Apple ends system of recruitment fees that tied labor to contractors

The requirement went into effect starting this year, the company said on Wednesday in its latest supplier responsibility report, which examines the labor conditions at factories that produce Apple products.

Many of these factories are based in mainland China, where suppliers are hiring thousands of local workers. But in periods of labor shortages, Apple suppliers have at times relied on third-party recruitment agencies to bring in more temporary workers.

The practice, however, isn't without controversy. Contract workers brought in by these third-party agencies can be charged "excessive recruitment fees" in exchange for jobs, Apple said in the report.

"Doing so creates an unjust system that places contract workers in debt before they even begin their jobs," it added.

To overcome the problem, Apple has forced its suppliers to repay any workers who were charged recruitment fees. In 2014, the U.S. company required its suppliers to reimburse over 4,500 contract workers for a total amount of about US$4 million.

Apple added that since 2008, the company has helped reimburse 30,000 contract workers for an amount of almost $21 million to cover the excess fees.

The company has been working to improve the conditions throughout its supply chain, following years of scrutiny from the media and labor groups over the issue.

One area of dispute has been overtime hours assembly line workers face at the factories.

The company demands that its suppliers limit the work week to 60 hours or less. And during last year, 92 percent of 1.1 million workers tracked met the benchmark, Apple said in its latest report.

But on Thursday, New York-based China Labor Watch tried to cast doubt over that number. In its separate investigation, the labor protection group alleged that workers at one Apple supplier were still working over the 60 hour limit.

The factory, based in Shanghai, is run by Taiwanese manufacturer Pegatron. From September to November, China Labor Watch found that some workers were on an average logging more hours than the limit, and obtained employee pay stubs as evidence.

To solve the problem, the labor group has urged electronics vendors to raise employee wages, so that assembly line workers can rely less on overtime to earn a living. "Apple has sufficient profits to improve workers' treatment," China Labor Watch said on its website.

Apple and Pegatron did not immediately respond to a request for comment. But in its latest supplier responsibility report, Apple senior vice president Jeff Williams said, "2014 was a year of tremendous progress."

"People sometimes point to the discovery of problems as evidence that our process isn't working. Nothing could be further from the truth," he added.

Last year, it conducted 633 audits of its suppliers, up from 451 in the previous year. The audits resulted in suppliers repaying workers almost $900,000 for unpaid overtime. In addition, Apple found 16 cases of underage workers being hired.

These underage workers were returned to school, and received financing for their education, along with the income they earned, while employed by the supplier, Apple said.