December 17, 2007

Another Wal-Mart Bargain Made in China

Some pictures speak a thousand words. The women in this photograph make goods for Wal-Mart at the Zhifeng factory in China. There is no factory cafeteria or any proper place for the women to eat, so they take their lunch sitting on the ground by the side of the highway in front of the plant. All the workers can afford to spend is 33 to 46 cents per meal, but some of the women try to get by eating just two steamed buns, which cost just 13 cents but have little nutritional value. The workers purchase their food at informal fast-food stalls that line the highway. They are cheap, but lack even the most rudimentary hygiene standards. Working seven days a week, the women are so exhausted by the grueling hours that after eating, they sleep sitting crouched along the highway, resting their heads on their knees or in their hands. It is a sad and disturbing sight. Imagine working a seven-day, 68 ½ hour week, including 28 ½ hours of overtime, while earning as little as 54 cents an hour and $36.73 for the entire week.

Exhausted workers sleep on the side of the highway during their lunch hour.

Such dismal conditions for the workers do not end there. For housing, all the workers can afford are primitive, tiny one-room apartments, which still cost $48.10 a month including water and electricity. This means that even half-starving themselves, the workers must spend $1.25 a day to eat, which comes to $38.13 a month. The combined cost to eat and house themselves poorly still amounts to $86.23 a month, which consumes 93 percent of their base wage of just $92.84 a month. Of course, workers cannot afford carfare, so they walk to work, with the fortunate ones riding on bikes. And these expenses do not even begin to account for other necessary purchases, such as toilet articles, medical care, clothing, shoes and phone calls to their families in the North"let alone sending money home.

This is the flip side of the bargain Wal-Mart is pitching to the American people. This is the reality they do not want us to see.

Wal-Mart Monitors Well-Run "Prisons"

With few workers knowing China's labor laws or what a union is, coupled with weak to non-existent labor law enforcement, the exhausted workers at the Zhifeng factory are in a trap, struggling to work as many overtime hours as they can possibly bear each week just to keep their families out of desperate poverty. Their lives become a treadmill of pitifully low wages and lack of rights with not exit. For Wal-Mart's 200 corporate auditors, these are idea conditions to apply Wal-Mart's voluntary code of conduct and private monitoring scheme, which amounts to monitoring well-run minimum security prisons.

It is impossible to monitor our way out of abusive sweatshop conditions in China or anywhere else in the global economy. Only concrete checks and balances, including enforceable laws backed up by sanctions to protect worker rights and independent unions will create a fair and level playing field for workers and companies.

Zhifeng Hardware and Plastics Factory
Shiyan Lake, Hongxing Village
Bao'an District, Gongming Town
Shenzhen City, Guangdong Province

Capital: Hong Kong owned.
Production: Kitchen implements and silverware. Bottle openers and other metal and Plastic utensils.
Major Buyers: Wal-Mart, Target, Sears and others.
Workers: Approximately 1,700, nearly 80 percent of whom are women.

The Zhifeng factory is surrounded by walls and a locked metal entrance gate.


A Bargain, or Exploitation?

  • Many of the 1,700 workers at the Zhifeng Hardware factory producing kitchen and silverware for Wal-Mart and other companies are at the factory 80 ½ to 85 ½ hours a week, working seven days a week and often going for months without a single day off.
  • Workers report making cooking utensils such as spatulas and ladles for Wal-mart. Workers producing spatulas must complete one operation every 18 seconds.
  • The routine shift is 12 ½ to 13 ½ hours a day, from 8:30 a.m. to 9:00 or 10:00 p.m., Monday through Friday, with nine-hour shifts on Saturday and Sunday.
  • Actual working hours are 68 to 73 hours a week, including 28 to 33 hours of overtime, which exceeds China's legal limit of permissible overtime by 237 to 297 percent!
  • To trick the gullible corporate auditors, the workers do not swipe their time cards on Sunday or Sunday, and wages are paid separately, in cash.
  • All weekday overtime is mandatory and anyone who misses even a single overtime shift will either be fired or docked three days' wages as punishment while also being barred from working overtime for the rest of the week.
  • The base wage is just 54 cents an hour, $4.33 a day and $21.65 a week. While being forced to work overtime, the workers are at the same time shortchanged 15 to 25 percent of the wages legally due them each week—paid an average of just $38.26 for a 78 ½ hour week, for which they should have earned at least $49.10. Each week workers are being cheated of between 1 ½ and nearly three days' base wages. Primarily the workers are cheated of the 100 percent premium (double time) which must be paid for Sunday work.
  • Workers are permitted just 20 minutes to review their pay slips before they are confiscated by management. This is done so the phony pay slips can be provided the gullible Wal-Mart auditors without fear that the real pay stubs might slip out.
  • Workers try to survive spending just $1.25 a day on food, eating at the cheapest fast food stalls, purchasing three small meals a day and a snack. Each meal costs 33 to 46 cents. To save money, some women eat just two steamed buns for supper, costing 13 cents. But such food has little nutritional value. The informal food stands that line the highways often lack even the most minimal standards of hygiene. Even half starving themselves, the workers still must spend $38.13 on food each month to survive.
  • Since there is not proper place to eat lunch, the women must sit along the side of the road. Most of the workers are so exhausted that after finishing their small meal, they will sleep sitting up on the roadside, resting their heads on their knees and hands.
  • The factory dormitory is so primitive that very few workers stay there. There is just one share bathroom and shower on each floor. Workers wishing to bathe have to return to the factory to fetch hot water in a small plastic bucket, which they carry back to a "shower room" to take a sponge bath. After their shift, workers return to the dorm at 10:00 or 11:00 p.m. Lights must be out at midnight.
  • Most workers rent tiny, primitive one-room apartments which still cost approximately $48.10 a month including utilities. Workers generally walk a half hour each way to get to the factory and home again, as they cannot afford public transportation. The fortunate ones have bikes, which cut the trip to 15 minutes.
  • Even these most minimal expenses—for basic food and tiny, one-room apartments—still cost the workers $86.23 a month, absorbing 93 percent of the monthly base wage of just $92.84. This is why workers must guard every cent they spend, while also being completely dependent upon long overtime hours to survive and hopefully save some money to send home to their families.
  • Workers arriving even five minutes late are docked 2 ½ hours' wages. Workers missing a day are docked three days' wages.
  • Workers who fail to reach their assigned production goal are barred from working overtime for the entire week.
  • There are no sick days.
  • New workers operating dangerous machinery are not provided any training and must learn as they go, which has resulted in several serious accidents each year. Seriously injured workers are forced to leave the factory, usually with less than half of the injury disability and compensation payment legally due them.
  • Workers are searched every time they leave the factory.
  • During their rare time off during the busy season, most workers remain at home to rest, at most taking a walk for recreation.
  • Many workers have never even heard the word "union" and have no idea what it might possibly be. The workers have no voice.

Getting Hired

To be hired, workers must first produce a health certificate, which costs them roughly 30 RMB ($3.98) for the medical examination. As insignificant as this may seem, it amounts to almost a full day's wages. Workers also have to purchase their uniforms, which cost another 25 RMB ($3.32) per item, such as a blouse. After a probationary period, workers sign a one-year contract, which, they say, is just for show—to share with corporate auditors—as it is never adhered to. To prevent new workers from quitting at the beginning—due to the long hours, low wages and primitive living conditions—management temporarily confiscates the workers' personal ID cards, without which they cannot leave the factory. Moreover, no one can leave the factory before a minimum of five weeks or they will forfeit their wages. After that, workers must give a one month's notice before they can quit. If not, they will not receive their outstanding back wages. Also, once they announce their desire to leave, they are prohibited from working overtime. Production line workers are covered by work injury insurance. But, illegally, the vast majority of workers are not inscribed in the mandatory national Social Security system, which would also cover healthcare, paid maternity leave, unemployment and a small pension.



Long Hours and Seven Day Work Weeks

During the long peak season, the routine shift at the Zhifeng Hardware and Plastics factory is 12 ½ to 13 ½ hours a day, from 8:30 a.m. to 9:00 or 10:00 p.m., Monday through Friday. There is a mandatory nine-hour shift on Saturday and another "voluntary" nine-hour shift on Sunday. The busy season lasts at least seven months, from April through October. It all depends upon how busy the factory is, but it appears that at least half of the workers are asked to toil each Sunday. Workers explain that they cannot really turn down the "voluntary" overtime since they desperately need as many overtime hours as possible in order to survive. The regular base wage of 700 RMB ($92.84) does not cover even their most basic needs. The factory cheats the workers on their "voluntary" Sunday work, paying just 65 cents an hour rather than the legal 100 percent premium of $1.08 for weekend overtime.

Routine Shift
Monday through Friday
(12 ½ to 13 ½ hours)

8:30 a.m. - 12:00 noon (Work, 3 ½ hours)
12:00 — 1:30 p.m. (lunch, 1 ½ hours)
1:30 — 6:00 p.m. (Work, 4 ½ hours)
6:00 — 7:00 p.m. (Supper, 1 hour)
7:00 — 9:00 or 10:00 p.m. (Overtime, 2 to 3 hours)

With the mandatory nine-hour shift on Saturday, workers are at the factory a minimum of 71 ½ to 76 ½ hours a week. Under this schedule, workers would be toiling 58 to 63 hours a week, including 18 to 23 hours of overtime, which exceeds China's legal limit (36 hours per month) by 117 to 177 percent. For at least half the workers, the work week is seven days, including a nine-hour shift on Sunday, putting them at the factory anywhere from 80 ½ to 85 ½ hours a week. Thus, they would be toiling 68 to 73 hours a week, including 28 to 33 overtime hours, which exceeds China's legal limit by 237 to 297 percent.

All weekday and Saturday overtime is strictly mandatory. If a worker misses even a single overtime shift—for no matter what emergency—she will either be fired or docked three days' wages and barred from working any overtime for a full week.

To trick the gullible North American auditors, workers do not swipe their timecards on Sunday and are paid separately and in cash.

Discipline is strict at the factory. Workers are prohibited from using the toilet within the first half hour upon entering the factory and for the last half hour before they leave each shift in the morning and in the evening. Supervisors say they do this to prevent the workers from getting "lazy."

In the Plastics department, there are two 12-hour shifts, from 8:00 a.m. to 8:00 p.m. and from 8:00 p.m. to 8:00 a.m. Workers receive two half-hour breaks during their shifts which were formerly paid, but this ended in 2007.



Workers cheated of anywhere from 15 to 25 percent of the wages due them

The legal minimum wage in the Bao 'An District of Shenzhen City is 710 RMB a month, or $94.16, which comes to 54 cents an hour and $21.65 a week. The Zhifeng factory pays slightly under this, just 700 RMB a month, or $92.84.

Legal Minimum Wage
(710 RMB a month)

54 cents an hour
$ 4.33 a day
$ 21.65 a week
$ 94.16 a month
$ 1,125.64 a year

All weekday overtime must be paid at a 50 percent premium, or 81 cents an hour, while weekend overtime must be compensated as double time, $1.08.

The Zhifeng Hardware and Plastics factory is definitely violating China's wage and hour laws, which in the U.S. is the first benchmark used to characterize a factory as a "sweatshop."

The workers report that, toiling seven days a week, the very highest wage they can earn during the peak season is between 1,200 and 1,300 RMB ($159.15 and $172.41) which means they are earning between $36.73 and $39.79 for a workweek averaging 68 ½ hours. The workers are earning an average hourly wage of just 56 cents an hour, despite being forced to work 28 ½ hours overtime each week, which is supposed to be paid at a premium rate of 81 cents to $1.09 an hour. In fact, under China's laws, the workers should have earned $49.10 for the week--$21.65 for the regular 40 hours; $10.13 for the 2 ½ hours a day of weekday overtime and $17.32 for the 16 hours of weekend overtime on Saturday and Sunday. Even is the workers toiled just two hours of overtime Monday through Friday rather than the average 2 ½ hours, they would still be being shortchanged a minimum of $7.24 a week—15 percent of the wages legally due them. At the high end, workers are cheated of $12.37 in wages due them each week, or 25 percent of what they are owed. This amounts to the loss of nearly three days' base wages each week, which is an enormous amount of money for these poor workers.

On Sunday, the workers are paid—off the books and in cash—just 64 cents an hour, rather than the $1.08 an hour premium required by China's laws for weekend overtime. So rather than earning $8.64 for working overtime on Sunday—hardly a lordly sum of money—the workers are paid just $5.12 for the day, $3.52 less than they deserve. Being shortchanged of Sunday's legal overtime pay alone is the equivalent of being cheated of 6 ½ hours of regular wages.

The $159.15 to $172.41 the workers report earning each month also includes and attendance bonus of 64 RMB ($8.49) if the worker does not miss a day or arrive late during the month.

Workers are allowed to review their pay slips for just 20 minutes before they are confiscated by management. This is done to avoid any chance of the real pay stubs somehow falling into the hands of Wal-Mart or other company auditors, who are routinely presented with phony pay stubs.

Wages are paid on the 15th or 20th of the following month.


Zhi Feng factory. Only a few lucky workers can afford bicycles.


Primitive Living Conditions

Half-starving themselves:
In the past, the Zhifeng factory had a cafeteria, but since the food was so awful, almost everyone chose to eat outside and the cafeteria was closed. Workers eat at informal fast-food stalls that line the nearby highway, which are certainly cheap, but also lack even the most minimal standards of hygiene. Workers can purchase a vegetable dish for 33 cents or a meat dish for 46 cents. They normally choose two vegetable and one meat dish for the day, plus a late-night snack when the shift ends at 9:00 or 10:00 p.m. Some women, to save money, try to get by on just two steamed buns for supper, which cost only 13 cents but lack any nutritional value. The workers say that these meals barely fill their stomachs. Half-starving themselves, the workers still spend $1.25 a day to eat—which as little as it sounds consumes more than two (2.3) hours of wages each day and $38.13 a month.

The Zhifeng factory includes a three-story company dorm, but conditions are so primitive that very few workers live there—those who do are mostly new hires. There is just one shared bathroom and shower on each floor. Workers have to fetch hot water from the factory using a small plastic bucket, which they carry back to the "shower room" in their dorm to take a sponge bath. Working regularly to 9:00 or 10:00 p.m. workers do not get back to the dorm until 10:00 or 11:00 at night, yet by factory rules all lights must be extinguished by midnight. It is not much of a life. The company deducts a dorm fee of 105 RMB ($13.93) a month from the workers' wages.

The vast majority of workers rent the smallest, cheapest apartments they can find. A small, single-room apartment costs between 280 and 320 RMB a month ($37.14 - $42.44). Including utilities—about $5.31 for water and $3.00 for electricity—the average cost totals $48.10 per month.

This means that even half-starving themselves and living in primitive one-room apartments, the combined monthly cost for room and board amounts to 650.13 RMB ($86.23), consuming a full 93 percent of the workers' monthly base wage of just 700 RMB ($93.84). This is why the workers are so completely dependent upon overtime work to survive and must, as the workers put it "be very thrifty each month" to stretch each cent as far as it will go.

If it were not so tragic, it would make an interesting survival reality show for Wal-Mart executives and their families to live like this for even a week.

Sometimes two families, or even a group of workers, will try to save money by renting a two-room, one-bedroom apartment, which costs $50.40 to $55.70 a month. If both husband and wife are working and getting a lot of overtime, two couples may even rent a two-bedroom apartment, but this costs between $66.31 and 79.58 a month, not including utilities.



Workers Without Rights

  • Supervisors set mandatory production goals each day and any worker who falls behind will be barred from working overtime for a full week as punishment;
  • Workers arriving five minutes late will be fined 2 ½ hours' wages, and for being late for a total of 15 minutes in the month, will be stripped of most, if not all, of their $8.49 attendance bonus, equivalent to the loss of almost two days' wages.
  • Workers missing a day are docked three days' wages.
  • Workers are searched—scanned with a sensor—each time they leave the factory. Anyone who objects is fined 30 RMB ($3.99)—more than seven hours' wages—and still has to be checked.
  • Workers must pay 10 RMB ($1.33)—2 ½ hours' wages—to receive a job position certificate, which states that the worker has been trained to operate a specific piece of machinery. There is in fact no training and the workers have to learn through their own experience. The only instruction the workers receive deals with mandatory factory rules. But the "job certificates" look good to the North American corporate auditors.
  • The lack of training for new employees, however, has led to several serious work accidents and injuries. Nor do workers who were seriously injured receive their full medical disability compensation. For example, one worker who received a 10th degree injury left the factory with just 8,000 RMB ($1,061), which was less than half the $2,368.25 the worker was owed under China's laws. Someone with a serious 10th degree injury—such as the tip of a finger being severed—is entitled to 11 months' salary, six months of which is to be paid by the government's Social Protection Bureau and the other five by the factory. The factory also has to pay for medical expenses and unemployment aid. The government covers injury and disability compensation. It appears that the Zhifeng factory skips out on its share of what is owed the injured worker.

Workers are provided with some protective equipment in the Cutting and Metal departments, where they receive a change of gloves every week or two.

  • Maternity leave is paid for just 45 days—not 90 days—and at the base wage rather than the average wage—which is illegal on both counts.
  • Workers receive just ten paid holidays a year, three days each for Spring Festival, Labor Day and National Day and one day for New Year.
  • The workers have no union and no voice. In fact, when questioned, about 80 percent of the workers had no idea what a union is. The migrant workers employed at the Zhifeng factory are entirely focused on trying to survive while also sending some money home to their families. When workers have a problem, they try to speak with one of the factory's managers. If nothing is resolved, the workers feel they have no choice but to swallow the injustice or loss. Many workers do not know China's labor laws and even fewer are aware of the existence of the Government Social Protection and Labor Bureaus, which are supposed to promote and enforce worker rights.
  • China's Wages "Soar" 3 Cents: Everyone seems to be talking about the steady surge in China's wages as factories struggle to maintain workers. In reality it might be more like a ripple than a surge. In October 2007, the legal minimum wage in Shenzhen was raised to 57 cents an hour, just a three-cent increase over the previous minimum wage of 54 cents. Workers now earn $22.95 a week, 99.47 a month, and $1,193.63 a year.