousand KYE workers (including the juvenile workers) live in?

The KYE factory has tight security.  The several thousand workers are isolated from the outside world.  They are allowed to enter or exit only during set hours.  According to KYE workers, all unmarried workers must reside in the dormitories.  They are only allowed to enter or exit during 07:00-8:00, 11:00-11:30 and 17:30-21:30.  They are not allowed to enter or exit at the other times.  "I came back at 21:34 one time.  For being four minutes late, I was docked two days of pay (or more than 100 yuan)."  Liu Jing in the digital camera department recalled.

Every worker who enters or exit the factory has to punch his /her card.  Outsiders are basically not permitted to enter.  Even family members who travel from afar to visit are not allowed to enter.  The factory will call the worker to come out to meet outside the factory.  "This is like being in jail.  But they allow visits in jail.  We are not even allowed visits."  Liu Jing said that the dormitory room accommodates 14 persons per room.  The rules stipulate lights out at 23:00 and no noise is allowed.  The dormitory rooms do not have power outlets.  Anyone who wants to re-charge their mobile phones have to do so at a specially designated room during scheduled hours.  Each worker pays 208 yuan for room and board.  Meals are provided in the company cafeterias.

Each day before work begins, the assembly line team leader will get the workers to line up and order: "Stand at attention!  Eyes right!  Right turn!  Sit down!"  Then work begins.

KYE has some nerve-racking rules.  For example, anyone who dozes off during work is given a minor demerit; repeated demerits earn a major demerit; no smoking allowed in the dormitories subject to sudden inspections by the security guards -- a single cigarette butt will cause every occupant of the room to be given minor demerits; late returns at night earns a minor demerit; failure to return at night results in dismissal.  At KYE, a minor demerit equals to a 120 yuan fine; a major demerit equals to a 280 yuan fine.

The workers also have to face the pressure from the environment inside the factory.  Liu Jing said: "The security guards here are foul-tempered.  When a worker makes a mistake, they will pound on the desk and yell."  Liu Jing recalled an incident when a worker accidentally dropped his food on the ground in the cafeteria.  A security guard pointed at his forehead and yelled: Pick it up and eat it!  This person was forced to pick up the food and put in back into his lunch box.  He managed to throw the food away behind the security guard's back.  This incident caused Liu Jing to be scared of the security guards.

According to a team leader who is close to the security guards, they usually boast to her about whom they beat up.  "He was all bloodied up after we beat him with sticks."  According to her, this only happens to "naughty" workers.  For example, these might be workers who argue with the security guards after returning late at night, or who try to smuggle company products out.  But sometimes the security guards can beat people up without reasonable cause.  She claimed that she personally saw the security guards beat one worker onto the ground but she did not know what for.

But Liu Jing is obviously helpless about what to do.  "Every factory is managed this way."  His greatest wish is merely for improvement in the cafeteria food.

"The cafeteria food is just like what is given to pigs."  Liu Jing said.  "The vegetables are usually yellowish in color and we have to fetch them ourselves from a steel bucket.  The cafeteria offers three dishes and one soup.  One of the dishes will always been white cabbage.  If you don't want white cabbage, you are down to two dishes.  The other dishes include tofu, lettuce, cauliflower.  The meat dishes include lettuce and sausage, garlic bolt and pork, etc but there is very little meat."  On Wednesdays, they get two tiny buns.  Therefore, his greatest wish is for improvement in the cafeteria food.

But there are other workers who think that this management system is fine.  A female worker said, "Strict management is necessary to avoid chaos!" and "Security guards only beat workers up for disobedience."

Life at KYE is boring.

Many workers said that before the re-organization at KYE (that is, before the NCL report came out), the workers got 4 hours of overtime per day during weekdays, 12 hours on Saturday and 8 hours on Sunday.

The worker Liu Jing explained: He gets out of bed at 6am every day; he arrives at the factory gate at 6:30am; he waits to get his card punched in ten minutes ahead of time.  When the factory door opens, the team leader will give them their assignment of the day.  Each time, the team leader will remember to lecture: "Move quickly; don't loaf!"  Then he sits down at the assembly line to begin work.

Liu Jing's work is monotonous: He tests cameras to see if they are water-proof and puts those which fail the test aside.  He just puts one into the machine and takes it out; then he puts another one in and takes it out ... he keeps working for four hours until lunch at 11am.

At 1230pm, he punches in again and works for another four hours.  Then he has 30 minutes for dinner.  After 17:20pm, this is the regular "overtime."  He works another 4 hours.  His day ends at 21:40pm.

"After I get out of work, the factory gate is locked and we cannot go out.  So I make instant noodle for myself.  I take a bath and I go to sleep.  When I wake up, it is the same thing again."  Liu Jing sighed.

Many workers such as Liu Jing describe the same thing.  They actually work 12 hours a day, with 15 hours in the factory building.  This was strikingly similar to the NLC report.  Liu Jing was not aware that article 41 of the state labor laws stipulate that overtime hours must not exceed 36 hours per month.  His actual overtime hours were as high as 160 hours per month.

18-year-old Wang Gang works on chip assembly in the digital camera department.  His work hours are even longer.  According to him, his department basically required six hours of overtime per day (or fourteen total working hours per day) during the month of March.  Wang Gang's classmate, 16-year-old Wang Ping, works on chip assembly in the computer department has also worked 6 hours per day for the past couple of weeks.  "From morning to late night."

But Wang Ping is different.  She is an intern from the Guizhou Provincial Shenqing Professional Technical Academy, and also a so-called "juvenile worker" according to the Dongguan Human Resources Bureau.  She and more than twenty other classmates were brought over by their school principal for training.  She worked overtime hours just like the regular workers, although their overtime pay rate was just the basic 5 yuan per hour.

At present, the situation with excessive overtime has improved.  According to information, among the several decisions that KYE made on April 16 after receiving the order to re-organize from the Dongguan Human Resources Bureau was to rescind Sunday overtime work altogether.

20-year-old Wang Feng recalled how he received notice: When they got off work on April 16, their team leader announced to the more than 20 workers present: "As of today, overtime hours will be cut back from four hours to two hours during weekdays; Saturday overtime will be cut back from twelve hours to ten hours; the eight hours of overtime on Sunday will be eliminated completely -- you get the whole day off!"

Wang Feng did not know why KYE suddenly to give them a day off.  He has been working at KYE for a month already.  This was the "first meaningful Sunday" that he has had.  "It was a relaxing Sunday.  I have not had such a good rest for a long time," Wang Feng recalled.

No matter whether it is Liu Jing or Wang Feng, they have all decided to quit KYE.  The reason: after KYE introduced the corrected procedures, their overtime hours and therefore their salaries have gone down.

Although Liu Jing want to live "more freely" such as getting a good rest on the weekend, he thinks that "people need to accept reality" and "the most basic requirement is a guaranteed salary."  "For factory workers, the main source of income is overtime work."  Every worker who has been with KYE says the same thing.  According to inforimation, if a KYE worker only works the normal eight-hour day from Monday to Friday, he will receive the basic 920 yuan base pay.  After deducting 208 yuan for room and board, he does not have a lot of money left for spending.  To make good money, he needs overtime work.  He receives 1.5 times the normal hourly rate if he works overtime during the weekday.  On weekends, he receive twice the normal hourly rate.  The normal hourly rate is 5 yuan per hour.  Before the KYE made its corrections, a worker can receive between 1,800 to 2,000 yuan per month.  Today, they are making just over 1,000 yuan.  Their overtime pay has gone down by 700 yuan.

Wang Gang also thinks that 10 hours per day ae too few.  He won't accept anything less than 12 hours per day, or else the salary won't be enough.

Liu Jing has decided to look for another job, but he dares not resign.  He said that if he were to resign, the factory will probably delay his application.  "They used to delay approval for a month.  Things are better now, because they will only delay for half a month."  Liu Jing said.  "By the time the application is approved, that half month's pay won't be issued."

There are costs associated with changing a job, including travel, board and meals.  Therefore, he is currently in a state of "wanting to leave but not having the money to do so."

At the same time that they reduced the overtime hours for regular adult workers, KYE also banned their juvenile workers from doing any overtime.

On April 18, Li Li and more than 300 juvenile workers were sent for new physical examinations by the hospital in order to register with the Human Resources Bureau.  On April 20, they were transferred to a "special" assembly line.  There is no overtime work on this assembly line.

KYE human resources manager Ms. Nie said that: "Basically, the way to make money at a factory is to work overtime.  We let the workers get overtime work and this gives them hope."

But Ms. Nie is clearly ignoring a fact: it is because the base pay is too low that the workers are forced to work overtime.

The base salary at KYE is based upon the 920 yuan/month minimum wage standard in Dongguan city.  Ms. Nie explained that the basic considerations are: "There is too much competition in the industry.  The subcontractors make a very low profit.  Most of the profits goes to our clients."

Such is the cruel reality for the Chinese subcontractors.  <Economic Observer> reported that certain multinational brands such as iPhone can make a profit of 200%, but their Chinese subcontractors make only 2%.

Therefore, some people think that it is superficial to think that the subcontractors are holding worker wages down.  In reality, the multinational companies are imposing low profits on their subcontractors and thus keeping worker wages low.

For these reasons, Ms. Nie think that the NCL report was "exaggerated."  She said: "We are not free of problems, but it is not as serious as they say."

Li Li's strongest reaction to the loss of half of her overtime hours was that "this was really rotten luck."  She did not care how much her legal rights were being damaged.  Her dream is this: "In a few months time, I will be 18 years old.  When that time comes, I will be able to work overtime and send more money back for my younger brother and sister who are still in school."