Nano-sized wages for iPod factory workers

PodfamilyI love my iPod. I never go anywhere without it. It has thousands of songs on it. It has all my appointments and contact information. In short, it’s pretty much my best friend. But can you believe that some people in China are apparently complaining to Western journalists about their working conditions when they are surrounded by thousands upon thousands of iPods for up to 15 wonderful iPod-filled hours?

Not that they can afford to actually buy them, what with apparently being paid between $50 and $99 a month. But hey – it gives them something to aspire to, and that’s how capitalism works.

In one factory, they’re locked up, according to The Mail on Sunday‘s investigation (There isn’t a direct link because they didn’t publish it online, but here’s another report and some photos.) In another, there are armed police officers keeping them in, and they get only a few possessions and a bucket to wash their clothes.

Apple has said it’s investigating the allegation, and reiterated its standards: “Apple is committed to ensuring that working conditions in our supply chain are safe, workers are treated with respect and dignity, and manufacturing processes are environmentally responsible”, they say.

This is a very embarrassing situation for the company, which has such a hugely trendy image. Steve Jobs, famously, was a hippie as a young man, travelling to India in search of enlightenment. When you open an iPod, it says “Designed by Apple in California”, throwing up images of a hipster campus where design geniuses throw around cool ideas. When what it should say, if this is true, is “Made by sweatshop workers in China”.

Clearly, the conditions are outrageous, and I’m glad Apple’s getting embarrassed by this press – the only mechanism that can improve labour conditions in China, realistically. My leftie knee-jerk reaction is that they should immediately improve matters, of course, but how much? I have great difficulty knowing exactly where the line should be drawn. No-one in this country would dream of working in conditions anything like those described. I certainly wouldn’t. And as much as we complain about WorkChoices – and so we should – the reality is that our labour force is in five-star luxury campared to China’s.

But the flipside of that, of course, is that we don’t have much of a manufacturing industry. It’s far too expensive to make things in Australia because of our civilised labour standards. And Apple’s policy allows for worse conditions than Australians would cop – a 60 hour maximum week and only one day off a week. Even judging by the letter of their rules, it’s hardly a picnic working for Apple. But I suspect most Chinese workers would rather work under somewhat arduous conditions than see their work disappear, and remain in poverty. It’s the great dilemma of international trade.

So what gives? Fortunately, in this instance, the solution is actually really simple. Because iPods are extremely profitable to manufacture, far more so than computers. Opinions differ on exactly how much the markup is, but one investigation by iSuppli found that the US$199 iPod nano costs $90.18 for parts and $8 to assemble, meaning a profit margin before marketing and distribution costs of 50% That doesn’t factor in R&D either – but still, it’s a huge markup.

Apple’s a luxury brand, and that means low price sensitivity. People tend to buy their gear even if it’s more expensive. Personally, I’d mortgage my future kids for the latest doohickey with an Apple logo on it, and scarily I’m not alone. And that is what makes the possibility that the local suppliers are gouging their workers all more despicable, when Apple could easily take slightly less margin and still be hugely profitable. It dominates the portable music market, and sells at a premium. I don’t know that sweatshops are ever excusable, but they are surely that much less justifiable when Apple is making such a whopping profit. It would hardly hurt them to increase the workers’ pay even by 50%.

As Wired points out, it’s particularly ironic for a company that’s traded on images of genuine advocates of the poor like Gandhi and impoverished farm worker advocate Ceasar Chavez. Seems they’re not Thinking Different from any other greedy company. And the damage this story is doing to their image will also have a substantial financial cost, as it discourages their core market.

Even if the conditions for workers do improve substantially, it’s going to be hard to completely enjoy the luxury that is my iPod having thought about the lifestyles of the previously faceless people who make them, and will probably never be able to afford expensive gadgets. As patronising and insubstantial as it is. Western guilt’s a powerful motivator for third-world change. If only companies like Apple did a better job of monitoring their suppliers and looking after their workers, and it wasn’t quite so necessary. But if a company as PC as this one can’t resist abusing its poorest workers to drive up profits, then the sad fact is that we can’t trust any company to do the right thing when it sets up a manufacturing plant in developing countries.



Dominic Knight

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