National Labor Committee

Toys of Misery 2004
A Joint Report by National Labor Committee and China Labor Watch

February 2004

He Yi Electronics and Plastics Products Factory
English name: Foreway Industrial China, Ltd.
Shong Bai Tang Administrative District
Chang Ping Township
Dongguan Municipality, China
(Part of the He Yi Business Group)

Number of Employees: 2,100 in the peak season and 500 to 600 in the slow season. The peak season generally lasts six months, from May through October. The slow season is November through April.

Production: “Bobblehead” dolls of major league players, produced under licensing agreements with the NFL, NBA, MLB, NCAA, Nascar and the Colleagiate Licensing Company. Other plastic toys, especially small toy cars, are also produced for Wal-Mart, Disney and Hasbro.

Currently, 40 percent of factory production is for the U.S. company Fotoball, which has licensing agreements with the National Football League, National Basketball Association, Major League Baseball, National Collegiate Athletic Association, Nascar and the Collegiate Licensing Company to produce their plastic bobble head dolls. Fotoball goods are sold at Wal-Mart and other mass retailers.

Production for Wal-Mart and Disney account for approximately another 20 percent of factory production.

(The Foreway factory is currently in its slow season and the total amount of production for the various labels is very different from that of the peak season, when Wal-Mart, Disney and Hasbro become much larger players.)

Summary of Abusive Factory Conditions:

18-to-20.5-hour all-night shifts;

Mandatory seven-day workweek;

At the extreme, workers could be at at the factory up to 130 hours a week;

One day off every other month—just 15 days off per year, including national holidays. (Workers are denied half of their national holidays.);

Paid below minimum wage: For over 100 hours of work, the workers receive a net wage of just $16.75, averaging about 16.5 cents an hour;

Overtime is also illegally paid at just 22 cents an hour;

Wages are routinely paid late. When the workers protested in January 2004 to demand payment of their wages, management responded by firing 50 workers and withholding one month’s back wages;

Workers are not permitted to resign from the factory, but rather must apply for a “voluntary automatic leave,” which means they forfeit one-and-a-half months’ wages;

There is no legal work contract;

No Social Security or health insurance;

Twenty workers share one dorm room;

Organizing a union is strictly prohibited;

So-called corporate audits are announced 20 days in advance—and the workers are threatened, coached and bribed to lie if they are questioned. Workers are given a “cheat sheet” and paid 50 rmb—several days’ wages—to memorize the “correct” answers.

Hours:

Mandatory overtime;

Frequent 18 to 20.5-hour all-night shifts stretching from 8:00 a.m. to 2:00, 3:00 or even 4:30 a.m. the following day;

Workers could be at the factory up to 130 hours a week;

Obligatory seven-day work week;

One day off every other month, with an average of just 15 days off per year.

These hours are for production line workers during the peak season. But even during the slow season, due to massive factory layoffs of upwards of 1,500 workers, the very reduced workforce of 500 to 600 people is still obligated to work seven days and often forced to put in 18 to 19-hour shifts, from 8:00 a.m. to 2:00 or 3:00 the following day.

Typical Shift 18 to 19 hours 8:00 a.m. to 2:00 or 3:00 a.m. the following day
8:00 a.m. to 12:00 noon 12:00 noon to 1:30 p.m. 1:30 p.m. to 5:30 p.m. 5:30 p.m. to 6:30 p.m. 6:30 p.m. to 8:30 p.m. 8:30 p.m. to 2:00 or 3:00 a.m.	Work—4 hours Lunch—1.5 hours Work—4 hours Supper break—1 hour Work—2 hours “Obligatory Overtime”—6 to 7 hours with a half-hour snack break

Illegally, the factory operates on a “regular” shift of ten hours, whereas by law, regular hours of work are limited to eight hours a day and 40 hours a week. In effect then, the workers are forced to work up to nine hours of overtime a day, and not the six to seven hours the factory recognizes as overtime.

The factory operates on a mandatory seven-day work week and a 30 day month, meaning the workers receive an average of one day off every two months.

Under this schedule, at the extreme the workers can be at the factory up to 130 hours a week, while being required to work 108.5 hours.

By law, all workers are to receive 12 paid national holidays a year, but the company recognizes just six of these holidays, forcing the workers to work through the other six legal holidays. On average then, a production line worker will receive just 15 days off a year—six paid holidays and nine unpaid days of leave.

Workers have to plead with management to win the few legal holidays they actually receive. On January 16, 2004, for example, one worker asked permission for a few days leave so he could travel home to visit his family during the important Spring Festival. Management refused and verbally abused the worker. Finally he had to drop to his knees and plead and beg before he was granted his leave. By law, the workers are to receive at least three days for the Spring Festival. (The vast majority of factory workers are migrants from the countryside and the Spring Festival holiday is the only chance they have all year to travel back to their rural villages to visit their families.)

Wages:

Wages below legal minimum, workers cheated on overtime pay;

Wages as low as 16 ½ cents an hour and just $16.75 for a seven-day, over-100-hour work week;

Wages paid late, workers seeking to be paid on time are sacked. The average take-home wage during the peak season for production line workers is just 600 rmb—U.S. $72.55 per month. Given that the Foreway factory operates on a mandatory seven-day, over 100-hour work week, this means the workers are earning a take-home wage as low as 16 ½ cents an hour, and just $16.75 for the typical 101-hour work week. (Concrete examples of this are attached.)

The base wage at the factory is supposed to be 450 rmb per month, or U.S. $54.41, which would be more or less in line with the legal minimum wage in Dongguan City. However, this legal minimum wage is to be calculated on the basis of a regular work week of eight hours a day, and 40 hours a week. Anything beyond that, by law, is to be paid as overtime with the appropriate premium. The workers are supposed to receive two days off a week.

At the Foreway factory, none of this happens. The factory considers the first 10 hours of work each day as “regular time” and the “regular” work week is seven days, not five. “Regular” time at Foreway is illegally set at 70 hours a week, and not the 40 hours defined by China’s labor laws. Also, under China’s laws, all overtime is to be voluntary, and paid at time-and-a-half during the week, double time during the weekends and triple time on national holidays. Overtime work is not to exceed three hours a day or nine hours a week. If the regular base wage is 31 cents an hour, then all overtime during the week should be at a 150 percent premium, or 46 ½ cents an hour. On weekends, the overtime rate should be 62 cents an hour, and for working on national holidays, the rate should be 93 cents an hour.

But for the workers at the Foreway factory, the law is just a fantasy. At Foreway, not only is all overtime mandatory and extreme, it is also illegally underpaid at just 1.8 rmb, or U.S. 22 cents an hour, which is well below even the legal minimum wage of 31 cents an hour for regular time.

Beyond this, the company deducts 150 rmb a month for room and board—the workers are housed in crowded dorms with 20 people sharing a room—lowering the workers’ take home pay even further.

Legal Minimum Wage

450 rmb, or U.S. $54.41, a month
(8.27 rmb = U.S. $1.00)S

31 cents an hour

$2.48 a day (8 hours)

$12.56 a week (40 hours)

$54.41 a month

$652.96 a year

The Foreway workers are not paid even this legal minimum wage, which is already set well below subsistence level. At Foreway, the “regular” workweek is considered to be 70 hours, which results in a regular hourly wage of just 18 cents. However, it gets even worse. After deducting 150 rmb per month for room and board from the base wage of 450 rmb, the workers are left with a take home wage of just $36.28 a month, $8.37 a week and as little as 14 cents an hour.

Take Home Wage at Foreway
Including 31 hours of mandatory overtime
Well below minimum wage
600 rmb per month for a seven-day, 101-hour work week

16 ½ cents an hour

$2.39 a day (approximately 15-hour shift)

$16.74 a week (over 100 hours)

$72.55 a month

$870.62 a year

It is also common for wages to be paid late. Wages are supposed to be paid on the 30th of each month, yet factory management often ignores this and pays the wages arbitrarily whenever it is convenient for the company. If management holds back the wages for too long a period, the workers become desperate. As discontent and anger spread, there have been wildcat strikes. Most recently, this happened on January 1 and 2 of 2004, when 50 workers organized an impromptu strike or work action. Management responded by immediately firing all 50 activists, while further punishing and humiliating them by withholding one month’s back wages.

Further Violations and Abusive Conditions:

Cheated of back wages and severance pay: Once in the Foreway factory, it is not easy to get out without paying a price. Many workers would like to quit the factory and move on to look for better work due to the low wages, excessive overtime and abusive treatment. However, management forbids workers from quitting. They can only leave under the condition that they “voluntarily” request an “automatic leave,” which means that since they are severing the “work contract” on their own, they must forfeit one-and-a-half months’ back wages owed them, as a punishment. (This, despite the fact that the workers are illegally not given a legal written work contract.)

The workers are provided no social security or health care insurance.

Any worker effort to exercise the rights of freedom of association and to organize would be crushed immediately. Organizing an independent union is strictly prohibited.

Twenty workers share crowded dorm rooms measuring approximately 12 by 23 feet. More than two dozen workers share a bathroom.

What Must Be Done

Clearly, there are numerous systematic and serious abuses of basic human and worker rights at the Foreway factory, which are in blatant violation of China’s labor laws and internationally recognized standards. These violations must be immediately addressed and corrected by the NFL, NBA, NCAA, MLB, Nascar, Collegiate Licensing Company, Wal-Mart, Disney and Hasbro.

At the very least, the legal minimum wage must be paid.
All overtime must be voluntary, and paid correctly and on time. Excessive overtime must end.
The 50 workers fired in January 2004 should be offered reinstatement to their former positions with no further discrimination and payment of all back wages.
The factory must strictly honor all 12 national paid holidays.
The workers must be provided with a legal work contract.
The workers should be afforded at least the standard social security and health care insurance.
Workers must have the right to leave the factory without being punished with the loss of back wages due them.
The workers have the right to decent, humane living conditions.
The workers’ rights to freedom of association and to organize should also be respected.

Surely, acting together, the NFL, NBA, MLB, NCAA, Nascar, Collegiate Licensing Company, Wal-Mart, Disney and Hasbro can readily accomplish this, if there is the will to do so.

(This is not a boycott: It must be noted that no one is calling for these U.S. companies to pull their work from the factory. Like workers across the developing and developed world, the Foreway workers in China are not calling for a boycott of their jobs. In the desperation and abject poverty characterizing the Race to the Bottom in the global sweatshop economy, no worker can afford to lose his or her job. The sad reality is that it is bettter to be exploited than to have no job at all. However, even the poorest, most desperate workers are not asking for more sweatshops. Rather, they are asking that they be treated like human beings, and that their fundamental human and worker rights be respected. The goal here is that the NFL, NBA, NCAA, MLB, Nascar, Collegiate Licensing Company, Wal-Mart, Disney and Hasbro keep their work at the Foreway factory, while at the same time working with their contractor to bring the plant swiftly into compliance with all local laws and internationally recognized human and worker rights standards. This is not too much to ask. The workers’ demands are quite modest—that their fundamental legal rights be respected.)

A Corporate Monitoring Farce
Going on right this minute, before our very eyes...

Far from doing the right thing and insisting upon strict adherence to all local laws and international standards, the North American companies are knowingly complicit and willing players in covering up the violations at the Foreway factory. Their so-called efforts to monitor factory conditions are so flawed and inadequate as to constitute a willful cover-up.

For example, Wal-Mart representatives “inspected” the Foreway factory on November 12, 2003. The factory was notified approximately 20 days before this so-called inspection. In many cases, the factory actually prepares and posts a “Welcome” sign for corporate monitors.

In preparation for these visits, both the factory and dormitory are cleaned and spruced up. Certain little amenities appear, only to disappear after the monitors leave.

One does not have to be a rocket scientist to be aware that in China it is common for the export assembly factories to keep two sets of books—one to show the buyer and the other to maintain actual records. As in other factories, when the monitors arrive at Foreway they are presented with falsified time cards and pay records, which, of course, show that the workers receive two, or at least one, day off, even during the busy season; that the overtime hours are within the legal limit; that all national holidays are respected with even a few extra days off thrown in here and there; and that all legal minimum wages and overtime are paid strictly according to the law.

Management also threatens, coaches and bribes the workers to lie if they are ever approached by any of the investigating monitors.

The workers have actually smuggled a “cheat sheet” out of the factory, that management gave them in preparation for a second Wal-Mart visit planned for February 2, 2004. Twenty-eight questions are listed with the appropriate answers attached, which the workers are forced to memorize. Those who can correctly repeat the standard answers, will receive a 50 rmb bonus—which is not bad. With an average wage of just 16 ½ cents an hour, this $6.05 bonus amounts to more than 36 hours’ wages.

On the day of Wal-Mart’s visit, 400 or so workers were suddenly given a special day off, perhaps so that the 100 workers with the best memories would be around to answer Wal-Mart’s tough questions.

Evidently, during Wal-Mart’s announced November 12, 2003 visit, despite all the preparations, some obviously falsified time cards found their way into the monitors hands. This is what lead to the follow-up visit scheduled for February 2, 2004.

Disney is also participating in a similar farce, with their next announced monitoring visit scheduled for February 11, 2004.

One must wonder why all the monitoring attention is focused on the slow season and not the peak season when 2100 workers are commonly in the factory until 2:00, 3:00 or even 4:30 a.m., seven days a week. One must also wonder if any of the corporate monitors have ever bothered to at least drive by the factory, say at 9:00 p.m. or midnight—or even at 2:00 or 3:00 a.m. to see if the factory is operating. Or, have they ever bothered to show up on a Sunday or a national holiday? None of this should be that hard.