Proof of Apple's much-rumored, low-cost iPhone might have been revealed inadvertently in a new report.
Released today by watchdog group China Labor Watch, the report, including safety violations, poor living conditions, and excessive overtime.
Page 11 of the 62-page report describes Pegatron as assembling cell phones and tablets for Apple. "Its assembled products include iPhone 4, iPhone 4s, iPhone 5, and low-priced plastic iPhones," the report said.
The long, difficult day in the life of one factory worker is detailed further in the report. Page 28 describes that worker's task with the plastic iPhone:
Today's work is to paste protective film on the iPhone's plastic back cover to prevent it from being scratched on assembly lines. This iPhone model with a plastic cover will soon be released on the market by Apple. The task is pretty easy, and I was able to work independently after a five-minute instruction from a veteran employee. It took around a minute to paste protective film on one rear cover. The new cell phone has not yet been put into mass production, so quantity is not as important.
The report's purpose apparently was to find out how a low-cost iPhone can be produced.
The executive summary specifically states: "Apple is preparing to release a cheap iPhone. Just how does a prosperous company like Apple produce a discounted version of its phones?" Another question asks: "So what is the competitive advantage that Pegatron has utilized to win Apple's order of the cheap iPhone?"
The report blames some of the violations on the rush to create a cheaper iPhone:
At this moment, in Shanghai, China, workers in Apple's supplier factory Pegatron are monotonously working long overtime hours to turn out a scaled-back, less expensive version of the iPhone. Six days a week, the workers making these phones have to work almost 11-hour shifts, 20 minutes of which is unpaid, and the remainder of which is paid at a rate of $1.50 an hour ($268 per month) before overtime. This is less than half the average local monthly income of $764 and far below the basic living wage necessary to live in Shanghai, one of costliest cities in China. So these workers rely on long overtime hours. If a worker does not finish three months at Pegatron, the dispatch company that got the worker hired will deduct a large portion of his wages.
The report goes on to highlight the labor violations claimed by China Labor Watch, which sent investigators to three Pegatron factories to conduct almost 200 interviews with workers from March to July.
China Labor Watch said it found at least 86 labor rights violations, including 36 legal violations and 50 ethical violations, across 15 categories: dispatch labor abuse, hiring discrimination, women's rights violations, underage labor, contract violations, insufficient worker training, excessive working hours, insufficient wages, poor working conditions, poor living conditions, difficulty in taking leave, labor health and safety concerns, ineffective grievance channels, abuse by management, and environmental pollution.
In response to the report, Apple sent a statement to The Wall Street Journal in which it said it has been in contact with China Labor Watch to investigate the allegations. Pegatron CEO Jason Cheng said: "We will investigate [the allegations] fully and take immediate actions to correct any violations to Chinese labor laws and our own code of conduct."