A Wal-Mart Christmas

Research:

Charles Kernaghan, Barbara Briggss, Jonathann Giammarco, Alexandra Hallock

Design:

Tomas Donoso

Printing:

AFSCME DC 1707 Labor Donated

National Labor Committee 75 Varick St., Suite 1500 New York, NY 10013 Tel: 212-242-3002 Fax: 212-242-3821 E-mail: nlc@nlcnet.org www.nlcnet.org

A Wal-Mart C hristmas EXECUTIVE SUMMARY

At Wal-Mart, Christmas ornaments are cheap, and so are the lives of the young workers in China who make them.

The Guangzhou Huanya Gift company describes itself as being “among the top three Christmas ornament producers in mainland China,” with “long term, friendly, collaborative relationships with industry leaders Wal-Mart…”

There are 8,000 workers in the factory.

At the Guangzhou Ornaments factory, every single labor law in China, along with internationally recognized worker rights standards, are being systematically violated on a daily basis.

Grueling Hours: Ten to 12 to 15-hour shifts, seven days a week are the norm during the long, eight-month busy season. Workers can go for months without a single day off. At a minimum, workers are at the factory an average of 84-hours a week, while toiling 77 hours. However, at least half the workers, some 4,000 people, are routinely at the factory 105-hours a week and working 95 hours, including 55 hours of overtime, which exceeds China’s legal limit by 562 percent. Any worker daring to take a Sunday off will be docked 2 1/2 days’ wages as punishment.

Workers were pressured to sign a “voluntary” Overtime Application Form in which they “agree” to work more than three hours overtime a day, to work on Saturdays, Sundays and holidays, and with no guaranteed minimum wage or overtime premium.

C heated of their Wages: The legal minimum wage in Guangzhou, China is 55 cents an hour, but factory management respects neither the minimum wage nor the mandatory overtime premium. Workers are paid by a piece rate, with some workers earning just 26 cents an hour, which is half the legal wage.

Wage documents smuggled out of the factory for a ten-day period (June 21-30, 2007, which included two Saturdays and one Sunday) show the workers earning a median wage of 49 cents an hour, while by law they should have been earning at least 68 cents an hour. For working a minimum of 110 hours in the ten-day period, the workers were paid just $49.29 instead of the $74.77 they were legally owed. On average, the workers were cheated of $25.48—one third of the wages legally due them. Only eight percent of the workers in the sample earned at or above the legal minimum wage, with 92 percent falling below that.

A Wal-Mart C hristmas Management also illegally withholds one month’s wages from each worker, making it almost impossible for workers to leave the factory without forfeiting that month’s wages.

High School Students Blow the Whistle on Wal-Mart: In the summer of 2007, the Guangzhou Huanya Ornaments factory hired 500 to 600 sixteen-year-old high school students, who were promised they would never be required to work more than 10 hours a day, six days a week, while earning more than 1,000 RMB ($132.63) a month. Once in the factory, the teenagers found themselves forced to work 12 to 14 hours a day, seven days a week, for wages nowhere near what they were promised. After a few weeks, many students were so exhausted they could barely walk.

The students had had enough and went on strike on July 8, also filing a legal suit against the company. Student representatives went to the local labor bureau not only to denounce the grueling hours, seven days a week, for payment below the legal minimum wage, but also to inform the labor officials that several children, some as young as 12 years of age, worked in the plant. The high school teenagers were able to quickly recognize and document gross human and worker rights violations, including child labor, at the plant, while Wal-Mart—the largest

retailer in the world—was apparently unable to discover any such abuses over the course of years.

The 12 and 13-year-old workers hired during the summer were required to work the same 10, 12 and 15-hour shifts, seven days a week, as the older workers, including the all-night shifts from 5:45 p.m. until 6:30 a.m. or later the following morning.

Workers Handling Potentially Dangerous C hemicals: Workers in the Spray Paint department lack even the most rudimentary protective gear—going without gloves or the cheapest disposable respiratory masks—while handling potentially dangerous paints, “gold” dust, thinners and solvents. Workers who develop serious skin rashes or sores have no choice but to leave the factory, as management will not pay medical bills or for days missed.

The Real Ornament is C hina’s Labor Laws: The Christmas ornament workers are in a trap.

Few workers know the labor law, and even if they do they have no idea what avenues to pursue to seek their rights. Nor are there independent unions to help them. Local labor bureaus are passive at best, and sometimes corrupt.

Either way, there is little aggressive monitoring of factories known to be engaging in illegal behavior.

Preface

By Charles Kernaghan

Wal-Mart

Scrooge Masquerading as Tiny Tim Wal-Mart has hired a new advertising agency, which is being paid a fortune to convince people that it is virtuous to purchase cheap goods, glorifying that every item bought on sale should fill the shopper with emotion and holiday spirit.

Too bad that this holiday spirit only exists in the realm of advertising, as the reality behind the bargain is hardly virtuous, uplifting or pretty.

It is most often downright nasty, manipulative, inhumane and even cruel. Far from kindling the holiday spirit, the conditions under which the mostly young women workers in China produce goods for Wal-Mart are dehumanizing.

This holiday season, we should stop to think of what it would be like to live without freedom of the press, without freedom of religion, without respect for human rights, without democracy, without freedom of association and the right to organize.

in China producing Wal-Mart goods for export to the U.S.? This is, of course, not by chance.

The truth is a reality so ugly that it must be kept hidden from sight.

It is doubly ironic and sad that it is the grueling hours, lack of rights and the pitifully low wages paid to the workers in China that allow WalMart to spend some $1.9 billion a year ($5.2 million a day) in advertising, while at the same time cutting prices.

In the end, some bargains are not worth it, and may instead come back to bite the American people, as more jobs leave, wages fall, and the middle class dwindles.

Over 66 percent of the goods Wal-Mart imports into the U.S. each year by ship come from China. If we stop to think about it, isn’t it odd that we have never had the chance to meet or hear from even one of the millions of workers

A Wal-Mart C hristmas Child worker surrounded by Christmas ornaments.

Introduction

Santa’s Helpers Relocated to C hina High school students blow the whistle on WalMart—exposing forced overtime, seven-day work weeks, payment below the legal minimum wage and even some child workers

Guangzhou Huanya factory, Wal-Mart—the largest retailer in the world—has apparently been unable to find any such violations over the course of many years.

The “Holiday Season” at the Guangzhou Huanya factory in China lasts eight months, stretching each year from March through October (the peak production period for Christmas ornaments) and there is nothing pleasant about it. For one thing, many of the workers are young. In fact, in June and July, the factory even hired 500 to 600 sixteen-year-old high school students, who quickly went on strike and tried to sue the factory decrying the miserable conditions. The students experienced and documented forced overtime, 10 to 12 to 15 hours a day, seven days a week, with payment below the legal minimum wage. They were able to smuggle out of the factory company pay records, which are posted every ten days on bulletin boards. The high school students also reported to the local government that several child workers—some just 12 years old—were employed at the plant.

Video footage smuggled out of the factory shows workers sitting on low stools and plastic crates, without backrests or cushions, surrounded by thousands of Christmas ornaments, their backs hunched as they lean over to insert the top pieces into each Christmas ornament, racing to complete one operation every three seconds.

Some workers will complete 12,000 to 14,400 such operations in a day. A young woman hand paints a Christmas ornament every 39 seconds, and 93 an hour. In the spray paint department, working without gloves or masks, a young man sprays rack after rack of 32 Christmas balls each, competing between 64,000 and 76,800 ornaments a day.

It is interesting to note that while the high school students were quickly able to discover serious human and worker rights abuses at the

A Wal-Mart C hristmas Child worker attaching tops to Christmas ornaments.

Young teenaged boy and girl with child worker.

A Wal-Mart C hristmas Child worker attaching tops to Christmas ornaments.

Child worker attaching tops to Christmas ornaments.

A Wal-Mart C hristmas Exhausted workers among Christmas balls.

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Workers among Christmas balls.

11

A Wal-Mart C hristmas Workers attaching tops to Christmas balls.

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Guangzhou Huanya Gift Ltd. Company Huanya Industrial Park Shengang Town, Conghua City Guangdong Province, China The Guangzhou Huanya Gift factory, with $60 million in annual sales, describes itself as being “among the top three Christmas ornament producers in mainland China”—which no doubt also means in the world. And the factory is huge, with 8,000 workers. “Our products,” the company states, “are sold all over the world, and we have long-term friendly collaborative relationships with industry leaders Wal-Mart and Target from the United States…” The workers were in fact able to smuggle a Wal-Mart production order—for red and blue shatterproof Christmas balls—out of the Huanya Gift factory, along with photos of the boxes they would be packaged in for sale at Wal-Mart.

The company also addresses the big box retailers’, especially Wal-Mart’s, demand that suppliers slash production costs each year, stating, “In the fierce competitive marketplace of today, we are willing to advance together hand-in-hand with fellow members of this industry…” It’s true that the Wal-Mart ornaments are cheap, just $5.44 for 24 shatterproof Christmas balls—24 cents each. http://china.alibaba.com/company/detail/wwwlzpzsy. html?categoryId=0&keywords=

Unfortunately, when Christmas ornaments are made that cheap, something has to give, which nine times out of ten means that the workers are exploited. At the Guangzhou Huanya Gift Ltd. Company, every single labor law in China, as well as internationally recognized worker rights standards, are being grossly and systematically violated on a daily basis.

This report—along with video footage, photographs and documents smuggled out of the Huanya Gift factory—will provide a rare glimpse, perhaps for the first time, of what it is like to work in a factory in China producing Christmas ornaments for Wal-Mart, Target and other retailers, including in England and Holland.

The Guangzhou Huanya factory produces all sorts of Christmas ornaments, including a huge variety of Christmas balls, some hand painted and others in the shape of small bears to hang on the tree; as well as artificial trees, garland and wreaths, standing snowmen, Santa Clauses and reindeer, candy canes, plastic snowflakes and arrangements with artificial pinecones and branches.

The National Labor Committee has been able to purchase many Christmas ornaments at WalMart which are exact matches to the photos and video of ornaments made at the Huanya factory.

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A Wal-Mart C hristmas Product photographs smuggled out of factory.

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Photograph of Christmas ornaments purchased at Wal-Mart.

Ornament box perfectly matches photograph of the box (p. 14) smuggled out of the factory.

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A Wal-Mart C hristmas Christmas ornaments leaving the Huanya factory for the U.S.

Wal-Mart uses 4,800 supplier factories in China. According to “China Business Weekly� seventy percent of products sold in Wal-Mart stores are made in China.

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Working 10, 12, even 15 Hours a Day, Seven Days a Week The minimum shift at the Guangzhou Huanya factory is 10-hours a day, from 6:45 a.m. to 5:30 p.m., seven days a week. During the long busy season, workers are required to toil for months at a time without receiving a single day off.

Even this “regular” shift has the workers at the factory 75-hours a week, while toiling 70 hours, including 30 hours a week and 130 a month of overtime, which exceeds China’s legal limit of 36 hours of overtime per month by 261 percent.

By law, the regular work day is eight hours, five

days a week, for a total of 40 hours. All overtime must be voluntary.

These workers are forced to work two hours of overtime each weekday and 10 hours of overtime on both Saturday and Sunday.

But this is only the beginning. Factory management “encourages” the young workers to remain toiling another five hours, until 11:30 p.m., for as many nights a week as they can possibly stand. The workers estimate that at least

Minimum Daily Shift (10-hours)

6:45 a.m. – 11:45 a.m.

(Work, 5 hours)

11:45 a.m. – 12:30 p.m.

(Lunch, 45 minutes)

12:30 p.m. – 5:30 p.m.

(Work, 5 hours)

“Voluntary” 16-hour Shift 6:45 a.m. – 11:45 a.m.

(Work, 5 hours)

11:45 a.m. – 12:30 p.m.

(Lunch, 45 minutes)

12:30 p.m. – 5:30 p.m.

(Work, 5 hours)

5:30 p.m. – 6:30 p.m.

(Supper, 1 hour)

6:30 p.m. – 11:30 p.m.

(Overtime, 5 hours) 17

A Wal-Mart C hristmas

half the workers—upward of 4,000 people— agree to work these 16-hour shifts, sometimes five days a week.

If the workers toil 16-hour shifts Monday through Friday and the standard 10-hour shift on Saturday and Sunday, they are at the factory 105-hours a week while working 95 hours, including 55 hours of overtime—which exceeds China’s legal limit by 562 percent. This would be at the high end of hours worked at the Huanya factory.

Every 15 days the workers are required to rotate shifts, with the day shift switching to night and vice versa. The routine night shift is from 5:45 p.m. to 6:30 a.m.—12-hours—seven days a week. With a break of approximately 45 minutes, the night shift workers are regularly toiling 12 hours a night and 84 hours a week, including 44 hours of overtime, which is mandatory and exceeds China’s legal limit by 430 percent. As on the day shift, management encourages the night shift workers to put in overtime, another two or three hours for as many nights as they can stand, remaining for a 14 to 15-hour shift from 5:45 p.m. to 8:30 or 9:30 a.m. the following morning. As on the dayshift, about half the night shift people “volunteer” to work the extra overtime. With the extra overtime hours, night shift workers can be at the factory 101 hours a week.

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Since there are no days off, it is particularly exhausting when the time comes to switch from the day to night shift. On that day, the workers are required to put in a half shift, from 6:45 to 11:45 a.m., after which they eat and return to the dorm to try to sleep for a few hours before having to report back that same afternoon at 5:45 p.m. to begin their 12-hour night shift.

Essentially, with just a few hours rest in between, the workers are toiling 17 hours. Nor does this take into account the disorientation and physical shock to the workers’ bodies when they have to so radically alter their schedules every 15 days.

The boss told one worker that if he wanted Sunday—the legal holiday—off, he would have to quit.

One worker described switching from the day to night shift on Sunday, July 1, 2007.

The boss notified us that we were changing shifts.

We did not have to work in the afternoon between 11:45 a.m. and 5:45 p.m. We were to start the night shift at 5:45 p.m. I felt too tired. I work over 10 hours every day. I only slept five hours today, and I had to start the 12-hour night shift.

I felt as if my body couldn’t take it, so I asked the boss if I could take the day off. The boss firmly refused. I told him it was Sunday. Why couldn’t I take the day off? The company never gives days off. It is enough to make a body collapse from fatigue. I really needed to rest. The boss told me

that if I wanted to take the day off, then I needed to quit. Otherwise, I had to come to work. I already worked five hours in the morning. I must now continue working in the factory and won’t get off until 6:30 a.m. Working in this factory is exhausting. They do not treat people as human beings.

During the long eight-month busy season, any workers daring to take a day off without permission from management—whether it is a Sunday or due to illness—will be docked 2 1/2 days’ wages as punishment. The worker will forfeit that day’s pay and be fined an additional 50 RMB ($6.63), which is the equivalent of 1 1/2 days’ wages.

Child worker.

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A Wal-Mart C hristmas Young teenaged girls packaging Christmas balls.

In summary, forced to work 10 hours a day and 12 hours a night on alternating shifts, on average, the workers are at the factory at least 82-hours a week, while actually toiling 77 hours. Approximately half the workers, those “volunteering� to work overtime, will routinely be that the factory over 100 hours a week.

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C hristmas Workers Forced to Sign a “Voluntary” Overtime Application Form After the high school students blew the whistle on Wal-Mart and the Guangdong Huanya Gift factory for excessive forced overtime and payment below the legal minimum wage, factory management flew into action.

Workers were encouraged—strong-armed—to each sign a voluntary “Overtime Application Form” stating that they “volunteer” to work more than three hours overtime each day, “volunteer” to work on Saturday, Sunday and legal holidays, and that they further “volunteer” to accept the standard piece rate, without payment of overtime premiums as required by law.

Moreover, as wages are so pitifully low at the factory, many workers have no choice but to seek as much overtime as they can physically bear.

With a tiny sheet of paper, one of the largest producers of Christmas ornaments in the world—many of which are made for WalMart—unilaterally and in broad daylight decided to write off China’s wage and hour laws and go their own way. Apparently with a wink and a nod from the local government, the Guangzhou Huanya Gift factory and Wal-Mart are getting away with ignoring China’s labor laws with complete impunity.

The vast majority of workers signed the voluntary “Overtime Application Form” for two simple reasons: Some signed because they had no idea what China’s labor laws were. Others, who did know the law, signed for fear of being fired if they did not.

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A Wal-Mart C hristmas

Guangzhou Conghua Huanya Gift Limited Company Overtime Application Form

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English Translation: Overtime Application Form Applicant name

Sex

Home Address

ID Number

Birth Date

(Vertical down the left side) Overtime Application I volunteer to enter the Guangzhou Conghua Huanya Gift Limited Company and do piece rate work (work on piece-rate wage compensation). In order to increase my family’s income during my employment at the factory, I am applying to work overtime and agree to the following: 1) Apply the combined hourly-rate work system and voluntarily request to work overtime over 3 hours/ day.

2) Salary is calculated at piece-rate. Overtime salary is calculated at piece-rate. (I will) observe all factory regulations as stipulated.

3) (I am) willing to take rest days on the rotating basis. I am willing to work overtime on Saturday, Sunday and legal holidays and accept wages calculated on piece-rate.

I hereby ask permission for this application!

Applicant signature: Date:

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A Wal-Mart C hristmas Young worker making candy cane ornaments.

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C heap Ornaments Lead to C heap Wages The Guangzhou Huanya Gift factory does not recognize the legal minimum base wage of 55 cents an hour. Rather, the factory pays the vast majority of workers according to a piece rate system, under which management arbitrarily sets both the mandatory production goals and the rates. The factory also ignores the legal overtime premium required for any time worked in excess of the regular eight hours on weekdays and for any work on weekends or holidays.

With no minimum wage, no overtime premium and with management in sole control of setting production targets and calculating piece rates,

there is enormous potential for very serious wage violations.

One Christmas worker was angry when he saw his wages: “The day before yesterday, I saw the company announce my wage. I worked 10 days and received 195 RMB ($25.86).” This means the worker was being paid just $2.59 a day, for working at least 10 hours a day, or just 26 cents an hour. This is less than half the legal minimum wage of 55 cents an hour, which itself does not come close to being a subsistence level wage. Moreover, as the ten-day period

Legal Minimum Wage (690 RMB a month)

RMB

U.S.$

4.12

$0.55 an hour

32.98

$4.37 a day (8 hours)

164.91

$21.87 a week (40 hours)

690.00

$91.51 a month

8,280.00

$1,098.14 a year

* Weekday overtime premium of 50 % – 82 cents an hour. * Weekend overtime premium at 100% - $1.09 an hour.

(Exchange rate: 7.54 RMB = $1.00 U.S.)

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A Wal-Mart C hristmas

in question would have included at least two weekend days, the worker should have earned at least $69.88 and not the $25.86 he did. This worker was paid less than 40 percent of the wages legally due him. He was cheated of at least $44.02, which is an enormous amount of money for these very poor workers. If he was toiling 12 hours a day—which is required every two weeks—his wage would drop to just 22 cents an hour. [Calculation: 8 weekdays at $4.37 = $34.96; 2 hours’ overtime per day x $0.82/hour x 8 = $13.12; 2 weekend days x 100% premium of $1.09/hour x 10 hours = $21.80; $34.96 + $13.12 + $21.80 = $69.88] More often than not, when we or other human rights organizations have approached WalMart pointing out serious wage violations at its suppliers’ plants, Wal-Mart responds by saying that they have reviewed the factory’s records and cannot find any such violation, but that they will continue to look.

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What makes this situation different is that with the help of high school students, a sample of the factory’s actual pay records were smuggled out of the plant. Every 10 days, the factory posts the workers’ piece rate wages, department by department on the wall. In this case, the pay records were smuggled out of the factory for a ten-day period for two separate electroplating departments (where metallic finish is applied to the ornaments). Finally we have a rare glimpse into the real wages paid in one of China’s largest ornament producers, which is also a supplier for Wal-Mart.

This ten-day period (Thursday, June 21 through Saturday, June 30) included seven regular weekdays and three weekend days—Saturday and Sunday, June 23 and 24 and Saturday, June 30. As has already been established, the mandatory minimum workday at the factory is ten hours, with 12-hour shifts required on an alternating basis every two weeks.

• A review of wages earned by 25 workers from both workshops during this ten-day period shows a median wage of just 371.66 RMB ($49.29), $4.93 a day and 49 cents an hour, which is well below the legal minimum wage of 55 cents an hour, not to mention the overtime premium required for working at night and on three weekends. The workers should have received $74.77 and not the $49.29 median wage they were paid. The workers were cheated of $25.48, or a third of the wages legally due them. Of course, the situation would be even worse if these piece rates were for 12 and not 10 hours of work.

On average, including overtime, the workers should have earned 77 cents an hour. Just two workers reached or exceeded this, earning 79 and 89 cents an hour for the 10-hour days.

[Calculation: 7 regular days x $4.37 = $30.59; 2 weekday overtime hours/day x $0.82/hour x 7 days = $11.48; 3 weekend days x $1.09/hour x 10 hours = $32.70; $30.59 + $11.48 + $32.70 = $74.77]

Only two workers of 25 (8 percent) reached or exceeded the legal minimum wage required for ten hours work for ten days. Ninety-two

We also had the chance to review pay rates for individual days for the two groups of workers over the same June 21-30 period.

percent of the workers did not earn even the legal minimum wage. If the piece rates were for a 12-hour shift, then no one earned the legal wage.

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A Wal-Mart C hristmas

Workshop #1: • On Sunday, June 24, the median wage for 15 workers totaled just $35.81 RMB ($4.75), or 47cents an hour, which is less than half the $1.09 legal overtime premium required. For ten hours work on Sunday, the workers should have earned at least $10.90, not the $4.75 median wage they were paid. The workers were shortchanged of 56 percent ($6.15) in wages legally due them. Not a single worker among the 15 was paid the legal minimum wage, and only one worker came even close—and that was just for the minimum 10 hours and not the 12 hours that the workers are also required to toil.

• On Saturday, June 30, a group of 24 workers earned a median wage of just $3.92, falling 64 percent short of the $10.90 legal wage due them. These workers were cheated of $6.98. Again, not a single worker earned the legal minimum wage for 10 hours of work, and the highest paid worker was still earning just $8.25, which is 25 percent short of the $10.90 he/she was owed.

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• On Wednesday, June 27, not a single worker was paid the legal minimum wage. For the 24worker sample, the median wage was $4.03, which is $1.64 below the $6.01 wage the workers were legally owed for working 10 hours, including two hours overtime. Only four workers—17 percent of the sample—came even close to reaching the legal $6.01 wage, earning between $5.36 and $5.91 for the day.

• On Monday, June 25, 26 workers toiling at least 10 hours earned a median wage of just $3.70 (37 cents an hour if they were working 10 hours and not the 12-hour night shift), far short of the $6.01 a day and 60 cents an hour they were legally owed. Assuming they were working the 10-hour day shift, on average, the workers were cheated of $2.31, or 38 percent of the wages due them. In this sample, four workers (15 percent) earned at or above the legal minimum wage, while 85 percent of the workers earned less than the minimum . Of the four highest-paid workers, three earned 61 cents an hour—one cent above the minimum—while the fourth earned 83 cents. It is unclear if these wages are for the mandatory 10-hour day shift or the mandatory 12-hour night shift.

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A Wal-Mart C hristmas

Workshop II: • On Sunday, June 24, 31 workers from Workshop II toiled a minimum of 10 hours, earning a median wage of just $4.64, which is well below the $10.90 they were legally due. On average, the workers were shortchanged of $6.26 (57 percent) of their legal wages. In this sample, just one worker earned at or above the minimum, leaving the other 30 falling far short. The highest paid worker earned $1.15 per hour, which is six cents above the $1.09 legal overtime premium for work on weekends.

• On Saturday, June 30, 30 workers toiled at least 10 hours to earn a median wage of $5.21, meaning they were paid less than half (48 percent) of the $10.90 legally due them. On average, the workers were cheated of $5.96 (52 percent) of the wages owed them. Again, a single worker earned at or above the legal minimum, earning $1.15 an hour. The rest of the workers were paid below the minimum.

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• Twenty-nine workers, toiling on Friday, June 22, earned a median wage of $4.79, for a minimum of ten hours work, or 48 cents an hour, which was 20 percent short of what they were legally owed.

For ten hours of work, the workers were owed at least $6.01, for an average of 60 cents an hour. In this sample, nine workers (31 percent) earned at or above the legal minimum, while the other 69 percent fell short of that.

• On Tuesday, June 26, the median wage for 36 workers toiling at least 10 hours was $4.35, which is 28 percent short of the $6.01 they were legally owed. In this sample, nine workers (25 percent) earned at or above the legal minimum, while 75 percent fell short.

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A Wal-Mart C hristmas

• On Thursday, June 28, 35 workers toiling at least 10 hours earned a median wage of $5.46, or nine percent below the $6.01 they were legally owed. In this case, 13 workers, 37 percent of the total, earned at or above the legal minimum, with 63 percent paid below that.

In summary, there is no doubt that there are widespread, systematic and very serious wage violations at the Guangzhou Huanya Gift factory. In a representative sample of two workshops over a ten-day period, the median wage fell 34.5 percent short of the legal minimum. On average, workers were earning just 49 cents an hour, including 44 hours of mandatory overtime, which is even below the legal minimum wage of 55 cents an hour—itself set at a below-subsistence level. Only eight percent of workers in this sample earned the legal minimum wage, leaving 92 percent of workers falling short. In a review of pay records for individual days, even under the very best case scenario, 63 percent of the workers were paid below the legal minimum wage.

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Child worker among Christmas balls.

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A Wal-Mart C hristmas Child worker among Christmas balls.

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Prison-like Discipline and Fines Control the Workers’ Lives On July 2, 2007, the following notice was posted on a large blackboard inside the plant: “The three people above each missed one day of work and will each be punished with a 50 RMB ($6.63) fine.”

Forget about China’s labor laws—a five-day, 40-hour workweek, with Saturday and Sunday off, with overtime strictly limited and voluntary.

For daring to take a Saturday, a Sunday or a sick day off, the worker will be docked that day’s wages and hit with an additional $6.63 fine, together resulting in the loss of 2 1/2 days wages.

Workers can be fined for just about anything.

Management even has a receipt book to keep track of the individuals fined. Many workers

were fined 30 to 50 RMB ($3.98-$6.63) for missing a day. Another worker was fined 20 RMB ($2.65)—the loss of nearly five hours’ wages—for placing large Christmas ornaments on the floor. A worker was fined 5.00 RMB (66 cents)—the loss of nearly 1 1/2 hours median wage (approximately 49 cents) for quality control problems. This person had an error rate of 2.78 percent in attaching a cover or hook to the top of the Christmas balls. This worker’s receipt even carried the following note: “We wish you would respect factory regulations and discipline and take this as a warning.” How’s that for Christmas spirit? Another worker was fined 5 RMB for accidentally dropping an ornament.

There are all sorts of other fines for violating factory discipline.

Blackboard with violations and fines. Worker names blocked out.

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A Wal-Mart C hristmas Violation and fine receipts smuggled out of factory (with English translation). Worker names blocked out.

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Fine receipts smuggled out of factory. Worker names blocked out.

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A Wal-Mart C hristmas Blackboard with violations and fines. Worker names blocked out.

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High School Students Strike: Blowing the Whistle on the Huanya Factory and Wal-Mart for Abuses Apparently, due to the long, grueling hours and pitifully low wages, management at the Guangzhou Huanya factory is in no position to be too choosy regarding whom it hires, especially during the peak production months of summer. So in June 2007, the company hired 500 to 600 sixteen-year-old high school students.

Management must have had a scam going with at least several of the teachers at the Guangdong Province Maoming Transportation Technical School—250 miles from the factory—which recruited their students to work at the Christmas ornament plant over the summer. The teachers lied to the kids, assuring them that they would never be forced to work more than ten hours a day, would have one day off a week, and would earn more than 1,000 RMB ($132.63) a month.

Many of the students come from poor families and were anxious to work to help their parents or at least to be able to pay their own tuition.

The students, a few actually younger than 16, had to pay their teachers a 100 RMB ($13.26) “introduction fee.” They also had to pay their own transportation to the factory. The teachers came along to manage the students.

The teachers did no real work, but the students

heard that the factory still paid them 2,000 RMB ($265.25) a month. One of the teachers the students mentioned was Mr. Li Gui. Once in the factory, the students were distributed among the various departments.

Instead of working 10 hours as they had been led to expect, the students were forced to work 12 to 14 hours a day, seven days a week, with absolutely no rest days. There was no legal minimum wage. The students were paid on a piece rate. At a minimum, they were at the factory 89 hours a week while working 84 hours.

On Saturday, July 7, after finishing their shift late at night, some of the students in the painting department—where they painted ornaments and sprinkled gold and silver glitter on the Christmas balls—were so exhausted that they could barely walk. Other students said the same—that they were too tired to go up and down the stairs. The students had had enough and angrily phoned their teachers for help. When the response they received was indifferent and cold, the students phoned the police, dialing the emergency 110 number. The police did come to the factory, but told the students that they had to appeal to the local Labor Bureau in order to deal with such problems. The police did, however, phone the 39

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plant manager demanding that he take care of any labor problems at the factory.

workers, who had been moved to the overnight shift.

As it was Saturday and no one was at the Bureau, the students would have to wait until Monday to file their complaint. Following the call from the police, the manager told the students that if they were unwilling to work at the company and follow the regulations, they could pick up their outstanding wages on Monday, July 9, and leave.

Everything seemed settled. Then, on Sunday, July 8, at 7:45 p.m., after the students had already been at work for 13 hours, management informed the students that they would have to keep working until at least 11:30 p.m.

The 12 and 13-year-old children who were hired during the summer months had to work the same 10, 12 and 15-hour shifts, seven days a week, as the older workers, including working the all-night shifts from 5:45 p.m. to 6:30 a.m. or later the following morning.

It was then that the students went on strike.

On July 9, the students sent a representative to the Labor Bureau to sue the company for unlawful labor practices. In addition to the wage and hour violations, the students told the Labor Bureau officials that they had also seen several younger children working in the plant, some as young as 12 years of age. Apparently, after receiving a call from the Labor Bureau, management shifted the children to the night shift so they would not be seen by the labor inspectors, who work only during the day.

Shortly after this, the students began leaving the factory in different groups. Before they left, the students called the Labor Bureau to inform the officials that management was hiding the child 40

The students received some of their back wages, but it is doubtful that they were paid anywhere near what they were legally owed.

A bunch of brave 16-year-olds with integrity had accomplished in a few weeks what Wal-Mart, a $351.1 billion company, has been unable to do for years: to see that gross human rights violations were going on in broad daylight every day for years. Perhaps Wal-Mart should replace the head of their Corporate Responsibility department with one of these 16-year-old students.

Almost impossible for workers to quit: Illegally, management withholds one full month’s wages from every worker. For example, a worker who enters the factory on September 1 will not receive his or her first wages until the end of October. This comes in handy for management, as workers cannot leave the factory without first receiving permission from management—which is rarely given. This leaves the workers with but two choices: stay in the factory despite being forced to work grueling hours while being cheated of their wages, or quit, which means forfeiting at least one full month’s wages.

Deductions for room and board drop take-home wages even further: The factory deducts 100 RMB ($13.26) each month from the workers’ wages for food and another 16 RMB ($2.12) in fees for water and electricity in the dorm. As insignificant as this $15.38 a month, 50-cent-a-day deduction seems, it has a real impact for workers, who are already earning below the legal minimum wage. The worker who was paid just $2.59 for toiling a 10hour day would see her take-home wage drop to just 21 cents an hour.

The workers say that, by factory standards, dorm conditions are passable. The food, however, is another story. Workers describe the food as 41

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“terrible,” “just awful,” “quality is poor,” and say that “meat is hardly ever served.” One worker described his lunch as follows: “The food seems like it has just been boiled in water. It lacks oil and is so bad it is hard to swallow.”

Money for charity: Management deducts 2 RMB (27 cents) each month from each worker’s wages for a “kindness” fund. No one has the slightest idea what this is. Perhaps this is done at Wal-Mart’s insistence that their suppliers give “humanitarian aid” back to the local community. With 8,000 workers participating, the factory would have $25,464.19 a year to play with.

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Continuing Violations: In another direct violation of China’s law, management refuses to inscribe its workers in the government’s mandatory social security system, which provides insurance coverage for work injuries, health care, paid maternity leave, unemployment insurance and a small pension.

The lack of work injury and health insurance are the most serious violations.

No Contract:

By law, all employers must provide their employees with a written employment contract, detailing hours, wages, benefits, holidays, and so on. Here too, management ignores the law and workers have no written contract, which is another way to strip the workers of their rights.

Workers Handling Potentially Dangerous C hemicals and Paints: Workers in the spray paint department lack even the most basic protective gear—going without gloves and the cheapest disposable respiratory masks—while handling potentially dangerous paints, gold dust, thinners, and solvents like acetone.

Some paint workers do develop allergic skin rashes. For example, one worker developed serious rashes and sores, but as he did not have the money to see a doctor, he had no choice but to quit the factory. If a worker goes to a hospital for medical attention, the company will pay neither medical bills nor the salary for days missed. A worker who leaves the factory on short notice due to health concerns will be docked a full month’s back wages as punishment.

Child worker among Christmas balls.

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A Wal-Mart C hristmas Child worker among Christmas balls.

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The Real “Ornament” is C hina’s Labor Laws The Guangzhou Huanya Gift company is not some tiny subcontract plant hidden away in a rural area. Rather, it is a huge factory with 8,000 workers, producing Christmas ornaments for the largest retailer on earth and located on the outskirts of Guangzhou City, which has a population of over ten million people.

So how is it possible that such extreme human and worker rights abuses—violating every single labor law in China—can go on in broad daylight for years? Clearly, something is seriously wrong with China’s labor law enforcement.

From the outset the workers are handicapped, as many, especially migrants from rural areas, do not know China’s labor laws or understand what avenues are available to them to protect their rights. The final blow is that workers do not have independent unions to help educate and accompany the workers in their struggle.

Even if a worker knows the law and is not afraid to sue the factory, it would take a great deal of money to hire a lawyer and pay court fees, which no worker can possibly afford.

Moreover, such lawsuits drag on and on, and workers do not have the time or money to wait around to learn the verdict.

On the other hand, local governments— including labor bureaus—are compromised as they depend upon the factories and other businesses to help grow the local economy and attract additional investment. For whatever reason, it is certainly not common in China for local labor bureaus to aggressively monitor and pursue factories which are known to be engaging in illegal behavior. For example, in the rare cases when a worker initiates a law suit against a factory, the local labor bureaus often create obstacles to either block the suit or at least contain it to keep the focus on one or just a group of workers and not allow the case to spill over to challenge the ongoing pattern of systematic violations across the plant. Even if a worker wins his or her suit, it will rarely go beyond payment of back wages to that individual. The labor bureaus rarely use such cases to fine companies for breaking the law.

Government corruption also appears to be as serious problem.

At the end of the day, without labor law enforcement or independent unions, China’s workers are left to fend for themselves.

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In 2005, China exported $1.2 billion of Christmas ornaments, $160 million artificial Christmas trees, and $39 million in nativity scenes and figures to the U.S.

Artificial Christmas tree.

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Other U.S. Companies Producing C hristmas Ornaments at the Guangzhou Huanya Factory: Gerson Co.

Christmas House

1450 South Lone Elm Road Olathe, KS 66061 Phone: (800) 444-8172

519 E. Wall Street Eagle River, WI 54521 Phone: (715) 479-4944

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European Companies Producing Ornaments at Guangzhou Huanya Gift Ltd. Company: Christmas Elements/England

Kugelkette/Mahlberg, Germany

Santini Christmas/Italy

Miro/ Madrid, Spain

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C hristmas Ornament Photographs Smuggled Out of Huanya Factory

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