Students & Scholars Against Corporate Misbehaviour

Telephone: (852) 2392 5464 Fax: (852) 2392 5463 Email: sacom@sacom.hk Website: www.sacom.hk Mailing Address: P.O. Box No. 79583, Mongkok Post Office, HONG KONG

Hong Kong, 7 January 2013

Widespread Labour Abuses at Disney and Mattel Factories ICTI doesnt care about labour rights standards

Today, the Hong Kong Toys and Game Fair is held at the Hong Kong Convention and Exhibition Centre. It is the venue for the brands and manufacturers to seek business opportunities. Yet, the Toys Fair will not care about if the labour practices in the toy factories are fair for the workers or not. From July to November 2012, Students & Scholars Against Corporate Misbehaviour (SACOM) investigated the Dongguan Tianyu Toys Co. Ltd. and the Dongguan Chang An Mattel Toys 2nd Factory. Labour abuses are widespread in the two factories, although both of them are certified by the International Council of Toy Industries (ICTI) CARE Process, an industrial association which established to ensure decent working conditions at the toy manufacturing factories. Despite the repetitive monitoring by SACOM in the past seven years, working conditions in the factories still fall short from the minimum legal standards. The toy brands like Disney and Mattel are only concerned the quality and unit price of their products when they place orders at the suppliers. Meanwhile, the ICTI CARE turns a blind eye to the abuses in the factories when granting certificates to the brands suppliers. As a result, the rights violations in the toy sector remain a norm. Disney, Mattel and ICTI CARE must be responsible for the dire working conditions of the toy workers!

Toy stories in the factories are not fairy tales. Excessive overtime, low wages, delayed payment, hazardous working environment, denial of pension and so on are the realities in the toy factories. SACOM has investigated Tianyu, which produces Toy Story products, for four times since 2007. The intense attention has not translated to structural reform at the factory. In the peak season, the work shift begins at 8am and ends at 10pm. Dispatched workers are found underpaid. Paintspraying workers are exposed to chemicals without adequate protection. Production line workers are often hurt by unsafe devices. Worker needs to acquire an off-duty permit if he or she has to be excused for a toilet break. Outrageously, Tianyu has been certified by ICTI CARE regardless the above abuses. At the Mattel factory, workers constantly have 80-100 overtime hours a month which exceed the 36-hour legal limit. Occupational health and safety is disturbing. New workers always got injured by needle or hot glue when they sew hair for the Barbie dolls. Paint-spraying workers are only provided with surgical masks which cannot filter the particles of the paint and the chemicals. Even worse, the paint particles may go into workers eyes. The factory is directly owned by Mattel. Mattel has indispensable responsibility to ensure decent working conditions in its own production facilities. Even though Mattel can have full control over the labour practices at the factory, the working conditions are equally bad compare to other Mattel suppliers. Apparently, it is a matter of commitment. For the details of the two toy factories, please refer to the Appendix. Tianyu and Mattel factory are not the exceptional cases which reveal the systematic problems of the ICTI CARE certification programme. In 2011-2012, SACOM investigated seven other ICTIcertified toy factories and rampant labour rights violations were found.1 It is evident that the ICTI CARE does not care about labour rights but resembles shield of the brands when deplorable working conditions at the brands suppliers are uncovered. Once again, SACOM demands the international toy brands, including Disney and Mattel, to strictly comply with the labour standards and their respective code of conduct. Outsourcing the monitoring work to ICTI CARE is not a solution but intensifying the labour rights violations in their supply chain. The brands must carry out selective factory inspections to crosscheck the labour practices of their suppliers. More importantly, the brands must increase the unit price when they place orders at the factories to enable the manufacturers to raise the labour standards. Last but not least, the workers are in the best position to scrutinize the rights abuses in their workplaces. The brands must facilitate dialogue between employer and employees on an equal footing through democratic unions or similar structure.

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Contact Persons CHAN Sze Wan, Debby Project Officer Email: debby@sacom.hk Tel: +852 2392 5464 or +852 6756 8964 CHENG Yi Yi Project Officer Email: yycheng@sacom.hk Tel: +852 2392 5464 or + 852 6012 0312
1

Please see SACOMs investigative reports in the toy sector in 2011-2012. http://sacom.hk/category/publication?sub_cat=7.

Appendix: Working conditions at Dongguan Tianyu Toys Co. Ltd. and Dongguan Chang An - Mattel Toys 2nd Factory
Case Study 1: Dongguan Tianyu Toys Co. Ltd.

Address Telephone Products Estimated workforce

Huaxing Industrial District, Tianxin Village, Qiaotou Town, Dongguan City, Guangdong Province, China +86 769 8342 6309 Electronic plush toys 1600

SACOM has investigated the Dongguan Tianyu Toys Co. Ltd. for the forth time since 2007. The factory has been producing electronics plush toys for Disney. International campaign has brought some improvement at the factory, but a wide range of labour rights violations have still been found. SACOM researchers carried out undercover research at Tianyu in July and August 2012. Forty workers were interviewed. SACOM is aware that Tianyus ICTI certificate was expired last December. This does not change the fact that ICTI has certified the factory while rampant labour rights violations has been taking place (seal no.: C0190). Wages The basic salary at Tianyu is CNY 1100 (USD 176) a month, which is at the same level of the minimum wage of Dongguan where the factory is situated. The hourly wage is CNY 6.32 (USD 1.01). The minimum wage in Dongguan has not been adjusted since March 2011. Workers demanded to raise wages to CNY 1290 (USD 207), but it was rejected by the management. During the low season, workers earn less than CNY 2000 a month. While in the peak season, the overall monthly salary is about CNY 2300 (USD 369). In other words, half of the wages comes from the overtime premiums. Tianyu withholds workers wages for a month. Workers can only receive their salary by the end of the following month. In the peak season, Tianyu hires considerably number of young workers from a labour agency. The young workers are usually graduates from the junior secondary schools or high schools. They

conclude the employment relationship with the agency instead of the factory. The dispatched workers have the same work as other regular workers. However, they only receive CNY 6 (USD 0.96) per hour and are denied of overtime premiums. In this regards, the workers are underpaid and it is illegal. Working hours The peak season usually falls between May and September. In the plastic injection department, there are day and night shifts. Meanwhile, there is only day shift for other production units. During the peak season, workers start working at 8am until 10pm on the weekdays. Apart from the 8-hour regular shift, the overtime shift is 3.5-hour long. On Saturdays, workers have 8-hour overtime work. In rare occasions, some workers work 11 hours on Saturdays. As such, the monthly overtime work is 100-120 hours which is about 3 times of the legal limit. In theory, workers can decline overtime work. Nevertheless, it is also subjected to the approval of the supervisors. Moreover, if the departments are busy, it is difficult to get permission to leave the production line after the regular shift. Given that the base payment is insufficient for basic needs of the workers and their dependents, workers are eager to earn more money from the overtime shifts. In other words, workers voluntarily stay on overtime shifts only because of a denial of a living wage.
Work schedule for workers Time Weekdays 08:00 Work shift begins 11:45 Lunch break 13:30 Work shift resumes 17:45 Dinner break 18:30 Overtime shift begins 22:00 Off duty Saturdays Overtime shift begins Lunch break Overtime shift resumes Off duty

In the warehouse, workers sometimes finish their work around 11pm. However, all the warehouse workers have to punch the time card at 10pm and the working time after 10pm is unpaid. Occupational health and safety The working conditions in the plastic injection and paint-spraying departments are particularly hazardous. The odour of plastic, paint and chemicals is very unpleasant according to the workers. Workers report that the factory does not deliver masks or other personal protective equipment to workers unless they request for them. In the production department, a female worker had to take out the excessive threads from the toys by using electric soldering iron. The device was out of order and she has suffered from electric shock for three times in one afternoon. She screamed and threw the toy away when she was hurt. Another electric soldering iron operator gets used to the problem. She shows her hands to a researcher. There are marks of injuries caused by the device. We are production workers and it is common to leave

Toy Story 3 products at Tianyu.

the marks of injuries on our hands, the female worker said. There is no protective measure at the factory. The best way to prevent injuries is to be careful, she added. Management Some senior workers feel that the management is more civil than before after the establishment of the worker committee. A few years ago, the management used to yell at workers with insulting or vulgar words. This problem is gradually improved. Any worker who needs a toilet break has to acquire an off-duty permit. Workers feel that the system is inhumane. Sometimes, the workers in need of a toilet break have to wait for a long time before they can leave the production line. When workers leave the factory after work, there are two security guards stationed at exit with metal detectors. Additionally, the security guards also ask workers to open their bags to check if they have smuggled the toys or components from the factories.

An Off-duty permit of Tianyu.

Social security The social security includes three basic elements, i.e. pension, work-related insurance and medial insurance. Both employer and employee have to contribute to the pension fund. Yet, all the interviewees state that they have not participated in the pension scheme. This is an infringement of article 3 of the Labour Law. Food and dormitory There are two canteens at the factory. A meal costs CNY 3-5 (USD 0.48-0.8). Most of the workers prefer to buy food from the street vendors or restaurants outside the factory. Some workers who rent a place outside the factory usually cook in their living places. Tianyu provides dormitory for workers. Each worker has to pay CNY 66 (USD 10.59) for a bed space. A dormitory room can house twelve people, but usually six people share a room. Workers can place their personal belongings on the upper deck of the bunk beds. No locker is available in the room. Some workers complain that their personal property is stolen in the dormitory. There are two fans in each room and the ventilation is fine. In the bathroom, only cold water is available. Workers have to take hot water from the tapes in the corridor of each floor. Workers cannot cook in the dormitory. And they cannot use electrical appliances. In case they have to recharge the battery of the mobile phone, they have to go to security office which is on the second floor of the dormitory building.

Case Study 2: Dongguan Chang An - Mattel Toys 2nd Factory

Address Telephone Products Estimated workforce

1st Industrial Zone, Changan Town , Dongguan City, Guangdong Province, China +86 769 85312683 Barbie dolls and accessories 8100

Unlike other toy manufacturers which supply to the international brands, the Dongguan Chang An Mattel Toys 2nd Factory is owned by Mattel. The factory was established in 1986. The Mattel factory in Dongguan mainly produces Barbie dolls and the Barbies accessories. The factory currently employs over 8000 workers. And it has been certified by the ICTI CARE Process (seal no.: C0194). SACOM investigated the Mattel factory in July, August and November 2012. Thirty five workers were interviewed outside the factory. Wages The basic salary at the Mattel factory is CNY 1100 (USD 176) a month, which is at the same level of the minimum wage in Dongguan. On the top of the minimum wage, there are other allowances, for example, high temperature allowance for non-air-conditioned shop floor, performance bonus and full-attendance bonus. The overall salary for workers is about CNY 1800-2600 (USD 289-417) per month. For the hair sewing workers, the overall monthly salary is about CNY 2900 (USD 465). Workers can only receive their wages on 20th of the following month. Working hours Mattel factory workers have 10.5-hour shift a day, from Mondays to Saturdays, throughout the year. Differs from other toy factories, the production cycle is more stable at the Mattel factory. The work shift starts at 7:30am and workers have to arrive at the factory 15 minutes in advance to

punch the work card. The work shift ends at 7:00pm. There are two 30-minute meal breaks in between. The Labour Law stipulates that the monthly overtime work should not exceed 36 hours. In contrast, the overtime work at Mattel factory is 80-100 hours a month. The factory has a 24-7 operation. It has both day and night shifts.
Work schedule for the day shift workers Time Monday Saturday 07:16 Punch time card 07:30 Work shift begins 11:30 Lunch break 12:00 Work shift resumes 17:00 Dinner break 17:30 Work shift resumes 19:00 Off duty

Workers can decline overtime theoretically. The worker concerned can fill a form to skip the overtime shift. Nevertheless, workers sometimes feel pressured because it will increase the workload of other colleagues. For example, a paint-spraying department worker did not attend an overtime shift one day. Other workers had to finish the same production target. Eventually, other workers had to work 10 minutes more without any extra payment. Occupational health and safety The hair sewing workers have to undergo training before they take up the post. Workers have to sew the hair on the Barbie dolls head. Before attaching hair on the doll, workers have to punch tiny holes on the dolls head. The dolls head is small. Workers need high level of concentration for the task. When operating a needle machine, workers have to control the machine by pedal and turn the dolls heads with fingers at the same time. The delicate work always makes the workers fingers and heels tingle. A worker report that he cannot open a water bottle cap after work and his eyes are extremely tired. The new workers sometimes injured by the needle machines. In one occassion, a young male workers finger was punched by a needle. He had to continue the work afterwards. On the next day, he left the factory without formal resignation. In August, a worker who used the glue to Hair sewing department of Mattel factory. attach hair to the Barbie dolls was injured as the machine was out of order. The temperature of the glue is high. When that worker stepped on the pedal of the glue machine, excessive hot glue spilled out. His shoulder was seriously burnt. In the paint-spraying department, the smell of paint and chemicals is irritating because of the poor ventilation on the shop floor. Workers are provided with surgical masks and gloves only. Yet, workers do not find the masks and gloves can protect them from the chemicals. A few workers

complain that they have to change the surgical masks for a few times a day as they got dirty very quickly. Furthermore, their arms are always covered by paint particles. In addition, a few interviewees report that it is common to have the paint particles go into eyes. Some workers tell they suffer from skin burnt when they use toluene. A few workers state they have problem of skin allergy because of the exposure of the paint and chemicals. No regular health examination at the factory is observed. Owing to the poor working environment on the shop floor, the paint-spraying department is always short of labour. Social insurance Social insurance, including pension, work-related injury insurance and medical insurance, is basic entitlement of the workers which is stipulated in the Labour Law. The Mattel factory workers can only protected by the pension scheme after they have worked in the factories for more than 10 months. Food and dormitory Worker who eats at the factory canteen has to pay CNY 288 (USD 46.2) a month. Workers feel the price, hygiene and quality of the food are reasonable. Mattel factory provides dormitory for workers. Workers have to pay CNY 52 (USD 8.34) a month for a bed-space. There are four zones in the dormitory area. In Zone A, each room can house 12 workers, but only 10 workers live in a room. The hygiene in the dormitory is satisfactory. However, the facilities are old and primitive. Other workers tell the facilities in Zones B-D are relatively better.