Can Human Rights Maximize Apple’s Profit?

The demand for Apple’s new iPhone is so high that it has left some customers waiting up to a month for it. To accommodate this demand, China’s factory workers are clocking in numerous overtime hours under threat of confiscated paychecks. Workers in Shanghai, China are currently working overtime in Apple’s supplier factory, Pegatron. They work six days a week with shifts up to 11 hours, and are paid $1.50 an hour ($268 per month) before overtime, according to a 2013 report from New York-based NGO China Labor Watch.

Getting paid $268 per month means a worker in Apple’s supplier factory is making less than half the average monthly income of Shanghai locals ($764). These workers make below the basic living wage required to survive in Shanghai, one of the costliest cities in China.

If one ignores these statistics and looks only at the production numbers, it would appear that Apple does not need to improve the working conditions in their Chinese supplier factories. Global Brand’s 2013 report recognized Apple as the number one brand in the world. People will buy Apple products despite the company’s unethical working conditions in which their products are assembled.

But no leading company can sustain their success forever while ignoring a key problem in their supply chain. Labor rights in Apple’s supplier factories are something that Apple must begin to seriously address if the company wishes to maintain its high profits. Even if Apple has to spend more money on enforcing labor codes, doing so will protect their profit in the long run.

“It is part of human nature for people to get jealous of winners, and right now Apple is the winner,” said Mark Brennan, an Adjunct Associate Professor of Business Ethics at NYU. “Some people will try to snipe at Apple, and labor rights is a potential weakness for them.”

Brennan added that, as a general corporate strategy, Apple should always employ someone to anticipate issues that might cause them to lose customers. The reason why human rights is not currently a serious issue for Apple because it has not been widely publicized—yet

Apple’s working conditions have not received the same publicity as the Bangladeshi factory fire that killed 117 and injured 200 workers in 2012. A report from The Telegraph claimed that in the aftermath of the fire, US retail giant Walmart, one of the companies that the factory supplied for, adopted a “zero tolerance” policy concerning factory working conditions and safety.

The poor conditions in Apple’s Chinese supplier factory Fox Conn have, for the most part, only been actively reported on by bloggers, smaller news platforms such as PolicyMic and non-government organizations such as China Labor Watch. According to a 2013 report from New York-based NGO China Labor Watch, the working conditions in Apple’s overseas factories are harrowing.

“If Apple wants to be proactive and get ahead of the curve before these stories come out, human rights would be a great investment for them,” Brennan said.

Others say the company will not lose profits over the enforcement of labor laws in China. “Apple’s profit margins are high, the unit cost of enforcement would be miniscule,” said Ronald Berenbeim, an expert in Business Ethics and a Senior Fellow at The Conference Board. To support his point, he referenced a recent incident in which fast food workers protested, while their wage demands could have been satisfied with a five-cent raise to the price of a burger.

But it’s not easy to enforce labor rights in China.

According to Berenbeim, Apple’s enforcement personnel overlooks many issues. “That’s what’s been happening,” he said in an email. “They do have people doing police work but they don’t quite know the ins and outs.”

Instead of spending money on their own enforcement personnel, Berenbeim recommends that Apple allot funds to local foundations and organizations that work with local companies to improve factory safety, and afford educational opportunities that those child plant workers would otherwise miss.

At the end of the day, whether Apple takes this step towards enforcing human rights in its factories or not depends on the public.

“If [Apple] does not see a direct link to increased profits, the company’s value will fall and the managers that you want to make this commitment will no longer have their jobs,” said Darren Campo, Adjunct Assistant Business Professor at NYU.

Ultimately, it is up to the consumer to decide whether they will support Apple. If people keep buying Apple products, these issues will likely remain overlooked.