Low-cost iPhone details revealed in report on labor conditions at Apple supplier

Apple's (NASDAQ:AAPL) long-rumored low-cost iPhone appears to have been confirmed in a new report by advocacy group China Labor Watch, which took Apple supplier Pegatron to task for labor practices that include using underage workers, paying insufficient wages and forcing employees to work overtime.

The low-cost iPhone, which many analysts have speculated Apple will release this fall to capture more of the smartphone market, was mentioned several times in the report. The mentions were first spotted by VentureBeat, which confirmed that the practices listed in the report were observed between March and July of 2013.

In the report's description of the Pegatron factories, it notes that products assembled there include the "iPhone 4, iPhone 4S, iPhone 5 and low-priced plastic iPhones."

According to The Verge, one part of the report discusses a worker's typical day at Pegatron: "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." 

"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," the report says.

The New York-based labor advocacy group found at least 86 labor rights violations while investigating three Pegatron factories from March to July. Apple has been in close contact with the group for several months, but the report contains "claims that are new to us," and those will be investigated immediately, Carolyn Wu, a Beijing-based spokeswoman for Apple, told Bloomberg.

"We will investigate these new claims thoroughly, ensure that corrective actions are taken where needed and report any violations of our code of conduct," Wu said. "We will not tolerate deviations from our code."

According to the Wall Street Journal, in March 2012, Apple supplier Foxconn, formally known as Hon Hai Precision Industry Co., said it would change its workplace policies after an audit, requested by Apple and conducted by the U.S.-based nonprofit Fair Labor Association, found numerous breaches of Chinese law and Apple's labor policies at three factories. The changes, which include a reduction in overtime and safety improvements, are scheduled to take effect this month.

Pegatron factories "are even worse than those at Foxconn," CLW Executive Director Li Qiang said in a statement today. The group's report chronicled alleged safety issues, loud noise of assembly line machines, long shifts during which workers were required to stand, and poor living conditions in packed dorms.

For more:
- see this VentureBeat article
- see this The Verge article
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this Reuters article

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