The Dark Side of the Glittering World: A Report on Exploitation in Toy Factories in China

Wednesday, November 20, 2019
Read this report in Chinese
Download the detailed pdf report

 

1) Context: the Left-Behinds of the Chinese Economic Miracle

From the late 1970’s, China's economy has enjoyed 30 years of explosive growth. With its 1.4 billion inhabitants, it is now the world's largest economy. This economic miracle, now on everyone's lips, has lifted hundreds of millions of Chinese out of poverty and made China a key player in globalization. A middle class, consuming goods and services, and confident in its potential for enrichment has emerged.

But this economic transition has a dark side: it is taking place at the expense of a significant part of the Chinese population. Migrant workers, known as nongmingong , come from poor agricultural regions in the country. Estimated at nearly 290 million , migrant workers toil in the manufacturing industry that make China the world's factory: electronics, textiles, toys, etc. Organized according to the registration system called hukou, these workers remain migrants throughout their lives within their own country. For larger cities in Guangdong Province where a substantial number of factories are located, it is almost impossible for rural residents to change their hukou due to strict regulations put in place. The consequences are serious: this new proletariat face unequal access to basic services provided to other citizens, such as education of children and healthcare. A third of the migrants are woman. With a country shifting from being the global workbench in the last few decades to a more service-oriented economy, this marginalized group remains for a big part working in the manufacturing industry such as the toy industry. In 2018, approximately 30% of migrant workers were employed in the manufacturing industry, compared to around 50% in the service industry.

The Chinese government has enacted labor laws which are comprehensive, albeit the lack of freedom of association. Workers have the right to be paid in full and on time, a formal employment contract, a 40-hour working week with fixed overtime rates, social insurance and severance pay in the event of contract termination. Additionally, equal pay for equal work and protection against workplace discrimination are included in labor laws. There are several laws that protect the rights of women, and which also mention that employers are to prohibit sexual harassment against women. However, the implementation of these labor laws are poor, especially in factories where migrant workers are working. Rights violations in Chinese factories have been well documented by human rights activists, investigative journalists and labor NGOs. China Labor Watch has conducted repeated investigations into toy factories, revealing a multitude of serious violations of labor laws. These violations range from excessive overtime hours to very low base wages that deny workers a life of dignity. Workers also work under dangerous working conditions due to the use of toxic chemicals. Local governments, relying heavily on investment for economic development, turn a blind eye to rights abuses occurring in factories and fail to properly enforce labor laws.

Foreign multinationals, in order to address reputational risks, publish codes of conduct listing the rights and working conditions they require their suppliers to respect: decent wages, acceptable working hours, complaint mechanisms to combat discrimination, etc. They often claim to verify compliance with these codes through audit systems. But these good intentions have proven to be a failure and show that companies are merely window dressing. The reason is simple: multinationals do not tackle the fundamental issues in their supply chain. By putting pressure on the prices of manufactured goods, setting short production deadlines, forcing factories to compete over short-term contracts and orders and demanding maximum flexibility, multinationals create the conditions of exploitation observed year after year in factories. Even companies that have promised to uphold human rights continue to blatantly violate the rights and interests of workers who manufacture their products.

Furthermore, labor rights advocacy has deteriorated recently in China. Since the early 1990s, labor rights activists and NGOs provided legal assistance to workers, raised awareness of labor rights and laws, held training sessions for workers and guided workers in collective bargaining with management. Activists located themselves in the Pearl River Delta where the manufacturing industry was booming. Since gaining power in 2013, President Xi Jinping has ramped up repression and crackdowns on rights activism, detaining feminist activists, labor activists and human rights lawyers. Labor rights organizations who once operated in a more open environment, have scaled back on activities or transformed into community service organizations. Some have even chosen to close their doors. Last summer, workers at Shenzhen Jasic Technology were heavily repressed by the factory after a unionization drive. Students from across the country voiced support for the workers, with some travelling to Shenzhen to participate in protests. The government responded by arresting and detaining not only students and workers, but staff from NGOs and civil society organizations. Arbitrary detentions and arrests continued this year, targeting even individuals who were not associated with the Jasic incident.

2) In a Nutshell: Working Conditions in the Toy Industry

Since 2001, China Labor Watch has released investigative reports on the working conditions in the toy industry in China. Our goal is to hold accountable major toy companies who continue to exploit Chinese workers. Shockingly, the same issues that were inherent in the industry since the first investigation prevail this year:

● Workers only receive the minimum wage, which is considerably lower than needed for a decent standard of living. Workers can only earn enough in peak season by putting in excessive overtime hours.
● During peak production season, workers in the investigated factories put in 60 to 126 overtime hours per month despite Chinese labor law stipulating that overtime hours are not to exceed 36 hours a month. One factory, Wing Fai, did not even grant workers one rest day per week as required by law.
● Workers did not take part in the legally mandated 24 hours of pre-job safety training which should cover the handling of any toxic substances they may come into contact with, in addition to the safe operation of machinery, that can cause permanent harm or damage. Workers did not receive enough personal protective equipment (PPE), even though masks, gloves and/or ear protection were handed out more often than in previous years. In addition to not receiving the necessary PPE, it was also sometimes questionable if the PPE handed to workers provides them adequate protection.
● Poor living conditions are still common in the factory’s dormitory. This includes overcrowded rooms and poor sanitary conditions, bedbugs, no hot water and safe storage for valuables.
● There is still a lack of independent unions which represent workers’ interests and a lack of effective grievance channels. Workers can only address issues with line leaders or management. When workers face issues at work, they mostly choose to resign or endure the difficulties.
● Women workers are often victims of verbal abuse and sexual harassment. They also have difficulties being promoted to management level staff when compared to male workers. Workers who are pregnant also do not receive any special care and continue to work overtime, night shifts and are exposed to toxic chemicals.

On the other hand, it is also worth noting that some improvements have been made since the early 2000s. Although limited, they provide evidence that by placing brand companies and factories in the spotlight for worker rights abuses, working conditions can be improved. Here are the main victories:

● The working hours have decreased from frequently more than 14 hours to an average 11 hours in peak season in a day.
● Wages have increased as local minimum wages have also been raised. For example, in 2013, Guangzhou’s minimum wage was 1550 RMB ($221.4) and this increased in 2015 to 1895 RMB ($270.7) and was raised last year to 2100 RMB ($300). However, living expenses have also gone up, hence the minimum wage doesn’t come close to an actual living wage in Southern China where most toys are manufactured.
● More factories now make social insurance contributions for workers. However, the amounts are frequently not paid in accordance with the law.
● Health and safety measures have improved. But the highly toxic, cancer-causing chemical benzene is still not prohibited and has been used widely in the toy industry. This shows factories are far from being a safe working environment.
● The issue with wage arrears has become less common in factories. Previously, workers had their wages withheld, making it difficult for them to quit as they were forced to forgo their wages if they chose to resign.
● There were cases of child labor in earlier years. However, our investigations into toy factories recently have found no cases of child labor.
● Workers are now receiving paid sick leave, paid leaves including maternity leave and bereavement leave and also have statutory holidays off.

3) Our In-Depth Investigation into Five Toy Factories

This year we have conducted investigations into five toy factories, which manufacture for the largest toy companies in the world. The working conditions are similar across all five factories. Although this is only a small sample of thousands of toy factories in China, but if some of the most profitable toy companies are unable to ensure their workers work in decent conditions, we can only assume that the factories of smaller companies are even worse.


Products manufactured at the factories

 

     

 

Left: Disney/Basic Fun!; Right: Hasbro's Transformers

 

 

 LOL! Surprise by MGA Entertainment

 

  

 

Main issues in the industry and findings of this year’s toy report

To understand the main issues in the toy industry in China better we have highlighted five of the major issues, which persist, in detail below. As shown, the manufacturing industry including toys, faces a great deal of pressure to stay competitive in the global market.

Living Wages, No Less
A living wage is defined as “the remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family (of four people). Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events.” A living wage is a human right as stipulated in article 23 of the Universal Declaration of Human Rights. What would a living wage amount to in China? The Global Living Wage Coalition executed a study in 2015, which looked at the cost of basic but decent living for a family. The result is 2818RMB ($398.4) for one person in Shenzhen.

The toy industry has consistently maintained a base wage that is close to or equivalent to the minimum wage. The minimum wage has risen over the years in China due to a rise in housing prices and commodity prices. However, the minimum wage remains far from a living wage. In Guangdong province, home to a large number of factories, the minimum wage standard was frozen for three years in response to rising costs of production that could potentially threaten the competitiveness of China’s economy in the world market. All five factories in this year’s report are located in Guangdong province, where the minimum wage was between 1410 - 1720 RMB ($201.4 - $245.7 USD). Only Foshan Mattel with 1860RMB ($263.2) paid slightly more than the amount required by law. All factories fall considerably short of paying a living wage, even when compared with the 2818RMB ($398.4) figure calculated for 2015. Without extensive overtime, the wages workers earn are insufficient in sustaining their livelihood. As such, the push for a living wage is crucial for the toy industry. Furthermore, many of the workers in toy factories are migrant workers from rural areas, leaving behind their family due to the high cost of living in cities. A large portion of the wages these workers earn are usually sent back to family in their hometowns.

In peak season, including excessive overtime, the wages in Wah Tung were still only 3000 RMB ($424.6), at Kongxing workers earned between 3400-3800RMB ($481.2 - $537.8), at Foshan Mattel 3400-4000RMB ($481.2 - $566.1), at Wing Fai 3500-4000RMB ($495.4 - $566.1) and at Everfront 3600 - 4200RMB ($514.3 - $594.4).

Excessive Overtime
Excessive overtime hours come hand in hand with low wages, as many workers prefer to put in overtime hours where they can earn 1.5 times – or on weekends twice – the hourly wage. Although overtime hours have decreased from an average of 150 overtime hours a month, during investigations conducted between 2001 to 2005, to an average of 100 hours a month in peak season, this is far from the legally mandated 36 hours of overtime a month. Excessive overtime remains a widespread issue across the toy industry as factories push workers to complete orders, especially during peak season, manufacturing toys for the Christmas sale.

This year, Wah Tung factory workers were putting in 60 overtime hours a month, which still exceeds the legally stipulated 36 hours. This is a remarkable drop considering Wah Tung had the highest number of overtime hours last year with 175 hours a month. At Everfront, workers put in 109 overtime hours a month, at Kongxing, 99 overtime hours a month and in Foshan Mattel, workers were clocking in 110 overtime hours. Workers at Wing Fai also must work mandatory overtime during peak season and worked the most overtime hours with 126 hours in total a month. Workers also worked consecutively for 11 days without a day of rest. Although overtime may be voluntary, more often than not, workers choose to work overtime to earn decent wages. Though, it should also be noted, that this year we found workers were paid the full overtime pay at Wing Fai and Kongxing even when they completed their evening targets early. This is a considerable improvement. However, we also found the opposite in several factories where targets were increased, although workers were still putting in the same hours. This occurred at Kongxing, Foshan Mattel and Everfront, which shows that the amount of orders and time requests directly affect workers well-being.

 

Labor Protection
Workers at toy factories come into contact with a range of toxic chemicals, including paint thinners, n-hexane and other solvents. Workshops have a noticeable pungent smell. Even though this has improved, workers are still not sufficiently protected. Workers are unsure of the products they are in contact with, and the factory fails to provide adequate protective equipment or training for workers to ensure they are well protected in their work positions.

This year, most factories provided at least some personal protective equipment (PPE) such as gloves and/or masks. However, at Everfront, workers were only provided with these during audits and inspections. In Foshan Mattel, only some workers had helmets and gloves in their positions. But even where PPE is handed to workers they are unsure if the equipment provides adequate protection. For example, Wing Fai workers wearing a simple mask could still smell the toxic chemicals in the workshop.

Chinese labor law requires a pre- and post-job physical examination for workers who are in contact with occupational hazards in the workplace. This year only Kongxing and Foshan Mattel provided them as necessary. Everfront provided workers in the spray-painting department with monthly and pre-job physical examinations. Wah Tung and Wing Fai did not provide any physical examination at all.

Whilst the state mandates that workers are to receive 24 hours of pre-job safety training, all factories failed to meet this standard. Kongxing, Foshan Mattel and Everfront provided training, but this did not include substantive content about the type of chemicals workers would come into contact with, and other occupational hazards and preventive measures.

Living conditions and social security
A large number of the workers in the toy industry are migrant workers coming from rural parts of China to Guangdong Province. They often work and live on the factory premises. Dormitory conditions are therefore an important factor in the assessment of a factory. As workers spend almost all their time in the factory, overall management culture affects not only their work but their lives in general. Another very important factor is the social security of workers. As the manufacturing industries in China face an aging workforce, the issue of social insurance has become a major workers struggle. There are still considerable shortcomings of factories not paying the required social insurance amount automatically and unconditionally to all their workers. China’s social insurance law mandates that employers are to provide all workers with social insurance and to contribute to the housing provident fund. Workers and employers are required to make contributions. Social insurance covers five types: pension, medical, maternity, unemployment and work injury. The housing provident fund is for workers to save funds to purchase, rent or maintain their homes. Finally, yet importantly, mandatory paid leave is another important issue for migrant workers specifically.

The living conditions in Wah Tung are terrible. Eight to ten workers share a room in the dormitory and the bathroom has no hot water running. Since last year the leave policy improved and it is now possible to take leave. It remains unclear though if this leave is paid or not. The factory purchases insurance but only for workers who are less than 50 years old. The management culture has relaxed noticeably but a system of monetary penalties, for minor violations like leaving the lights on in the dormitory, are still in place.

Everfront also has dreadful dormitory conditions. There are 10 to 15 workers in one room only with a fan. The rooms got extremely hot and sometimes workers sleep in the hallways. The workers needed to bring their own blankets and pillows. It was very messy and dirty. Some bunk beds were very thin and even tilting up. There were also bed bugs. Because there were so many workers, queuing for the shower took about two hours. However, the factory offers paid leave and purchases insurance according to the law. The overall management culture can be summarized as abusive and workers are not treated decently and are yelled at regularly.

Foshan Mattel has installed A/C in the dormitories, but still squeezes 8 workers into a room and even sent workers to a dormitory of another factory – due to lack of space – where conditions were even worse. Foshan pays the required social insurance and has paid sick leave and national holidays for workers. However, the general management culture in Foshan Mattel is unfriendly and at times, even abusive. Management staff are rude to and even yell at new workers, and three of the ten female workers who were interviewed reported they were being harassed. The investigator felt unsafe herself.

Kongxing has decent living conditions with 6 to 7 workers in one room with an A/C and bathroom attached. The factory has paid sick leave and national holidays for workers. It fails to purchase social insurance automatically but instead leaves it to the workers to ask for it themselves. The overall management culture is quite relaxed. Workers can leave the line to go to the bathroom and can talk to each other or listen to music.

Wing Fai offers free dormitory rooms but the conditions are horrible. There are only 3 to 4 workers in a room, but bed bugs were present, and workers are prohibited from using the light during the day. There is only one hot water room in the corridor where workers have to take back to the restrooms. Hot water is only provided at certain times. The factory purchases insurance for regular workers but fails to do so for temporary workers. The factory has paid leave.

 

Worker Representation
Workers representation is a delicate issue in China, and workers do not have freedom of association. Unions established must be affiliated with the All China Federation of Trade Unions (ACFTU), the sole legally mandated trade union in the country. Although the ACFTU touts over 300 million members and has made efforts to boost the number of members, unions established at workplaces are a mere formality and rarely are a means for workers to address rights issues. In our previous investigative work, where we found unions at the factory, union leaders were generally appointed by factory management, as opposed to being elected by workers. Workers remain unaware of the functions of a union. Without a functioning union or worker representatives, most workers can only endure the conditions or speak to their workshop line leader.

This year was no different. Wing Fai, Foshan Nanhai Mattel and Kongxing did not have a union let alone real worker representation. At Everfront and Wah Tung workers were unsure whether a union exists, which is equivalent to not having a union at all. There were also no effective grievance mechanisms to be found. In Kongxing we found an ICTI Hotline number displayed, but workers did not know what the phone number is for. In Wah Tung, a complaint to a confidential hotline was even leaked to the line manager at issue. And Everfront had a poster with a hotline number but it was not used by workers.

4) Unfair treatment, discrimination, gender based violence faced by women factory workers

In the toy industry worldwide, the female workforce is estimated at 60% according to IETP. In China, women make up 57% of the labor force, but earn on average 35% less than men for doing similar work, ranking in the bottom third of the Global Gender Gap Index. It is rare for recruitment notices to place restrictions on gender. However, there is a serious gender imbalance between male and female workers, and higher management positions are dominated by male workers. Female workers usually make up a large portion of regular workers, line leaders and group leaders. The reasons for this are various: The toy industry, although labor intense, is less physically demanding than for example the construction industry. Workers who stay in toy factories for a long time, despite the low wages, are mostly female workers with low educational level and of older age. Our investigation shows that they often focus on stability and avoid being unemployed after resignation and therefore remain in the factories.

Many factories prefer to hire female workers, as Chinese society still sees them as more docile, obedient and less likely to be troublemakers. Contrary to this, female workers have been in the front lines of strikes and protests, and at times, shielded their male colleagues from police brutality. They have increasingly become more militant, participating in collective actions and taking on the role of worker representatives to negotiate with management. An example is the strike which broke out in March last year over International Women’s Day at Shimen Factory, a luxury handbag factory, where female workers made up 80% of the workforce. The strike ended after the company agreed to the demands of workers, which included compensating workers for owed social insurance contributions and housing provident funds. In the 2015 Lide shoe factory strike, where workers protested relocation compensation and social insurance. Female workers not only actively participated in the strike but also became worker representatives, negotiating with management.

On the production line, female workers face various challenges. They have less chances of being promoted to higher management positions, and lack protection during pregnancy as they continue to work overtime and are exposed to toxic chemicals. Female workers usually leave their children behind in their hometowns due to the financial constraints and the highly restrictive hukou registration system limits migrant workers access to social and education services. A 2013 study revealed an alarming 70% of female factory workers have experienced sexual harassment.

#Metoo became a global movement last year and although the internet remains heavily censored in China regarding feminism and women’s rights, victims of sexual harassment made national headlines as they came forward with stories of their own. Despite this, female workers from factories have rarely made their voices heard publicly regarding their experiences of sexual harassment. An exception being a letter in January 2018, in which a female worker from Foxconn, a major electronics factory in China, demanded the factory to establish systems to combat sexual harassment and address issues of gender inequality. In the letter, she writes: “Loudly telling dirty jokes, ridiculing female colleagues about their looks and figures, using the excuse of “giving direction” to make unnecessary body contact…in factory workshops, this kind of “sexual harassment culture” is prevalent, with many people having grown accustomed to it.”

This year’s toy report focuses not only on the general labor violations but also reveals how much more needs to be done in terms of protecting the rights of female workers. The report found that male workers are usually promoted to higher positions, pregnant workers were working excessive overtime and there were even cases of sexual harassment. One female worker at Foshan Mattel mentioned she was followed by two male workers on the same assembly line who used their cell phones to take photos of her. Female workers were often scolded and criticized more compared to male workers. Social insurance in China includes maternity insurance. For factories that did not pay social insurance, pregnant workers also did not receive maternity insurance, which covers medical checkups and also provides stipends after giving birth. According to Article 12 of the “Special Provisions on Labor Protection of Female Employees“, labor unions should monitor compliance of employers with this law. However, there are no independent labor unions or worker representatives present in the factories workers can only go talk to workshop line leaders or administrative departments if they have problems. Knowing how difficult it is to come forward with a claim of sexual harassment this is even more problematic.

 

5) Conclusion

Year after year, we have called on brand companies to address the ongoing rights violations at their factories and to ensure that the workers in their supply chain are fairly treated. Brand companies and factories are well aware of the labor laws in China and also international labor standards. Yet they continue to expose loopholes and evade laws, all in the pursuit of profits. With the rising costs of production in China and the U.S. -China trade war, this may well push factories and brand companies to move their operations abroad. However, these working conditions will only be replicated in other countries where labor laws are even weaker and are hardly enforced. Therefore, it is the responsibility of brand companies to take serious measures in fundamentally reforming the working conditions in their supply chain.

 

 

NOTE: “*” represents a violation of Chinese labor law